Sri B venkataswamy , Bangalore v. Income TAx Officer Ward-6(3)(3), Bangalore

ITA 1451/BANG/2017 | 2008-2009
Pronouncement Date: 29-11-2019 | Result: Allowed

Appeal Details

RSA Number 145121114 RSA 2017
Assessee PAN AADCA1658E
Bench Bangalore
Appeal Number ITA 1451/BANG/2017
Duration Of Justice 2 year(s) 5 month(s) 7 day(s)
Appellant Sri B venkataswamy , Bangalore
Respondent Income TAx Officer Ward-6(3)(3), Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 29-11-2019
Last Hearing Date 27-12-2017
First Hearing Date 25-11-2019
Assessment Year 2008-2009
Appeal Filed On 21-06-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N. V. VASUDEVAN VICE PRESIDENT AND SHRI D. S. SUNDER SINGH ACCOUNTANT MEMBER ITA NO S . 2897 & 2898 /BANG/2019 ASSESSMENT YEAR : 20 05 - 06 & 2006 - 07 M/S. ANSYS SOFTWARE (P) LTD. KABRA EXCELSIOR 3 RD FLOOR NO.6A 7 TH MAIN 1 ST BLOCK KORAMANGALA BENGALURU-560034. PAN : AADCA1658E VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(1) PRESENTLY CIRCLE-1(1)(1) BMTC BUILDING 80 FEET ROAD 6 TH BLOCK KORAMANGALA BENGALURU - 56 0 09 5. APPELLANT RESPONDENT ASSESSEE BY : SHRI. NARENDRA SHARMA ADVOCATE REVENUE BY : SHRI. L. RAJASEK H AR REDDY CIT (DR)(ITAT) BENGALURU DATE OF HEARING : 27 .11.2019 DATE OF PRONOUNCEMENT : 29 .11.2019 O R D E R PER N. V. VASUDEVAN VICE PRESIDENT THESE ARE APPEALS BY THE ASSESSEE AGAINST TWO ORDERS BOTH DATED 31.8.2017 OF CIT(A) -1 BENGALURU RELATING TO ASSESSMENT YEAR 2005-06 & 2006-07. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT AND SALE OF COMPUTER SOFTWARE AND TECHNICAL ENHANCEMENTS PROVISION OF TECHNICAL SUPPORT AND MARKETING SUPPORT SERVICES FOR COMPUTER SOFTWARE PRODUCTS. THE ASSESSEE MADE A PAYMENT FOR PURCHASE OF SOFTWARE LICENSES TO NON-RESIDENTS. 3. ACCORDING TO THE REVENUE THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE ON THE AFORESAID PAYMENT UNDER SECTION 195 OF THE INCOME TAX ACT 1961 (THE ACT) ACT AS THE PAYMENT WAS IN THE NATURE OF RIGHT TO USE SOFTWARE AND ITA NOS.2897 & 2798/BANG/2019 PAGE 2 OF 4 WAS IN THE NATURE OF ROYALTY WHICH WAS CHARGEABLE TO TAX IN THE HANDS OF THE NON-RESIDENT IN INDIA. SINCE THE ASSESSEE FAILED TO DO SO THE REVENUE AUTHORITIES WERE OF THE VIEW THAT THE SUM OF RS.12 54 85 108/- CLAIMED AS REVENUE EXPENDITURE IN AY 2005-06 AND RS.10 77 21 425/- CLAIMED AS REVENUE EXPENDITURE IN AY 2006-07 SHOULD BE DISALLOWED AS PER THE PROVISIONS OF SEC.40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX AT SOURCE. THE QUESTION BEFORE THE AO WAS AS TO WHETHER THE PAYMENT IN QUESTION CONSTITUTE ROYALTY WITHIN THE MEANING OF THE ACT AS WELL AS THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) WITH THE RESPECTIVE COUNTRIES OF WHICH THE PAYEES WERE TAX RESIDENTS. THE ASSESSEE TOOK THE STAND THAT THE PAYMENT IN QUESTION IS NOT IN THE NATURE OF ROYALTY BUT THE SAID PLEA WAS REJECTED BY THE REVENUE AUTHORITIES BY FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS LTD. 344 ITR 495 (KAR). ACCORDINGLY THE SUMS CLAIMED AS DEDUCTION WERE DISALLOWED U/S.40(A)(IA) OF THE ACT. 4. AGGRIEVED BY THE AFORESAID ORDERS OF THE AO ASSESSEE PREFERRED APPEALS BEFORE THE CIT(A). THE CIT(A) CONFIRMED THE ACTION OF THE AO IN BOTH THE AYS. 