Income Tax Appellate Tribunal Delhi Microsoft Regional Sales Corporation, ... vs Acit (International Taxation), New ... on 5 July, 2022 1 ITA No. 1135/Del/2017 & 7257/Del/2017 & 6832/Del/2018 Microsoft Regional Sales Corporation IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BEFORE DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No. 1135/Del/2017 (A.Y 201314) Microsoft Regional Sales Pte. Ltd. Vs ACIT (formerly known as Microsoft International Taxation, Regional Sales Corporation) Circle 2(2)(1), C/o. Mr. Aakash Uppal, SRBC & New Delhi Associates LLP, 3rd & 6th Floor, World mark 1, IGI Airport Hospitality, District, Aero city New Delhi (RESPONDENT) PAN: AADC1638A (APPELLANT) I.T.A. No. 7257/Del/2017 (A.Y 201415) Microsoft Regional Sales Pte. Ltd. Vs DCIT (formerly known as Microsoft International Taxation, Regional Sales Corporation) Circle 2(2)(1), C/o. Mr. Aakash Uppal, SRBC & New Delhi rd Associates LLP, 3 & 6 Floor,th World mark 1, IGI Airport Hospitality, District, Aerocity New Delhi (RESPONDENT) PAN: AADC1638A (APPELLANT) I.T.A. No. 6832/Del/2018 (A.Y 201516) Microsoft Regional Sales Pte. Ltd. Vs DCIT (formerly known as Microsoft International Taxation, Regional Sales Corporation) Circle 2(2)(1), C/o. Mr. Aakash Uppal, SRBC & New Delhi Associates LLP, 3rd & 6th Floor, World mark 1, IGI Airport Hospitality, District, Aerocity New Delhi (RESPONDENT) PAN: AADC1638A (APPELLANT) 2 ITA No. 1135/Del/2017 & 7257/Del/2017 & 6832/Del/2018 Microsoft Regional Sales Corporation Appellant by Sh. Nageshwar Rao, Adv and Sh. Akshay Uppal, Adv Respondent by Ms. Anupama Anand, CIT DR Date of Hearing 17.05.2022 Date of Pronouncement 05.07.2022 ORDER PER YOGESH KUMAR U.S., JM These three appeals have been preferred by the assessee for the assessment years 201314, 201415 & 201516 against orders dated 31/01/2017, 31/10/2017 & 31/08/2018 respectively passed u/s 143(13) read with Section 144C (1) of the Act, by DCIT, International Taxation, New Delhi . I.T.A. No. 1135/Del/2017 (A.Y 201314) 1. That on the facts and in the circumstances of the case and in law, the Assistant Commissioner of Income Tax, Circle 2(2)(1), International Taxation, Delhi ('Ld. AO') has erred in computing the total income of the Appellant at INR 4064,82,52,315 as against the returned income at INR 204,90,61,907. 2. Taxability of revenue from sale of software 2.1 That on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') and the Ld. AO have erred in holding that revenue amounting to INR 38,32,90,74,884 earned by the Appellant from sale of Microsoft Retail Software Products to distributors in India is taxable as "Royalty" ignoring the fact that the same is not in nature of "Royalty" under Article 12 of the India USA DTAA and is not taxable in India. 2.2 That on the facts and in the circumstances of the case and in law, 3 ITA No. 1135/Del/2017 & 7257/Del/2017 & 6832/Del/2018 Microsoft Regional Sales Corporation the Hon'ble DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 2.3 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have erred in not following the decision of the Hon'ble ITAT in the Appellant's own case for AY 2010 11 & AY 201112 and the decision of Hon'ble Delhi High Court in the case of In