Tax on Amount received for sale of specialized software & maintenance & support services under India Finland DTAA

Trimble Solutions Corporation Vs DCIT (ITAT Mumbai)

We find that the issue involved in the present appeal i.e as to whether the payments received by the assessee from its distributor for sale of specialized software and maintenance and support services (including upgrades) could be held as ^“royalty” as per Article 12 of the India-Finland tax treaty, and also as per the Explanation 2 to Sec. 9(1)(vi) of the Act, had came up for adjudication before the Tribunal in the assessee‟s own appeals for A.Y 2010-11 (ITA No. 6481/Mum/2017) & A.Y 2011­12 (ITA No. 6482/Mum/2017) viz. Trimble Solutions Corporation Vs. Deputy Commissioner Of Income-tax, Circle (IT)(4)(1)(2), Mumbai. The Tribunal after deliberating at length on the issue therein involved had in its aforesaid order, had concluded, that the amount received by the assessee from its distributors for sale of specialized software and maintenance and support services (including upgrades) cannot be held as being in the nature of”royalty” as per Article 12 of the India-Finland tax treaty

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The captioned appeals filed by the assessee company are directed against the respective orders passed by the A.O under Sec. 144C(13) r.w.s 143(3) of the Income Tax Act, 1961 (for short ^„Act‟) for Assessment Years 2013-14 and 2014-15, dated Nil and 13.07.2028, respectively. As the issues involved in the captioned appeals are inextricably interlinked or in fact interwoven, therefore, the same are being taken up and disposed off by way of a common order. We shall first advert to the appeal of the assessee for A.Y 2013-14. The assessee has assailed the impugned order on the following grounds of appeal before us :

“Based on the facts and circumstances of the case, Trimble Solutions Corporation (hereinafter referred to as the’ Appellant’ or ‘Trimble Corporation’) respectfully craves to prefer an appeal against the order passed under Section 144C(13) read with Section 143(3) of the Income-tax Act, 1961 (‘the Act’) by the Deputy Commissioner of Income-tax (International Taxation) – 4(1)(2), Mumbai (hereinafter referred to as the ‘AO’) dated 16 October 2017 (received on 30 October 2017) in pursuance of the directions issued by the Hon’ble Dispute Resolution Panel – 2, Mumbai (hereinafter referred to as the ‘DRP’) on the following grounds:

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