Income Tax Appellate Tribunal Bangalore Anz Operations And Technology Private ... vs Ddit, Bangalore on 23 March, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH, BENGALURU BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER and SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER Sl. ITA No. & Appellant Respondent No Asst. year 1 193/Bang/2010 M/s.ANZ Operations & Deputy Commissioner of (200809) Technology Pvt. Ltd. Incometax, Circle 1(1), Embassy Gold Links Bengaluru. Business Park, Off Intermediate Ring Road, Bangalore560071. PAN:AABCA 9002G 2 IT(IT)A No. Deputy Director of Income 1508/Bang/2012 do tax, International Taxation, (200809) Circle 1(1), Bengaluru. 3 156/Bang/2010 M/s.Jubilant Biosys Ltd. Incometax Officer (200708) Plot 1A, Sector16A, (International Taxation), Noida201301(UP) Ward 1(2), PAN: AAACJ 9445 P Bengaluru. 4 610/Bang/2010 do do (200708) 5 157/Bang/2010 do do (200809) 6 611/Bang/2010 do do (200809) Assessee by : Shri Kaushik Mukherjee, CA. Revenue by : Dr. P.V.Pradeep Kumar, Addl.CIT Date of hearing : 08/01/2018 Date of pronouncement : 23/03/2018 O R D E R Per BENCH : These are appeals filed by M/s.ANZ Operations & Technology Pvt. Ltd. and M/s.Jubilant Biosys Ltd., directed against different orders of the learned Commissioner of Incometax (Appeals)IV, Bengaluru [CIT(A)], for the assessment years 200708 and 200809. Sine common issue is involved in all these appeals, we proceed to dispose of the same by way of this consolidated order. For the sake of clarity and convenience, facts ITA Nos.193, 156....611/Bang/2010 Page 2 of 20 relevant in ITA No.193/Bang/2010 for assessment year 200809 are stated herein. 2. Briefly facts of the case are that the assessee is a company duly incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of providing IT and IT enabled Services. During the financial year 200708, the assessee made the following remittances to its parent company ANZ Banking Group Ltd. Australia towards purchase of software. Sl.No. Date of remittance Amount (in AUD) Àmount (in INR) 1 10/10/2007 504,316 1,78,07,425 2 10/10/2007 616,351 2,17,62,806 It was contended before the TDS Officer that remittance was in the nature of reimbursement of cost for providing software license. The parent company viz., M/s.ANZ Banking group, Melbourne had entered into agreement with Microsoft Pte. Ltd., Singapore for purchase of license. It was further stated that the assessee also utilized software license and cost pertaining to appellant had been charged by the parent company and the same was reimbursed by the appellant. It was further contended that payments were not subject to tax in India as the same were on cost to cost basis and no income element is embedded in it. Without prejudice to this, it was contended that the payment was towards purchase of offshelf software which is not chargeable to tax in the hands of software vendor. It was further contended that payment cannot be characterized as royalty in terms of Article 12 of DTAA as the payment was in the nature of cost towards use of copyrighted article not towards use of copyright. 3. The said contentions have been rejected by the TDS officer by holding that software is intellectual property which can be licensed to user and the consideration paid is only towards license for use. The TDS officer concluded that the payment was towards royalty which is taxable in India. As regards alternative contention of the appellant the TDS officer held that same is not in the nature of reimbursement of cost. The TDS officer rejected it by holding that appellant had failed to substantiate same by leading necessary evidence. Accordingly, the TDS officer held ITA Nos.193, 156....611/Bang/2010 Page 3 of 20 the assessee as the 'assessee in default' for not deducting tax at source and remitting same to the account of the Government account and accordingly passed orders u/s 2