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9. That on the facts and the circumstances of the case and in law, the Ld. AO has erred in proposing to levy penalty under Section 270A of the Act;

10. That on the facts and circumstances of the case and in law, the Ld. AO has erred in passing the order in a contradictory manner;

11. The above grounds of appeal are independent and without prejudice to one another."

3. Shri S K Aggarwal, appearing on behalf of the assessee narrating facts of the case submits that the assessee/appellant was incorporated in Canada and is a tax resident of Canada. The assessee is engaged in the business of selling reservoir simulation software used in oil and gas exploration industry. The assessee is also providing software maintenance and support services to the customers in oil and gas exploration sector worldwide. In India, the assessee grants software licences for the use of software by entering into software licence agreements with various customers engaged in oil and gas sector and educational institution. The assessee claimed that the receipts from sale of software and income from rendering software maintenance support services are exempt under the provisions of India- Canada Double Tax Avoidance Agreement (DTAA). The Assessing Officer (AO) in Draft Assessment Order (DAO) held the receipts from sale of software licenses Rs.3,04,78,620/-as 'royalty'. When the assessee filed objections against the DAO before the Dispute Resolution Panel (DRP), the DRP recharacterized 'royalty' as equipment 'royalty' under Article 12(3)(b) of India-Canada DTAA and further, the DRP upheld addition of Rs.9,62,34,954/- proposed by the AO holding software maintenance fee as, 'Fee for Included Services' (FIS) under Article 12(4) of India- Canada DTAA.

6. Per contra, Ms. Ekta Jain representing the department vehemently defending the impugned order submits that the software sold by the assessee is not off the shelf software but is customized according to the requirement of the customers. He further placed reliance on the decision rendered in the case of Paradigm Geophysical Pty. Ltd. vs. CIT, 115 taxmann.com 254 (Delhi) to contend that where customize software and annual maintenance services are provided to oil and gas exploration industry and the assessee has not segregated its activities into supply of software and maintenance support services, the entire income derived under contract was liable for taxation u/s.44BB of the Act.

7. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also considered documents and the decisions on which rival sides have placed reliance in support of their respective submissions. The assessee based in Canada is engaged in selling software used by the customers engaged in exploration of oil and gas. The assessee also providing software maintenance services to its customers in India engaged in exploration of oil and gas. The assessee claimed revenue from sale of software licences and software maintenance fee as exempt under India-Canada DTAA. The AO in the Final Assessment Order passed in compliance with directions of the DRP held receipts from sale of software licences as 'equipment royalty' under Article 12(3)(b) of the DTAA and fee received for rendering software maintenance services, taxable in India as FIS under Article 12(4) of India-Canada DTAA.

12. The Revenue has placed reliance on the judgment rendered in the case of Paradigm Geophysical Pty. Ltd. vs. CIT (supra), we find that the said judgment is distinguishable on facts. In the said case, the assessee was providing customized software solutions and annual maintenance services used by oil and gas exploration industry. The assessee itself offered the receipts from sale of software and annual maintenance services to tax u/s.44BB of the Act. Thus, in the said case the assessee therein had opted to offer the receipts from sale of customized software and annual maintenance services under presumptive basis. In the instant case, the software licence provide by the assessee is off the shelf software and not the customized software. Further, the case of the assessee herein is that it has no PE in India. The Revenue has also not been able to establish that the assessee has PE in India. Thus, the facts in the case of assessee are distinguishable from the decision rendered in the case of Paradigm Geophysical Pty. Ltd. vs. CIT (supra). Therefore, the said decision does not support the cause of Revenue.