TDS CREDIT TO PERCOLATE DOWN TO LEGAL HEIRS, PARENTS

 

TDS CREDIT TO PERCOLATE DOWN TO LEGAL HEIRS, PARENTS Recently, the Central Board of Direct Taxes amended the rule for grant of Tax Deducted at Source (TDS) to a person in whose hands the income is assessable when paid to another person. Until now, the credit of TDS was given to the deductee, based on the deductor's TDS-related information. And, the information in the returns filed with respect to TDS credit. The amendment has been applicable from November 1. If tax is deducted at source on all or a part of the income assessable in the hands of the non-deductee, the credit of the TDS (complete or partial, as the case may be) shall be given only to him/her. However, the deductee (in whose name the tax is deducted) needs to file a declaration with the deductor (employer), which is filed in case the tax liability is nil. This is filed before the deductor furnishes the TDS information. And, the deductor is supposed to report the source in the name of the non-deductee and issue a pertinent certificate.

APPLICABILITY: Tax experts say a taxpayer till now got the credit even when (s)he is dead. Now on, the legal heir of a deceased will be granted the TDS, says Sharad Shah, partner, tax advisory services, Haribhakti & Co. "As the legal heir, he/she is entitled to the grant of TDS when the person in whose hand the income was assessable has passed away. There was clarity required on such cases," he adds. Explains Amitabh Singh, tax partner at Ernst & Young: If one is putting money in the name of a minor, the TDS deducted used to be credited in the minor's name. "But, this amendment will allow the person (guardian or parent) who is putting the money in the minor's name or in whose hand the income is assessable, to get the TDS credit in place of the minor." Alike case was if the asset of a Hindu Undivided Family (HUF) was held in the name of an adult member, but the income is assessable in the hands of the HUF. Similarly, there was no rule on the method of grant of credit in case of corporate reorganisations (amalgamation, demerger), where the income of one company will be assessable in the hands of the other. Also, in cases where the asset was held by trustees of a trust but income was assessable in the hands of the beneficiary of such trusts, tax experts.

EXCEPTIONS: Till now, the credit was to a non-deductee only under specific circumstances. Like clubbing of incomes, incomes from association of persons or trusts assessable in the hands of the member or trustees or joint ownership of assets. Here too, the deductee was suppose to file a declaration for nil tax liability.

DECLARATION FOR NIL TAX: Currently, the rule which provides for the form, manner and periodicity (quarterly) for deductors to provide withholding tax statements does not specify the need to furnish information pertaining to cases where tax is not deducted based on the declarations. Henceforth, the rule will provide that the deductor furnishes particulars of the amount paid or credited on which tax was not deducted due to the nil tax liability declaration. – www.business-standard.com

Some case laws

 

[2011] 15 taxmann.com 269 (CHENNAI - ITAT)
IT : An authorized representative under section 288(2) is not required to get himself registered as an authorized income-tax practitioner under rules 54 and 55 of Income-tax Rules in order to appear before Tribunal on behalf of assessee

[2011] 15 taxmann.com 268 (CHENNAI - ITAT)
IT : Amount received by assessee from a company for providing that company easement right in private road situated on his land would be capital receipt

S. 147: Retrospective amendment does not mean failure to disclose material facts

 

CIT vs. M/s K. Mohan & Co. (Exports) (Bombay High Court)

S. 147: Retrospective amendment does not mean failure to disclose material facts

After the expiry of four years from the end of the assessment year, the AO reopened the assessment u/s 147 by relying on the retrospective amendment to s. 80HHC by the Taxation Laws (Amendment) Act, 2005 w.e.f. 1.4.1998. The CIT (A) and Tribunal (included in file) struck down the reopening. On appeal by the department, HELD dismissing the appeal:

The assessment was sought to be reopened on account of retrospective amendment to s. 80HHC introduced by the Taxation Laws Amendment Act, 2005 with effect from 1st April 1998. If the legislature amends the provisions of the Act with retrospective effect, it cannot be said that there was failure on the part of the assessee to disclose fully and truly all material facts relevant for the purpose of assessment.

See also Sadbhav Engineering vs. DCIT (Guj) & CIT vs. Baer Shoes (Mad)

Related Judgements
Titanor Components Limited vs. ACIT (Bombay High Court At Goa) There is a well known difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts. It is only in the latter case that the AO is entitled to proceed…
CIT vs. Baer Shoes (Madras High Court) The assessee had claimed deduction u/s 80HHC after a full disclosure of the material facts. As four years had elapsed from the end of the assessment year, the assessment could not be reopened in the absence of failure to disclose the material facts. The judgment of the Supreme Court…
Sadbhav Engineering vs. DCIT (Gujarat High Court) Under the first proviso to s. 147 where an assessment has been made u/s 143(3), the assessment cannot be reopened after expiry of four years from the end of the relevant assessment year unless if income has escaped assessment by reason of failure on the part of the assessee…

INCOME TAX REPORTS (ITR) Volume 345 Part 3 (Issue dated 2-7-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 345 Part 3 (Issue dated 2-7-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Business expenditure --Deduction--Expenditure incurred on education of daughter of one of directors abroad--Finding by Commissioner (Appeals) as well as Tribunal that expenditure not wholly and exclusively incurred for purpose of business--Finding of fact--Income-tax Act, 1961, s. 37-- Natco Exports P. Ltd. v . CIT (Delhi) . . . 188

Income-tax --General principles--Procedure strictly according to law--Satisfaction of one authority cannot be substituted by satisfaction of another authority-- CIT v . SPL’s Siddhartha Ltd . (Delhi) . . . 223

International transactions --Arms length price--Determination--Payment for acquisition of use of technical know-how incurred for genuine business purposes--To be allowed even if assessee suffered continuous losses in business--Income-tax Act, 1961, s. 92CA--Income-tax Rules, 1962, r. 10B(1)(a)-- CIT v . EKL Appliances Ltd .  (Delhi) . . . 241

Penalty --Repayment of loans or deposits otherwise than by account payee cheque or draft--Provision mandatory--Repayment by debit of account through journal entries--Is in contravention of provision--But penalty can be avoided on showing reasonable cause--Assessee becoming liable to repay loan and receive similar sum towards sale price of shares sold to creditor--Account settled by journal entries--No finding that repayment not bona fide or attempt at evasion of tax--Reasonable cause shown--Penalty not leviable--Income-tax Act, 1961, ss. 269T, 271E, 273B-- CIT v . Triumph International Finance (I.) Ltd . (Bom) . . . 270

Perquisite --Salary--Tax on salary paid by employer--Is a perquisite--Tax component of such perquisite value cannot be included in computation of perquisite value of rent free accommodation--Income-tax Rules, 1962, r. 3--Income-tax Act, 1961, s. 17(2)(iv)-- CIT v. Telsuo Mitera (Delhi) . . . 256

----Valuation--Tax on salary paid by employer--Excludible while computing perquisite of rent free accommodation--Income-tax Act, 1961, s. 17(2)(iv)--Income-tax Rules, 1962, r. 3-- CIT v . Hidechito Shiga (Delhi) . . . 269

Reassessment --Notice--Assessing Officer initially holding transfer of equity shares investments but on reassessment as trade--Change of opinion--Notice to be quashed--Income-tax Act, 1961, ss. 147, 148-- Ritu Investments P. Ltd . v . Deputy CIT  (Delhi) . . . 214

----Notice--Jurisdiction--No universal proposition that notice can never be served when time for issue of notice under section 143(2) has not expired--Assessee deliberately keeping matter pending and continuing to appear and neither protesting nor objecting--Assessing Officer not prevented or barred from recording reasons in writing and issuing fresh notice under section 148--Undertaking by Department to withdraw notice with liberty to issue fresh notice--Income-tax Act, 1961, ss. 147, 148-- Acorus Unitech Wireless P. Ltd . v . Deputy CIT (Delhi) . . . 228

----Notice--Sanction of Joint Commissioner required--Sanction obtained from Commissioner--Notice not valid--Income-tax Act, 1961, ss. 148, 151, 292B-- CIT v. SPL’s Siddhartha Ltd. (Delhi) . . . 223

Revision --Avoidance of tax--International transactions--Circular stating that reference must be made to Transfer Pricing Officer where value exceeds Rs. 5 crores--Circular binding on Assessing Officer--Failure to make reference to Transfer Pricing Officer--Order can be revised--Income-tax Act, 1961, ss. 92CA, 263--Circular No. 3, dated 20-5-2003-- Ranbaxy Laboratories Ltd . v. CIT (Delhi) . . . 193

AUTHORITY FOR ADVANCE RULINGS

Non-resident --Taxability in India--Fees for technical services--Indian company rendering technical services to overseas group companies--Shared services company incorporated in the Netherlands to support global finance functions of group--Branch office in Philippines performing the back office finance services--Philippines branch providing business support services to Indian company--Services rendered by Netherlands company though Philippines branch--DTAA between India and Philippines not applicable--Consideration for financial services received by Indian company not fees for technical services--Payment received by Netherlands company not chargeable to tax in India--No obligation on Indian company to withhold tax--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and the Netherlands, arts. 5, 12-- Shell Technology India Private Limited, In re . . . 206

Company Bill Analysis

 

Company Bill Analysis
By: CS Swati Dodhi :

REGISTERED OFFICE

After incorporation, within 15 days company has to decide about their registered office capable of acknowledging or receiving all communications.
The company shall furnish to the registrar verification of its registered office within 30 days of its incorporation
COPIES OF MOA AND AOA ETC TO ITS MEMBERS

Within 7 days of the request from the members, the company has to send copy of the each document i.e MOA, AOA, or every agreement or every resolution as mentioned in sub section (1) of section 11
Default shall be liable for each default , to a penalty of one thousand rupees for each day during which default continues or one lakh rupees, whichever is less
DEMAT OF SECURITIES FOR PUBLIC OFFER

As per companies bill clause 29 provides that every company making public offer or every other class or classes of public companies as may be prescribed shall issue only dematerialized form
Any other company may convert its securities in demat form ( voluntarily as per the provision of companies act and depositories act, 1996)
APPLICATION FORM FOR IPO

Application forms shall accompany abridged prospectus as per sub clause 1 of clause 33 of company's bill 2011.
MIS STATEMENTS IN PROSPECTUS

Where a prospectus, issued, circulated or distributed under this Chapter, includes any statement which is untrue or misleading in form or context in which it is included or where any inclusion or omission of any matter is likely to mislead, every person who authorizes the issue of such prospectus shall be liable under section 447
SECRETARIAL AUDIT

— 204. (1) Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board's report made in terms of sub-section (3) of section 134, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed.

— (2) It shall be the duty of the company to give all assistance and facilities to the company secretary in practice, for auditing the secretarial and related records of the company.

— (3) The Board of Directors, in their report made in terms of sub-section (3) of section 134, shall explain in full any qualification or observation or other remarks made by the company secretary in practice in his report under sub-section (1).

— (4) If a company or any officer of the company or the company secretary in practice, contravenes the provisions of this section, the company, every officer of the company or the company secretary in practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

GLOBAL DEPOSITORY RECEIPT

— As per clause 41 of companies bill, every company after passing special resolution in its general meeting issue depository receipt in any foreign country in such manner subject such terms and conditions as may be prescribed.
The government will come out rules for the same in future.
EQUITY SHARE CAPITAL

Two kinds of equity share capital
With voting rights
With differential rights as to dividend or voting rights or otherwise in accordance with rules as may be prescribed clause 43 (a)
NATURE OF SHARES OR DEBENTURES

The shares or debentures or other interest of any member in a company shall be movable property transferable in the manner provided by the articles of the company. CLAUSE 44
— COMMENTS: WE SHOULD SPECIFICALLY TO PROVIDE IN THE ARTICLES OF ASSOCIATION ABOUT TRANSFERABILITY

CERTIFICATE OF SHARES

Certificate issued by a company affix its common seal specifying no of shares held by a member is prima facie evidence of the title of the person to such shares
DUPLICATE SHARE CERTIFICATE

Clause 46 (2) provides that duplicate share certificate can be issue for the following reasons
(a) Is proved to have been lost or destroyed; or