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS AGAINST THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS(SUPRA) AN APPEAL HAS BEEN FILED AND PENDING BEFORE THE HONBLE SUPREME COURT. ACCORDING TO HIM THOUGH THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL IN THE CASE DECIDED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS (SUPRA) SINCE THE SAME HAS NOT BECOME FINAL HE REITERATED SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A) AND POINTED OUT THAT IN ASSESSEES OWN CASE FOR AY 2003-04 REPORTED IN (2012) 23 ITA NOS.2897 & 2798/BANG/2019 PAGE 3 OF 4 TAXMANN.COM 344 (KAR.) ANSYS SOFTWARE (P) LTD. VS. CIT IN ITA NO.129/2007 JUDGMENT DATED 20.3.2012 THE HONBLE KARNATAKA HIGH COURT HELD THAT IDENTICAL PAYMENTS WERE LIABLE TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE CASE OF THE ASSESSEE IS IDENTICAL TO THE CASE DECIDED BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS (SUPRA) AND THEREFORE THE DECISION OF THE HONBLE KARNATAKA HIGH COURT HAS TO BE FOLLOWED. THE FACT THAT AN APPEAL AGAINST THE SAID DECISION OF THE HONBLE KARNATAKA HIGH COURT IS PENDING BEFORE THE HONBLE SUPREME COURT CANNOT BE THE BASIS NOT TO FOLLOW THE DECISION OF THE HONBLE KARNATAKA HIGH COURT. WE ALSO OBSERVE THAT THE GROUND OF APPEAL FILED BY THE ASSESSEE ARE GENERAL AND THERE IS NO REFERENCE TO ANY PARTICULAR PROVISIONS OF DTAA BASED ON WHICH IT IS CLAIMED THAT THE SUM IN QUESTION IS NOT TAXABLE IN INDIA. IN AY 2005-06 THE ASSESSEE HAS CHALLENGED THE VALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS ON THE GROUND THAT PROVISO TO SEC.147 OF THE ACT IS APPLICABLE AND THE REOPENING IS BASED PURELY ON A CHANGE OF OPINION. THESE GROUNDS WERE RIGHTLY REJECTED BY THE CIT(A) AS THERE WAS NO PROCEEDINGS U/S.143(3) FOR AY 2005-06 AND THEREFORE THE PROVISO TO SEC.147 OF THE ACT WILL NOT BE APPLICABLE. SIMILARLY THE REOPENING OF ASSESSMENT WAS MADE IN AY 2005-06 ON THE BASIS OF THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN ASSESSEES OWN CASE REFERRED TO IN THE EARLIER PARAGRAPH AND THEREFORE IT CANNOT BE SAID THAT THE REOPENING OF ASSESSMENT WAS BASED ON CHANGE OF OPINION. IN THE CIRCUMSTANCES WE FIND NO MERITS IN THESE APPEALS BY THE ASSESSEE. CONSEQUENTLY WE DISMISS THE SAME. ITA NOS.2897 & 2798/BANG/2019 PAGE 4 OF 4 7. IN THE RESULT THE APPEALS BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF NOVEMBER 2019. SD/ - SD/ - (D. S. SUNDER SINGH) ACCOUNTANT MEMBER (N. V. VASUDEVAN) VICE PRESIDENT BANGALORE. DATED: 29 TH NOVEMBER 2019. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.