IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH, NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER, AND SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 976/DEL/2023 [A.Y. 2020-21]

Forcepoint International Vs. The ACIT Technology Limited Circle – 1(3)(1)

B-5, Sector – 6, Noida International Taxation New Delhi PAN: AABCW 0411 B (Applicant) (Respondent)

Assessee By : Shri Anil Bhalla, CA.

Department By : Shri Vijay B. Basanta CIT- DR Date of Hearing : 27.06.2025 Date of Pronouncement : 22.09.2025

ORDER

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-

This appeal by the assessee is preferred against the order of the ld. CIT(A) - 42, dated 08.02.2023 for A.Y 2020-21.

2. The grounds raised by the assessee read as under:

“1. Learned CIT(A) has erred both on facts and in law by holding that assessee company is providing technical services and its income of Rs.93,14,40,396/- is taxable as FTS under Article 12 of India-

Ireland DTAA and under Section 9(1)(vii) of the Act.

1.1 Learned CIT(A) has erred both on facts and in law by contending that direct human involvement is not necessary for rendering technical services, thereby disregarding judgement Bharti Cellular Ltd [2011] 330 ITR 239.

1.2 Learned CIT(A) has erred both on facts and in law by stating in its order that appellant has in past always considered payment received as Fees for Technical Services under Article 12 of the India- Ireland DTAA and u/s 9(1)(vii) of the Act.

1.3 Learned CIT(A) has erred both on facts and in law by ignoring the fact that nature of product assessee company is selling is an email security program and apart from a right to use the computer software programme by the end-user himself, there is no further right to sub-licence or transfer, nor is there any right to reverse- engineer, modify, reproduce in any manner otherwise than permitted by the licence to the end-user.

1.4 Learned CIT(A) has erred both on facts and in law by ignoring the fact that what is granted to the distributor is only a non- exclusive, non- transferable licence to resell computer software, and no copyright in the computer programme is transferred either to the distributor or to the ultimate end user.

1.5 Ld CIT(A) has erred both on facts and in law by ignoring the fact that what is paid by way of consideration by the distributor in India to the foreign, non-resident manufacturer or supplier, is the price of the computer programm as goods, either in a medium which stores the software or in a medium by which software is embedded in hardware or by way of SaaS on the cloud, which may be then further resold by the distributor to the end-user in India, the distributor making a profit on such resale. Importantly, the distributor or reseller does not get the right to use the product at all.

1.6 Ld CIT(A) has erred both on facts and in law in not considering the fact that the income of the assessee company is not taxable in India by virtue of Hon'ble Supreme Court ruling in the matter of Engineering Analysis Centre of Excellence Pvt Ltd 125 taxmann.com 22 and thereby ignoring the Nil return of income filed by the assessee company and assessing at Rs.93,14,40,396/-

2. The appellant company craves leave to add, alter or amend the ground of appeal at a later stage.”

3. The sum and substance of the grievance of the assessee is as to whether sale of software constitutes fess for technical services or not.

4. Brief facts of the case are that the assessee company Forcepoint International Technology Limited, Ireland (herein referred as FITL) [erstwhile Websense International Technology Limited (WITL)] is an overseas Company. It does not have permanent establishment in India.

5. The Assessee has filed its return on income u/s 139(1) declaring nil income and claiming a refund of Rs. 9,31,43,040/-. FITL is the leading provider of data protection Cybersecurity software (Triton), products entrusted to safeguard IT Infrastructure of organizations. FITL sells Websense software products to an independent third party distributo