Case Law Details
Ms. Sandvik Tooling Sverige AB Vs DCIT (ITAT Pune)
The assessee is non-resident and was providing software services to Sandvik Asia Ltd. and also was providing IT support services to the said concern. The question which arises in the present appeal is whether the consideration received by assessee from the payer i.e. Sandvik Asia Pvt. Ltd. amounts to ‘royalty’ or ‘fees for included services’ or ‘fees for technical services under the realm of section 9(1 )(vi) of the Act or under the provisions of DTAA between India and Sweden. The Assessing Officer has relied on the order in the case of Sandvik Asia Pvt. Ltd., which is the payer, wherein it was held that the said payment by the said concern to the assessee before us was in the nature of ‘royalty’. The DRP in the sa d case allowed the claim of said concern i.e. payer, against which the Revenue filed an appeal before the Tribunal. The Tribunal in ITA No.533/PUN/201 6, relating to assessment year 2011-12 in a consolidated order with lead case in ITA No.491/PUN/2016, relating to assessment year 2011-12 vide order dated 08.03.2019 held that the payment made by Sandvik Asia Pvt. Ltd. to its associated enterprise Sandvik Tooling Sverige AB for purchase of copyrighted article was not ‘royalty’.
The assessee, non-resident has received consideration against provision of software services from Sandvik Asia Pvt. Ltd. Once the Tribunal has held the same as not royalty either under the Income Tax Act or under DTAA provisions in the hands of payer i.e. Sandvik Asia Pvt. Ltd., consequently the said receipt by the assessee cannot be termed as ‘royalty’ under both the provisions of the Act i.e. section 9(1)(vi) / 9(1)(vii) or under Article 12 of the DTAA between India and Sweden. Accordingly, we hold that consideration received by assessee on providing software services is not taxable in its hands.
FULL TEXT OF THE ITAT JUDGEMENT
This bunch of three appeals filed by assessee are against separate orders of DCIT(International Taxation), Circle-2, Pune, all dated 29.11.2016 relating to assessment years 2010-11, 2011-12 and 2013-14 passed under section 144C(13) r.w.s. 143(3) r.w.s. 147 / 144C(13) r.w.s. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
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