Ixia Technologies International Ltd. Vs ACIT(IT) (ITAT Kolkata)
Since assessee`s case is covered by beneficial provisions of the India-Ireland DTAA, hence the retrospective amendment made in the provisions of section 9(1)(vi) of the Act, which provides that royalty would include consideration for transfer of all or any rights in respect of any right property, (including granting of software) etc, will not override the provisions of the India-Ireland DTAA. We note that the retrospective amendment made in the Act cannot override, the provision of Treaty, finds support from the principles laid down in the case of Director of Income vs Nokia Networks OY reported in 358 ITR 259 (Delhi HC) and CIT Vs Siemens Aktiongesellschaft reported in 310 ITR 320.The amount received by the assessee towards sale of software is on account of sale of ‘copyrighted article’ and not on transfer of any ‘copyright right’. As we have noted above that the right to use any copyright in the software was never transferred by the company in favor of the Indian customers. Hence, the said sale proceeds cannot be characterized as ‘Royalty’ as per Article 12 of the India-Ireland DTAA.
FULL TEXT OF THE ITAT JUDGEMENT
The captioned appeal filed by the assessee, pertaining to assessment year 2013-14, is directed against a fair assessment order passed by the assessing officer under section 143(3) / 153(1) / 144C(13) of the Income Tax Act, 1961 (in short the Act) dated 10.12.2016, which incorporates the direction given by the Hon`ble Dispute Resolution Panel u/s 144C(5) of the Act, 1961, dated 28.11.2016.
2. The grievance raised by the assessee are as follows:
