ORDER

PER SOUNDARARAJAN K., JUDICIAL MEMBER

This is an appeal filed by the revenue challenging the order of the NFAC, Delhi dated 04/09/2024 in respect of the A.Y. 2017-18.

2. The brief facts of the case are that the assessee is a company incorporated in the USA and is engaged in the business of developing, manufacturing and distribution of software products. The assessee company entered into agreements with the distributors / resellers / customers in India for supplying the software products and ancillary support services. The assessee filed their return of income declaring a Nil income and also claimed a refund. The assessee’s case was taken up for scrutiny and notice u/s. 143(2) was issued. During the scrutiny proceedings the AO asked for the details about the various payments received during the year from India whether the same was recognized as income or not. The AO also sought for the details about the reasons for not offering certain income for taxation. The assessee company submitted the details and submitted that they have received income from the sale of software products and from the sale of support services and the same is not taxable in India as per section 5 r.w.s. 9 and 90 of the IT Act. The AO not accepted the said claim and passed a draft assessment order on 05/07/2019 proposing to treat the aggregate amount received by the assessee as royalty / fee for technical services taxable in India. Thereafter the AO had confirmed the draft assessment order by passing a final assessment order on 30/08/2019.

3. As against the said order, the assessee filed an appeal before the Ld.CIT(A), Bengaluru -12. Before the Ld.CIT(A), the assessee had submitted that the sale of software could not be treated as a royalty and the reliance made by the AO on the Hon’ble Karnataka High Court judgments in the case of CIT vs. Samsung Electronics Co. Ltd. and CIT vs. Synopsis International Old Ltd. is not correct since the said judgments were under challenge before the Hon’ble Supreme Court. The assessee had also raised several grounds on merits and also relied on the DTAA between India and USA and submitted that the sale of software and sale of support services could not be treated as royalty under the Article 12 of the DTAA and therefore prayed to allow the appeal. The Ld.CIT(A) had considered the issue and also relied on the Tribunal order in respect of the assessee’s own case for the A.Ys. 2015-16, 2016-17 and 2020-21, had concluded that the sale of software could not be treated as royalty and ancillary support services could not be treated as FTS. The Ld.CIT(A) had extracted the finding of this Tribunal in the assessee’s own case for the A.Y. 2015-16 which was given by relying on the earlier orders of this Tribunal for the A.Y. 2016-17. In the earlier order of this Tribunal, the Tribunal had relied on the judgment of the Hon’ble Jurisdictional High Court in ITA No. 7/2019 in the case of NICE Ltd. wherein the Hon’ble Jurisdictional High Court had relied on the judgment of the Hon’ble Supreme Court in the case of Engineering Analysis Centre for Excellence Pvt. Ltd. vs. CIT reported in 432 ITR 471 and on that basis, the Ld.CIT(A) had decided the appeal relating to the A.Y. 2017-18.

4. As against the said order, the revenue filed this appeal. The revenue also subsequently filed a revised grounds of appeal and challenged the order of the Ld.CIT(A) on the ground that the judgment of the Hon’ble Supreme Court in the case of Engineering Analysis Centre for Excellence Pvt. Ltd. vs. CIT reported in 432 ITR 471 was not accepted by the revenue and to that effect, a review application was filed before the Hon’ble Supreme Court.

5. At the time of hearing, the Ld.AR of the assessee submitted that the levy of tax on the sale of software products and the sale of support services as royalty and FTS was deleted by the orders of the Tribunal which was challenged by the revenue before the Hon’ble High Court and the Hon’ble High Court had also confirmed th