NORTON LIFE LOCK INC, Pune v. ASSTT COMMISSIONER OF INCOME TAX , Pune

ITA 506/PUN/2020 | 2017-2018
Pronouncement Date: 05-02-2021 | Result: Allowed

Appeal Details

RSA Number 50624514 RSA 2020
Assessee PAN AAQCS1868P
Bench Pune
Appeal Number ITA 506/PUN/2020
Duration Of Justice 5 month(s) 17 day(s)
Appellant NORTON LIFE LOCK INC, Pune
Respondent ASSTT COMMISSIONER OF INCOME TAX , Pune
Appeal Type Income Tax Appeal
Pronouncement Date 05-02-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 05-02-2021
Last Hearing Date 01-02-2021
First Hearing Date 01-02-2021
Assessment Year 2017-2018
Appeal Filed On 19-08-2020
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH PUNE BEFORE SHRI R.S. SYAL VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI J UDICIAL MEMBER . / ITA NO S.505 & 506 /PUN/20 20 / ASSESSMENT YEAR S : 20 1 2 - 13 & 2017 - 18 NORTONLIFELOCK INC. (EARLIER KNOWN AS SYMANTEC CORPORATION) C/O S R B C & ASSOCIATES LLP C - 401 PANCHSHIL TECH PARK NEAR DON BOSCO SCHOOL YERWADA PUNE - 411006 PAN : AAQCS1868P ...... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE 2 PUNE / RESPONDENT ASSESSEE BY : SHRI NAGESWAR RAO REVENUE BY : S MT. AMRITA MISRA / DATE OF HEARING : 0 1 - 02 - 2021 / DATE OF PRONOUNCEMENT : 05 - 0 2 - 2021 / ORDER PER S.S. VISWANETHRA RAVI JM : BOTH THE APPEAL S BY THE ASSESSEE FILED AGAINST THE COMMON FINAL ASSESSMENT ORDER DATED 17 - 06 - 2020 PASSED BY THE ASSESSING OFFICER (AO) U/S. 143(3) R.W.S. 147 R.W.S. 144C(1) OF THE ACT FOR ASSESSMENT YEAR S 2012 - 13 AND 2017 - 18. 2 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 2. WE FIND THAT THE ISSUES RAISED IN BOTH APPEALS ARE SIMILAR BASED ON SAME IDENTICAL FACTS. UPON HEARING BOTH THE PARTIES WE PROCEED TO HEAR BOTH THE APPEALS TOGETHER AND TO PASS A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST WE SHALL TAKE UP THE APPEAL IN ITA NO. 505/PUN/2020 FOR A.Y. 2012 - 13. ITA NO. 505/PUN/2020 A.Y. 2012 - 13 4 . THE ASSESSEE RAISED GROUND NO. 1 (A) CHALLENGING THE ACTION OF AO/TPO FOR TREATING THE CONSIDERATION RECEIVED FOR SALE OF SOFTWARE PRODUCTS AS ROYALTY AND TA XABLE IN THE HANDS OF ASSESSEE IN INDIA. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE LAW OF USA AND IS A NON - RESIDENT FROM THE INDIAN INCOME TAX PERSPECTIVES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE EARNED INCOME FROM SALE OF SOFTWARE LICENSES TO THIRD PARTY CUSTOMERS IN INDIA. THE ASSESSEE FILED RETURN OF INCOME ON 27 - 06 - 2019 DECLARING A TOTAL INCOME AT NIL IN RESPONSE TO THE NOTICE U/S. 148 OF THE ACT. WE NOTE THAT THE