IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, D: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.986/Del/2025 [Assessment Year: 2022-23]

M/s Enea Software Inc. Deputy Commissioner of (formerly known as Openwave Income Tax, Circle Int. Tax Mobility Inc.), 1st Floor, Vs 2(2)(2), Civic Centre, Quattro Iconic Plot no. 273, Minto Road, Udyog Vihar, Phase 2, New Delhi.

Gurugram, Haryana-122015 PAN- AABCO7261M Assessee Revenue Assessee by Shri Gaurav Singhal, Adv.

Revenue by Shri M.S. Nethrapal, CIT(DR)

Date of Hearing 06.08.2025 Date of Pronouncement 31.10.2025

ORDER

PER BRAJESH KUMAR SINGH, AM:

This appeal has been preferred by the assessee against the Final Assessment Order dated 06.01.2025 passed by the Learned Deputy Commissioner of Income Tax, Circle Int. TAX 2(2)(2) (hereinafter referred to as the ‘AO’) under Section

143(3) read with Section 144C (13) of the Income-tax Act, 1961 (“the Act”), pursuant to the directions of the Hon'ble Dispute Resolution Panel (DRP) order dated 27.12.2024 for the Assessment Year 2022-23.

1.1 Ground no.1 of the appeal is general in nature and hence needs no separate adjudication.

2. Brief facts of the case:- The assessee filed its return of income for A.Y. 2022-23 on 22/11/2022 declaring total income at Rs. 4,96,87,808/- and claiming the same as exempt in its return of income. The case of the assessee was selected under "CASS" and notice under section 143(2) of the Income Tax Act, 1961 dated 31.05.2023 was issued electronically through ITBA portal. Subsequently, notices u/s 142(1) of the Act, were issued to the assessee from time to time. The submissions of the assessee were perused and considered by the AO and a show cause notice dated 13.02.2024 was issued to the assessee to which the assessee submitted response on 20.02.2024 which was perused but not found tenable by the AO. The AO noted that the assessee had shown total receipt of Rs. 4,96,87,808/- which included Rs.4,69,04,308/- on account of rendering services pertaining to supply of software licence and support and maintenance services amounting to Rs. 27,83,500/- to Reliance Jio Infocomm Limited (RJIL). The AO further noted that claim of the assessee that this amount was not taxable in India as the underlying services do not fall within the purview of Royalty/Fee for Technical Services'

under Article 12 read with sec 90(2) of the India-USA Double Tax Avoidance Agreement ('DTAA') and therefore shall qualify as business income of the assessee, which was not chargeable to tax in the absence of any permanent establishment of assessee in India.

2.1. The AO further noted that the assessee had entered into a software licensing and service agreement with Reliance Jio Infocomm Limited ('RJIL') and received software licensing and service income and the details of services provided in pursuant to these agreements was that the assessee had granted a non-exclusive, nontransferable license to RJIL, to use and operate the software relating to Transmission Control Protocol and Video Optimisation Solution in the territory of India. The AO further noted that this software license was subject to the terms and conditions and the restrictions specified in the Agreement.

2.2. The AO analyzed the nature of software provided by the assessee to Reliance Jio Infocomm Limited and noted that the software provided by the assessee was not a product but an end to end solution using a proprietary process and it was not in the nature of simplicitor sale of goods but in the nature of imparting right to use a proprietary process to for client's business purposes. The AO further noted that as the assessee had provided software which had configurable components and had plans to integrate the same with the clients and core partners network in future, and thus adapting to the same, the right imparted by the assessee to Reliance came under the purview of providing copyright and thus chargeable as copy-right royalty.

2.3. It w