Director of Income Tax Intn’l Vs Western Union Financial Services Inc. (Delhi High Court)
Delhi High Court held that software, being an intangible property, do not in themselves constitute a Permanent Establishment. Hence, Laision Office of assessee didn’t constitute a PE in India.
Facts- The respondent-assessee is stated to be a non-resident company registered in USA and has been engaged in the business of rendering Money Transfer Services since 1890. The essential business model adopted by it has been recorded by the Tribunal to be as follows. A person residing in USA desirous of transferring money to an individual or an entity in India, approaches a branch or an outlet of the assessee and transfers the money in USDs, together with the charges prescribed by the respondent-assessee. Upon receipt of that money, the respondent-assessee generates a unique number which is referred to as the Money Transfer Control Number. It is this MTCN which is communicated by the remitter to the person or entity situate in India.
For AY 2001-02, the respondent-assessee is stated to have paid a total commission of INR 12,16,94,036/- to its agents situate in India being equivalent to USD 2,663,472/-. On 13 January 2003, the Income Tax Department is stated to have issued a notice to the respondent-assessee calling upon it to file its Income Tax Returns. The respondent-assessee initially questioned the assumption of jurisdiction, as would be evident from its letter of 03 October 2003. However, notwithstanding that objection being raised, it ultimately furnished a return of income on 08 December 2003 declaring its income as ‘nil‘.