ASSESSEE BEING A RESIDENT OF USA ADOPTED THE BENEFICIAL PROVISIONS OF IND IA - USA TAX TREATY. IN 148 PROCEEDINGS THE AO REQUESTED THE ASSESSEE TO FURNISH DETAILS OF SOFTWARE PRODUCTS SOLD BY THE ASSESSEE TO INDIAN CUSTOMERS AND ASKED TO SUBMIT WHY THE RECEIPTS FROM SALE OF SOFTWARE LICENSES IN INDIA SHOULD NOT BE TAXABLE AS ROY ALTY. IT WAS EXPLAINED THAT THE ASSESSEE HAS RECEIVED AMOUNTS TO AN EX TENT OF RS.19 69 76 597/ - FROM SALE OF SOFTWARE LICENSES TO ITS END USER CUSTOMERS IN INDIA EITHER DIRECTLY OR INDIRECTLY THROUGH AUTHORIZED DISTRIBUTORS 3 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 RESELLER OR SERVICE PROVIDER. FURTHER IT WAS STATED NO CUSTOMIZATION OF ASSESSEES SOFTWARE HAS BEEN DONE AT THE CUSTOMERS END EXCEPT FOR INTEGRATING THE SOFTWARE WITH EXISTING SYSTEM. EVERY END USER OF ASSESSEE SOFTWARE HAS TO ACCEPT AND ABIDE BY THE END USER LICENSE AGREEMENT. THE END USER LICENSE AGREEMENTS SPECIFICALLY PROHIBIT THE END USER TO DO MODIFY COPY SUBLICENSE RENT LEASE OR TRANSFER ANY PORTION OF THE SOFTWARE. FURTHER IT WAS CONTENDED THE SAID LICENSE AGREEMENTS PROHIBIT THE END USER TO DO REVERSE ENGINEER DEC OMPILE DISASSEMBLE MODIFY TRANSLATE MAKE ANY ATTEMPT TO DISCOVER THE SOURCE CODE OF THE SOFTWARE TO CREATE DERIVATIVE WORK OF THE LICENSED SOFTWARE EXCEPT PERMITTED BY THE APPLICABLE LAWS. 6. APART FROM THE ABOVE IT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF AO IN 148 PROCEEDINGS THAT THE ISSUE OF CHARGEABILITY OF TAX IN RESPECT OF CONSIDERATION RECEI VED FROM SALE OF SOFTWARE LICENSES IS HELD TO BE NOT CHARGEABLE AS ROYALTY BY THE PUNE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2013 - 14 IN ITA NO. 387/PUN/2017 BUT HOWEVER THE AO IN PURSUANCE OF DIRECTIONS OF DRP HELD THE SAID CONSIDERATION FROM SALE OF SOFTWARE LICENSES AS TAXABLE AS ROYALTY IN INDIA. 7. BEFORE US THE LD. AR SHRI NAGESWAR RAO SUBMITS THAT THE ISSUE RAISED IN GROUND NO. 1 IS SIMILAR TO THE GROUND RAISED IN ITA NO. 2452/PUN/2017 IN ASSESSEES OWN CASE FOR A.Y. 2014 - 15. THE LD. AR IN SUPPORT OF HIS CONTENTIONS DREW OUR ATTENTION TO THE GROUNDS RAISED IN FORM NO. 36 AND THE FINDING RENDERED BY THIS TRIBUNAL VIDE ITS ORDER DAT ED 11 - 01 - 2021 IS SQUARELY APPLICABLE TO THE ISSUE RAISED IN GROUND NO. 1. 4 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 8. THE LD. DR SMT. AMRITA MISRA FAIRLY CONCEDED THAT THE ISSUE RAISED BEFORE THIS TRIBUNAL IS SIMILAR AND BASED ON IDENTICAL FACTS AS THAT OF IN ASSESSEES OWN CASE FOR A.Y. 2014 - 15. 9. HAVING HEARD BOTH THE PARTIES AND ON PERUSAL OF ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2014 - 15 IN ITA NO. 2452/PUN/2017 ORDER DATED 11 - 01 - 2021 WE NOTE THAT THE ASSESSEE CLAIMED REVENUE FROM SALE OF SOFTWARE LICENSES IN INDIA AS NOT C HARGEABLE TO TAX IN THE ABSENCE OF IT HAVING ANY PERMANENT ESTABLISHMENT IN INDIA. FURTHER IT WAS EXPLAINED THAT THE SOFTWARE LICENSES SOLD BY IT WERE MEANT FOR INTERNAL BUSINESS PURPOSE OF THE USERS AND NOT FOR COMMERCIAL EXPLOITATION AND THE ASSESSEE D ID NOT TRANSFER ANY RIGHT IN RESPECT OF THE COPYRIGHT IN THE SAID SOFTWARE AND ONLY RIGHT TO USE THE SOFTWARE WAS TRANSFERRED ALSO REFERRED THE DECISION OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2013 - 14 WHICH HELD THE SALE OF COMPUTER SOFTWARE IS SALE OF COPYRIGHT ED ARTICLE AND NOT TRANSFER OF COPYRIGHT IN THE SOFTWARE AND HELD THE SAME AS BUSINESS INCOME AND NOT ROYALTY IN RESPECT OF SALE OF SOFTWARE LICENSES TO END USERS. 10. WE NOTE THAT THE LD. DR THEREIN HIGHLIGHTED THE ASSESSEES ACCEPT ANCE OF SALE OF SOFTWARE LICENSES TO DISTRIBUTORS AND THE RESELLERS. THE TRIBUNAL CONSIDERED THE SAME AND REJECTED THE CONTENTION OF REVENUE THAT THE RESELLERS HAVE BEEN GIVEN A LICENSE BY THE ASSESSEE FOR CONSIDERATION TO COMMERCIALLY EXPLOIT SUCH LICENS E AT THEIR END. THE RELEVANT PORTION HAS BEEN DISCUSSED IN PARAS 11 TO 13. 11. THIS TRIBUNAL IN A.Y. 2014 - 15 ALSO DISCUSSED THE TRANSACTIONS BETWEEN THE ASSESSEE AND ITS DISTRIBUTORS WHICH HAS ALSO BEEN CLAIMED BY 5 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 THE LD. DR TO BE IN THE NATURE OF ROY ALTY. ON AN EXAMINATION OF DISTRIBUTORS AGREEMENT HELD THE DISTRIBUTORS EXCEPT FOR PASSING OVER THE ASSESSEE PRODUCTS AS ACQUIRED BY THEM FROM THE ASSESSEE DO NOT ACQUIRE ANY RIGHT OR TITLE IN THE INTELLECTUAL PROPERTY USED IN THE SOFTWARE WHICH ALWAYS REMAINS WITH THE ASSESSEE AND AT NO STAGE THE RIGHT TO USE THE COPYRIGHT IN THE SOFTWARE IS LICENSED EITHER TO THE DISTRIBUTOR OR THE RESELLER. THEREBY THIS TRIBUNAL HELD THE INCOME EARNED BY THE ASSESSEE FROM SALE OF SOFTWARE EITHER DIRECTLY TO THE CUSTOMERS IN INDIA OR THROUGH DISTRIBUTORS OR RESELLERS CONSTITUTES ITS BUSINESS INCOME AND NOT THE ROYALTY INCOME AND AS SUCH BUSINESS INCOME IS NOT TAXABLE IN INDIA AS THE ASSESSEE DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. THE RELEVANT PORTION OF THE ORDER IS REPRODUCED HERE - IN - BELOW FOR READY REFERENCE : 11. ARTICLE 12(3) OF THE DTAA BETWEEN INDIA AND THE USA DEFINES THE TERM ROYALTIES TO MEAN: (A) PAYMENTS OF ANY KIND RE CEIVED AS A CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE ANY