(b) Has been defaced, mutilated or torn and is surrendered to the company

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS ISSUE DATED 25-6-2012 Volume 16 Part 5

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS

ISSUE DATED 25-6-2012

Volume 16 Part 5


APPELLATE TRIBUNAL ORDERS



->> Where new industrial undertaking in a free trade zone, loss can be set off against normal business income of assessee : Patni Computer Systems Ltd. v. Dy. CIT (Pune) p. 533

->> Where extension of credit to AE beyond stipulated credit period, cannot be construed as international transaction, no adjustment required for ascertaining ALP : Patni Computer Systems Ltd. v. Dy. CIT (Pune) p. 533

->> Where assessee taking benefit of ss.10A and 80HHE in relation to same unit to consider 10 per cent. of profit of undertaking covered u/s. 10A, entitled to special deduction u/s. 80HHE : Patni Computer Systems Ltd. v. Dy. CIT (Pune) p. 533

->> Where amendment extending period of exemption from five to ten years, undertaking existing prior to date of amendment, entitled to exemption for extended period of years : Maral Overseas Ltd. v. Addl. CIT (Indore)[SB] p. 565

->> Where depreciation not an expenditure but an allowance, does not come within scope of disallowance : Hoshang D. Nanavati v. Asst. CIT (Mumbai) p. 614

->> Where share of profit from firm exempt in hands of partner, disallowance of expenses in proportion of that income proper : Vishnu Anant Mahajan v. Asst. CIT (Ahmedabad) [SB] p. 621

A MERE IMPROVEMENT IN THE QUALITY DOES NOT AMOUNT TO MANUFACTURE. By: Mr. M. GOV

 

A MERE IMPROVEMENT IN THE QUALITY DOES NOT AMOUNT TO MANUFACTURE.
By: Mr. M. GOVINDARAJAN

Section 2(f) of the Central Excise Act, 1944 defines the term `manufacture'. While dealing with the extended meaning of the term `manufacture' the Supreme Court in `Shyam Oil Cake Limited V. Collector' – 2004 (165) ELT 641 (SC) held that it is clear that the Legislature realized that it was not possible to put in an exhaustive list of various processes but that some methodology was required for declaring that a particular process amounted to manufacture. The language of the amended Section 2(f) indicates that what is required is not just specification of the good but a specification of the process and a declaration that the same amounts to manufacture. The specification must be in relation to any goods.

Many a case has arisen on interpreting the term `manufacture' before the judicial authorities. It is trite to state that `manufacture' can be said to have taken place only when there is transformation of raw materials into a new and different article having a different identity, characteristic and use. Manufacture implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labor and manipulation; a new and different article must emerge having a distinctive name, character or use.

It is well settled that mere improvement in the quality does not amount to manufacture. It is only when the change or a series of changes take the commodity to a point where commercially it can no longer be regarded as the original commodity but is instead recognized as a new and distinct article that manufacture can be said to have taken place. In `Tungabhadra Industries Limited V. Commercial Tax Officer' – 1961 (2) SCR 14 the Supreme Court held that in the opinion of the Supreme Court the High Court laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter-molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving the quality and utility. But neither mere absorption of other matter, nor inter-molecular changes necessarily affect the identity of a substance as ordinarily understood. The change here is both additive and inter-molecular but yet it could hardly be said that rancid groundnut oil is not groundnut oil.

In `Commissioner of Central Excise, Bangalore – II V. Osnar Chemical Private Limited' – 2012 -TMI - 208472 – (Supreme Court of India) the respondent is engaged in the supply of Polymer Modified Bitumen (PMB). The respondent also supplies the Crumbled Rubber Modified Bitumen (CRMB) which is a different kind of modifier. The respondent entered into a contract with M/s Afcons Infrastructure Limited for supply of PMB at their work site. As per the agreement the base bitumen and certain additives were to be supplied by Afcons to the respondent at site where the respondent in the mobile polymer modification plant was required to heat the bitumen at a temperature of 160 degree C with the help of burner. To this hot bitumen 1% polymer and 0.2% additives were added under constant agitation, for improving the quality by increasing its softening point and penetration. The process of agitation was to be continued for a period of 12 to 18 hours till the mixture becomes homogenous and the required properties were met. The said bitumen in its hot agitated condition was mixed with stone aggregates which was then used for road construction. The resultant product was considered to be a superior quality binder with enhanced softening point, penetration, ductility, viscosity and elastic recovery.

