Case Law Details
BMC Software Asia Pacific Pte Ltd. Vs ACIT (ITAT Pune)
The brief facts relating to the issue are that the assessee is a company incorporated under the laws of Singapore and is a tax resident of Singapore, therefore, the assessee is a non-resident from an Indian Income-tax perspective. We note that the assessee declared an amount of Rs.130,20,15,830/- from sale of software licenses and support, maintenance and training services.
Under scrutiny, the AO issued notice u/s. 143(2) and 142(1) of the Act. According to the AO, the said receipts are in the nature of Royalty and liable for tax as per the provisions of section 115 of the Act or as per the provisions of Article 12 of India Singapore DTAA. It was contended that the assessee is not the owner of the software licenses and no access to modify the source codes in the software programming techniques etc. The said support, maintenance and training services were rendered to in relation to such software licenses sold either directly or indirectly through third parties in India and it is only permitted to distribute such software licenses in the Asia pacific region. The AO did not accept the submissions of assessee and held receipts derived by the assessee from sale of software licenses is taxable as Royalty under Article 12 of DTAA between India-Singapore @ 10%.
A similar issue came up before this Tribunal in assessee’s own case for A.Y. 2010-11 and the ld. AR placed the said order on record. On perusal of the said order, we note, the Co-ordinate Bench, by placing reliance in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT reported in (2021) 432 ITR 472 (SC) held the receipt derived by the assessee under the sale of software licenses and support services are not chargeable to tax in terms of section 9(1)(vi) of the Act r.w. Article 12 of DTAA. The ld. DR fairly conceded that the facts and circumstances in the year under consideration are similar to that of A.Y. 2010-11 in assessee’s own case. Therefore, we hold the receipt of Rs.130,20,15,830/- received under sale of software licenses and support services are not chargeable to tax u/s. 9(1)(vi) of the Act r.w. Article 12 DTAA between India and Singapore. Thus, the final assessment order dated 09-10-2019 passed by the AO/ACIT (IT), Circle-1, Pune is set aside and sole issue raised by the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
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