COPYRIGHT OF A LITERARY ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS OR WORK ON FILM TAPE OR OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TELEVISION BROA DCASTING ANY PATENT TRADEMARK DESIGN OR MODEL PLAN SECRET FORMULA OR PROCESS OR FOR INFORMATION CONCERNING INDUSTRIAL COMMERCIAL OR SCIENTIFIC EXPERIENCE INCLUDING GAINS DERIVED FROM THE ALIENATION OF ANY SUCH RIGHT OR PROPERTY WHICH ARE CONTINGENT ON THE PRODUCTIVITY USE OR DISPOSITION THEREOF; AND (B) PAYMENT OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE THE INDUSTRIAL COMMERCIAL OR SCIENTIFIC EQUIPMENT OTHER THAN PAYMENTS DERIVED BY AN ENTERPRISE DESCRIBED IN P ARAGRAPH 1 OF ARTICLE 8 (SHIPPING AND AIR TRANSPORT) FROM ACTIVITIES DESCRIBED IN PARAGRAPH 2(C) OR 3 OR ARTICLE 8. 12. ON GOING THROUGH THE LANGUAGE OF ARTICLE 12 DEFINING THE TERM `ROYALTIES IT IS PALPABLE THAT THE SAME MEANS A CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE ANY COPYRIGHT OF A LITERARY WORK ETC. SELLING OR SUB - LICENSING OR TRANSFERRING COPYRIGHT MEANS ASSIGNING A RIGHT TO COPY THE `WORK FOR COMMERCIAL EXPLOITATION AND NOT SIMPLY USING THE WORK FOR SELF CONSUMPTION. ASSIGNING A RI GHT TO COPY FOR COMMERCIAL EXPLOITATION IS DIFFERENT FROM THE RIGHT TO USE THE COPY OF THE WORK FOR SELF PURPOSE. EX CONSEQUENTI GIVING A RIGHT TO COPY IS A SALIENT FEATURE OF THE TERM `ROYALTIES UNDER THE DTAA WHICH MEANS THAT THE LICENSEE MUST ACQUIRE A RIGHT TO COPY THE WORK OR THE INTELLECTUAL PROPERTY SO ACQUIRED ON THE GOODS SOLD OR SERVICES RENDERED BY HIM DURING THE COURSE OF HIS BUSINESS. BUT WHERE THE INTELLECTUAL PROPERTY OR WORK IS SIMPLY USED BY THE LICENSEE FOR HIS INTERNAL USE AND NOT FOR EXPLOITING IT COMMERCIALLY FOR EARNING INCOME DIRECTLY THE CONSIDERATION PAID BY HIM CEASES TO BE A ROYALTY INCOME IN THE HANDS OF THE LICENSOR. SIMPLY ALLOWING ONE - TO - ONE USER OF THE INTELLECTUAL PROPERTY OR A PRODUCT USING INTELLECTUAL PROPERTY IS NOT T HE SAME THING AS THE OTHER PERSON COMMERCIALLY EXPLOITING SUCH A RIGHT IN HIS BUSINESS FOR SELLING THE WORK AS IT IS OR SELLING PRODUCTS OR SERVICES USING THE INTELLECTUAL PROPERTY. IT IS ONLY WHEN THE LICENSEE 6 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 GETS A RIGHT TO COPY THE INTELLECTUAL PROPERT Y EITHER ON THE GOODS/SERVICES SOLD BY HIM TO CUSTOMERS OR TO SUB - LICENSE THE SAME TO THIRD PERSONS FOR COMMERCIAL EXPLOITATION THAT THE CONSIDERATION AMOUNTS TO ROYALTY IN THE HANDS OF THE LICENSOR. 