SRBC & Associates LLP, Oval New Delhi Offisce, 18, Ilabs Centre, Hitech City, Madhapur, Hyderabad. PAN: AAACQ1484H (Appellant) (Respondent) Assessee by : Sh. Percy J. Pardiwala, Sr. Counsel, Sh. Nishant Thakkar, Advocate & Ms. Jasmin Amalsadwala, Advocate Revenue by : Sh. Gangadhar Panda, CIT(DR) Sh. Sanjay Kumar, Sr. DR Date of hearing : 24.03.2023 Date of pronouncement : 13.06.2023 ORDER PER SAKTIJIT DEY, J.M.: Captioned appeals have been filed by the assessee challenging the final assessment orders passed u/s. 143(3) read with section 144C(13) of the Incometax Act, 1961 pertaining to assessment years 201415 ITA Nos. 7894/Del/2017 & 7559/Del/2018 and SA Nos. 309 & 304/Del/2020 2 and 201516, in pursuance to the directions of learned Dispute Resolution Penalty (DRP). 2. The common issue arising in both the appeals relates to taxability of royalty income received by the assessee on subscribers units from original equipment manufacturers (OEMs) located outside India and royalty income on infrastructure equipments. Since the facts involved in both the appeals are common, for the sake of brevity, we will discuss the facts as involved in ITA No. 7894/Del/2017 for the assessment year 201415. 3. Briefly, the facts are, the assessee is a nonresident corporate entity incorporated in United States of America (USA) and tax resident of USA. As stated by the Assessing Officer, the assessee is a world leader in 3G/4G and next generation wireless technologies. The assessee holds a number of patents in the field of manufacture of subscriber units and network equipments capable of operating on Code Division Multiple Access (CDMA) technology. Basically, the assessee earns revenue from two divisions operated by it, viz., Qualcomm CDMA Technology (QCT) division, which develops and supplies CDMA based integrated circuits ITA Nos. 7894/Del/2017 & 7559/Del/2018 and SA Nos. 309 & 304/Del/2020 3 and systems software for wireless voice and data communication, multimedia functions and global positioning system products and Qualcomm Technologies Licensing (QTL) division, which grants license to manufactures of wireless products for the right to use qualcomm's intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. In the assessment year under dispute, the assessee earned the following incomes : S. No. Nature of Income Amount (Rs) 1. Royalty from Datawind Innovations Pvt. 29,67,500/ Lt. (OEMs) 2. Royalty from Innominds Software Pvt. 29,67,500/ Ltd. (OEMs in India) 3. Royalty on subscriber units (paid by 435,54,84,680/ OEMs outside India) 4. Royalty on Infrastructure equipments 5,36,96,200/ Total 441,51,15,880/ 4. Royalty income aggregating to Rs.59,35,000/ received from OEMs carrying on business in India through their Permanent Establishments (PEs) were offered to tax in India. Whereas, the royalty on subscriber units from OEMs outside India and royalty on infrastructure equipments received outside India were not offered to ITA Nos. 7894/Del/2017 & 7559/Del/2018 and SA Nos. 309 & 304/Del/2020 4 tax on the reasoning that no taxable event has happened in India in terms of section 9(1)(vi) of the Act as well as Article 12 of IndiaUSA Double Taxation Avoidance Agreement (DTAA). The Assessing Officer, however, was not convinced with the submissions of the assessee. After calling upon the assessee to furnish various details relating to royalty received from OEMs and examining asessee's submissions, the Assessing Officer was of the view that the royalty received by QTL division of the assessee from OEMs doing business in India by selling their CDMA products, such as, handsets and other equipments is taxable as royalty income under section 9(1)(vi)(c) of the Act. Though, th