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Showing contexts for: Dynamic Vertical Software India in Ito, New Delhi vs M/S. Mikroz Infosecurity Pvt. Ltd., New ... on 25 May, 2018Matching Fragments
2. Whether on the facts and circumstances of the case & in law, the Ld.CIT(A) has not given any cogent reasoning as to how the payment towards firewall & security software should not be treated as royalty as per Explanation 2 to Section 9(1) (vi) of the Act?
3. Whether on the facts and circumstances of the case & in law, the Ld.CIT(A) has incorrectly applied the decision of Hon'ble Delhi Court decision in the case of CIT Vs. Dynamic Vertical Software India Pvt. Ltd. Even though the taxability of software was clarified by legislature by Finance Act, 2012, subsequent to the said decision?
10. Identical issue in controversy has been settled by the Hon'ble Delhi High Court in case cited as CIT vs. Dynamic Vertical Software India (P.) Ltd. - 332 ITR 222 (Delhi) wherein it is held that, "when the assessee has been purchasing software from Microsoft and sold it further in Indian market, by no stretch of imagination, it can be treated as royalty." Hon'ble Delhi High Court in case cited as Pr.CIT vs. M. Tech India (P.) Ltd. - 381 ITR 31 (Delhi) held that, "where payments were made for purchase of software as a product considering paid would have to be treated as payment for purchases of software rather than consideration for use or right to use of software so as to be termed as royalty."
11. So, in view of the law laid down by Hon'ble High Court in cases cited as CIT vs. Dynamic Vertical Software India (P.) Ltd. and Pr.CIT vs. M. Tech India (P.) Ltd. that when assessee has purchased hardware embedded with software component for resale without retaining any copyright in the goods, it is a copyrighted article and does not attract the provisions contained u/s 194J.
12. So far as the question of applicability of CBDT Instructions vide Notification No.21/2012 (F.No.142/10/2012-SO (TPL)] S.O. 1323 (E) dated 13.06.2012 is concerned, the same is applicable w.e.f 01.07.2012 and is not applicable to the year under assessment. Moreover, the cost of hardware and software embedded therein is not separable. The addition made by the AO has been rightly deleted by the ld. CIT (A).