13. REVERTING TO THE FACTUAL PANORAMA IT IS SEEN THAT RESELLERS HAVE NOT BEEN CONFERRED WITH ANY RIGHT TO COPY THE SOFTWARE FOR FURTHER SALE BY THEM. THEY JUST PURCHASE THE SYMANTEC PRODUCTS AS SUCH FOR RESALE TO THE END CUSTOMERS IN INDIA. EACH ITEM OF SYMANTEC PRODUCT IS TO BE SEPARATELY PURCHASED BY T HEM FOR RESALE. THE POSITION WOULD HAVE BEEN OTHERWISE IF THE ASSESSEE INSTEAD OF SELLING SYMANTEC PRODUCTS TO THE RESELLERS WOULD HAVE LICENSED THEM THE RIGHT TO COPY IT FOR THEIR COMMERCIAL EXPLOITATION WHICH WOULD HAVE MERITED CONSIDERATION OF THE M ATTER FROM A DIFFERENT PERSPECTIVE. IN OUR CONSIDERED OPINION THE POSITION QUA THE SALE TO RESELLERS IS NO DIFFERENT FROM THE DIRECT SALES MADE BY THE ASSESSEE TO ITS END CUSTOMERS IN INDIA. THUS THE ESSENTIAL INGREDIENT OF THE ROYALTY BEING GRANTING OF USE OR RIGHT TO USE THE COPYRIGHT IS LACKING INSOFAR AS SALE TO RESELLERS IS CONCERNED. 14. NOW WE MOVE FORWARD TO EXAMINE THE NATURE OF TRANSACTIONS BETWEEN THE ASSESSEE AND ITS DISTRIBUTORS WHICH HAS ALSO BEEN CLAIMED BY THE LD. DR TO BE IN THE NATURE OF ROYALTY. FOR THIS PURPOSE WE HAVE PERUSED THE DISTRIBUTORS AGREEMENT WHOSE COPY HAS BEEN PLACED AT PAGE 71 ONWARDS OF THE PAPER BOOK. PARA 1(B) OF THE AGREEMENT STATES THAT THE: `DISTRIBUTORS APPOINTMENT IS LIMITED TO DISTRIBUTION OF SYMANTEC PRODUC TS TO RESELLERS AND SPECIFICALLY EXCLUDES RESALE OF THE SYMANTEC PRODUCTS TO END - USERS. SYMANTEC GRANTS THE DISTRIBUTORS THE NON - EXCLUSIVE NON - TRANSFERABLE RIGHT DURING THE TERM TO ACQUIRE AND DISTRIBUTE SYMANTEC PRODUCTS TO RESELLERS IN THE TERRITORY TO ALLOW SUCH RESELLERS TO DISTRIBUTE SYMANTEC PRODUCTS TO END - USERS. PARA 1(C) OF THE AGREEMENT FURTHER STATES THAT THE: DISTRIBUTORS APPOINTMENT ONLY GRANTS TO DISTRIBUTOR A LICENSE TO TRANSFER SUCH SYMANTEC PRODUCTS TO DISTRIBUTORS CUSTOMERS AND DOES NOT TRANSFER ANY RIGHT TITLE OR INTEREST IN ANY SUCH SOFTWARE TO DISTRIBUTOR. CLAUSE 2 OF THE AGREEMENT ENUMERATES OBLIGATIONS OF DISTRIBUTOR. PARA 2(G) STATES THAT: `DISTRIBUTOR WILL DISTRIBUTE SYMANTEC PRODUCT TO RESELLERS ONLY UNDER THE TERMS OF THE END - USER LICENSE AGREEMENT. PARA 5 OF THE AGREEMENT DEALS WITH `PRICES PER COPY LICENSE FEES AND PAYMENT. IT STATES THAT SYMANTEC WILL INVOICE DISTRIBUTORS ON THE BASIS OF THE SYMANTEC BUY PRICE LIST FOR THE SYMANTEC PRODUCTS. PARA 5(G) DEALS WITH `APP LIANCES RETURN OR EXCHANGE. IT STATES THAT THE: `DISTRIBUTOR MAY EXCHANGE TO SYMANTEC A PORTION OF THE APPLIANCE(S) WHICH WERE SHIPPED TO DISTRIBUTOR HEREUNDER DURING ANY CALENDAR QUARTER DURING THE TERM OF THIS AGREEMENT TO THE EXTENT THAT DISTRIBUTOR HA S MORE THAN FOUR (4) WEEKS OF INVENTORY OF SUCH