Case Law Details
Vanderlande Industries Private Limited Vs ACIT (ITAT Pune)
A cursory glance at the definition of the term `Royalties’ makes it patent that the hitherto content of para 4 of Article 12 comprising of copyright royalty cases only became subject matter of sub-para (a) of the amended para 4 of Article 12. In addition, para 4(b) also came to be added, which deals exclusively with industrial royalty cases, thereby enveloping, consideration for the use of or the right to use industrial, commercial or scientific equipment, subject to certain exceptions, which are not applicable to the case under consideration. Thus, it is manifest that India and Netherlands have agreed to bring industrial royalty, of the nature as obtaining in the present appeal, within the scope of Article 12 of the DTAA w.e.f. 30-08-1999. The assessment year under consideration is 2012-13. As such, it would only be the amended definition of the term `Royalties’ in the DTAA, which will prevail. Since para 4(b) of Article 12 of the DTAA specifically covers consideration for use of any industrial or commercial equipment, the payment made by the assessee for use of the overall ICT Infrastructure set up by its Netherlands entity would fall within the term `Royalties’ under the DTAA. As the case is admittedly covered u/s.9(1)(vi) of the Act and also found to be covered by Article 12 of the amended DTAA, we hold that the amount paid by the assessee is chargeable to tax in the hands of the Netherlands entity. Failure of the assessee to deduct tax at source from payment made to the Netherlands entity clearly magnetizes section 40(a)(i) of the Act. We, therefore, accord our imprimatur to the view canvassed by the authorities in making and sustaining the disallowance.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee is directed against the order passed by the ld. CIT(A)-5, Pune on 25-09-2017 in relation to the assessment year 2012-13.
2. The only issue raised herein is against the confirmation of disallowance made by the Assessing Officer (AO) u/s.40(a)(i) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).
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