Case Law Details
Avnet Asia Pte Ltd Vs ACIT (ITAT Delhi)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Delhi has delivered a significant verdict in the case of Avnet Asia Pte Ltd Vs ACIT. The central theme revolves around the nature of receipts generated from the reselling of hardware and software packages.
Analysis: The Revenue appealed against four separate orders concerning Avnet Asia for the assessment years 2013-14 to 2017-18. The crux of the contention was whether the amounts received from the sale of software and hardware should be categorized as ‘Royalty’ under the India-Singapore Double Taxation Avoidance Agreement (DTAA). The Assessing Officer had initially posited that the sale of software amounted to royalty income. However, after deliberations, the Tribunal noted that Avnet Asia was merely a distributor and didn’t transfer any rights related to copyrights. This perspective is reinforced by the Supreme Court’s decision in the Engineering Analysis Centre of Excellence Pvt. Ltd. case. Moreover, past rulings concerning the assessee for similar transactions were also taken into consideration.
Conclusion: The ITAT Delhi upheld the decision of the Commissioner (Appeals) that the receipts from the sale of hardware and software packages by Avnet Asia do not fall under the ‘Royalty’ category as per the India-Singapore DTAA. Furthermore, the Tribunal affirmed the deletion of additions made on the account of royalty income and Fees for Technical Services (FTS). This landmark decision provides clarity on the categorization of receipts from the sale of software and hardware under the India-Singapore DTAA.
FULL TEXT OF THE ORDER OF ITAT DELHI
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