APPLIANCE(S). CLAUSE 8 OF THE AGREEMENT WHICH IS RELEVANT FOR OUR PURPOSE DEALS WITH `TRADEMARKS TRADE NAMES AND COPYRIGHTS. PARA 8(A) STATES THAT: `DURING THE TERM OF THIS AGREEMENT DISTRIBUTOR IS AUTH ORIZED BY SYMANTEC TO USE THE TRADEMARK SYMANTEC THE SYMANTEC LOGOS FOR SYMANTEC PRODUCTS AND THE DESIGNATION AUTHORIZED SYMANTEC DISTRIBUTOR IN CONNECTION WITH DISTRIBUTORS ADVERTISEMENT PROMOTION AND DISTRIBUTION OF SYMANTEC PRODUCTS. DISTRIBUTOR S USE OF SUCH TRADEMARK LOGOS AND DESIGNATION WILL BE IN ACCORDANCE WITH SYMANTECS POLICIES IN EFFECT FROM TIME TO TIME. PARA 8(B) STATES THAT: `DISTRIBUTOR AGREES NOT TO ALTER ERASE DEFACE OR OVERPRINT ANY NOTICE ON ANYTHING PROVIDED BY SYMANTEC. CL AUSE (C) OF PARA 8 HAS CAPTION - `NO DISTRIBUTOR RIGHTS IN TRADEMARKS OR COPYRIGHTS. CLAUSE (E) OR PARA 8 STATES THAT: `DISTRIBUTOR WILL NOT ALTER REVERSE ENGINEER DECOMPILE DISASSEMBLE RENT ELECTRONICALLY DISTRIBUTE OR MARKET BY INTERACTIVE CABLE R EMOTE PROCESSING SERVICES SYMANTEC PRODUCTS. 15. ON GOING THROUGH THE ABOVE CLAUSES OF THE DISTRIBUTOR AGREEMENT IT BECOMES IMMENSELY CLEAR THAT THE DISTRIBUTORS HAVE BEEN APPOINTED BY THE ASSESSEE IN INDIA TO SERVE A LINK WITH RESELLERS. THE DISTRIBUT ORS SIMPLY ACQUIRE THE SYMANTEC PRODUCTS WHICH THEY SPECIFICALLY SELL TO THE RESELLERS. TRADEMARKS TRADE NAME AND COPYRIGHTS IN SYMANTEC PRODUCTS REMAIN WITH THE ASSESSEE AND THE DISTRIBUTOR CANNOT MAKE ANY DEVIATION IN THE SYMANTEC PRODUCTS IN ANY MANNER . THUS IT IS OVERT THAT THE ASSESSEE HAS APPOINTED DISTRIBUTORS IN INDIA TO FACILITATE SALE OF SYMANTEC PRODUCTS. THE SYMANTEC PRODUCTS SOLD AS SUCH TO THE DISTRIBUTORS DO NOT CONFER ANY RIGHT ON THEM TO COPY THE SOFTWARE LICENSE. THE DISTRIBUTORS EXCEPT FOR PASSING OVER THE SYMANTEC PRODUCTS AS ACQUIRED BY THEM 7 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 FROM THE ASSESSEE COMPANY DO NOT ACQUIRE ANY RIGHT OR TITLE IN THE INTELLECTUAL PROPERTY USED IN THE SOFTWARE WHICH ALWAYS REMAINS WITH THE ASSESSEE. 16. THE ABOVE DISCUSSION BOILS DOWN THAT BE IT A CASE OF SALE TO THE RESELLERS OR THE DISTRIBUTORS THE ASSESSEE ONLY TRANSFERS SYMANTEC PRODUCTS TO THEM. IT IS NOT AS IF THE DISTRIBUTORS OR THE RESELLERS ACQUIRE ANY RIGHT FROM THE ASSESSEE TO COPY THE SOFTWARE AND THEN EXPLOIT IT COMMERCIALLY. THE IR TRANSACTIONS ARE CONFINED TO PURCHASING SPECIFIC SYMANTEC PRODUCTS FROM THE ASSESSEE AND THEN EVENTUALLY SELLING THE SAME TO THE END CUSTOMERS IN INDIA. THERE IS NO QUALITATIVE DIFFERENCE BETWEEN THE DIRECT SALES MADE BY THE ASSESSEE TO ITS CUSTOMERS IN INDIA WHICH HAVE ALREADY PASSED THE SCRUTINY BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEAR AND THE SALES MADE BY THE ASSESSEE THROUGH THE DISTRIBUTORS OR THE RESELLERS. IN BOTH THE SETS OF CIRCUMSTANCES IT IS ONLY ONE - TO - ONE SALE OF THE SYMANT EC PRODUCTS BY THE ASSESSEE AND AT NO STAGE THE RIGHT TO USE THE COPYRIGHT IN THE SOFTWARE IS LICENSED EITHER TO THE DISTRIBUTOR OR THE RESELLER. THUS THE DECISION TAKEN BY THE TRIBUNAL IN THE CONTEXT OF DIRECT SALES MADE BY THE ASSESSEE TO END CUSTOMERS IN INDIA APPLIES WITH FULL FORCE INSOFAR AS THE SALES THROUGH DISTRIBUTORS AND RESELLERS ARE CONCERNED. THAT BEING THE POSITION WE HOLD THAT THE INCOME EARNED BY THE ASSESSEE FROM SALE OF SOFTWARE EITHER DIRECTLY TO THE CUSTOMERS IN INDIA OR THROUGH DIST RIBUTORS OR RESELLERS CONSTITUTES ITS BUSINESS INCOME AND NOT THE ROYALTY INCOME. AS ADMITTEDLY THE ASSESSEE DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA SUCH INCOME WILL NOT MAGNETIZE INDIAN TAXATION. WE THEREFORE OVERTURN THE IMPUGNED ORDER. 1 2. IN THE LIGHT OF THE ABOVE WE HOLD THE SALE CONSIDERATION RECEI VED FOR SALE OF SOFTWARE PRODUCTS FROM THE END USERS DISTRIBUTORS OR RESELLERS IS BUSINESS INCOME AND NOT ROYALTY INCOME AND AS SUCH IT IS NOT TAXABLE IN INDIA. THUS THE FINAL ASSESSMENT ORDER PASSED BY THE AO IS SET ASIDE AND GROUND NO. 1 (A) RAISED BY THE ASSESSEE IS ALLOWED. 13. GROUND NO. 1(B) RAISED BY THE ASSESSEE REQUIRES NO ADJUDICATION IN VIEW OF OUR DECISION IN GROUND NO. 1 (A) HERE - IN - ABOVE. THUS GROUND NO. 1(B) RAISED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 14. IN THE RESULT THE APPEAL OF ASSESSEE IN ITA NO. 505/PUN/2020 IS ALLOWED. ITA NO. 506/PUN/2020 A.Y. 2017 - 18 15. BOTH SIDES ARE UNANIMOUS IN STATING THAT THE ISSUES RAISED IN THE APPEAL AND THE FACTS IN ITA N O. 506/PUN/2020 ARE IDENTICAL TO ITA NO. 8 ITA NO S.505 & 506/PUN/2020 A.YS. 2012 - 13 & 2017 - 18 505/PUN/2020. SINCE THE FACTS IN ITA NO. 506/PUN/2020 ARE SIMILAR TO ITA NO. 505/PUN/2020 THE FINDINGS GIVEN BY US WHILE DECIDING THE APPEAL OF ASSESSEE IN ITA NO. 505/PUN/2020 WOULD MUTATIS MUTANDIS APPLY TO ITA NO. 506/PUN/2020 AS WELL. THE APPEAL OF ASSESSEE IS ALLOWED ACCORDINGLY. 16. TO SUM UP BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY 202 1 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 05 TH FEBRUARY 202 1 . RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE DISPUTE RESOLUTION PANEL - 3 (WZ) MUMBAI 4. THE CIT (IT & TP) PUNE 5. / DR ITAT C BENCH PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER / PRIVATE SECRETARY / ITAT PUNE