The respondent is paying excise duty on the PMB processed at their factory but not paid the same for conversion don at the work site. A show cause notice was issued by the Department demanding duty in respect of PMB falling under the sub heading 271500.90 of the Tariff Act for the period from 18.08.2004 to 19.09.2006. The Commissioner adjudicated that the aforesaid process amounted to manufacture of PMB irrespective of the fact whether such process was carried out on their own account or on job work basis and therefore was dutiable.

The respondent filed an appeal before the Tribunal. The Tribunal set aside the order of the Commissioner. The Tribunal held that since PMB cannot be bought and sold in the market as it is fit for use only in a molten condition at a temperature around 160 degree C and resultantly cannot be stored unless kept in continuous agitated state at 100 degree C so as to avoid separation of polymer and bitumen; the process carried out by the respondent does not amount to manufacture. The Tribunal relied on the circular No. 88/1/87-CX.3, dated 16.06.1987 which clarified that a slight modification of the grade of quality of bitumen brought about by the process of air blowing to duty bitumen did not amount to manufacture.

The Revenue against the order of the Tribunal filed an appeal before the Supreme Court. The Revenue put forth the following arguments before the Supreme Court:

Having regard to the nature of process involved, PMB and CRMB are different from bitumen;
Ordinarily bitumen is heated to a temperature of 200 degree C, in the polymer modification plant; to this heated mixture, polymer is added and samples are taken, if the samples are found to be satisfactory, additives are added and the PMB is either stored or dispatched;
The end product are different from bitumen and covered by the term `manufacture';
PMB and CRMB are commercially known in the market for being bought and sold and therefore, satisfy the test of marketability which is one of the essential conditions for the purpose of levy of excise duty;
The Tribunal wrongly relied on the circular No. 88/1/87-CX.3, dated 16.06.1987 as it has been subsequently modified by Circular No. 88/1/88-CX.3, dated 01.07.1988 wherein the department has clarified that duty would be chargeable on the blown-grade bitumen.
The respondent submitted the following:

Based on the documents, evidence and materials on record the Tribunal has found as a fact that the process of mixing an insignificant dose of polymer with duty paid bitumen only enhanced the quality of bitumen and did not amount to manufacture and therefore in the absence of plea of perversity, the findings of the Tribunal does not want interference by Supreme Court;
A mere improvement in the quality did not amount to manufacture as manufacture takes place only when there is a transformation of raw materials into a new and different article having a distinctive name, character and use, which is not the case here as the end use of both the articles remained the same;
Merely because bitumen and PMB are specified under two different headings, it cannot be presumed that the process of obtaining PMB automatically constituted manufacture, unless in fact there has been a transformation of bitumen into a new and different product or alternatively, the Section Notes or Chapter Notes created a deeming fiction by providing by an artificial or extended meaning to the expression `manufacture' in respect of the goods in question;
Even if it is assumed that the said process amounted to manufacture still PMB cannot be subjected to excise as it is not commercially marketable;;
The burden to prove that the process in question constitutes manufacture and that the goods so manufactured are marketable as new goods, known to the market, lies on the revenue and the same has not been discharged in the present case;
The Supreme Court observed as follows:

The expression `manufacture' defined in Section 2(f) of the Act, inter alia includes any process which is specified in relation to any goods in the Section or Chapter Notes of First Schedule to the Tariff Act. It is manifest that in order to bring a process in relation to any goods within the ambit of Section 2(f) the same is required to be recognized by the legislature as manufacture in relation to such goods in Section Notes or Chapter Notes of the First schedule to the Tariff Act. Therefore in order to bring petroleum bitumen within the extended or deemed meaning of the expression `manufacture' the process of its treatment with polymers or additives or with any other compound is required to be recognized by the legislature as manufacture under the Chapter notes or Section notes to Chapter 27;
In the present case, a plain reading of the Schedule to the Act makes it clear that no such process or processes have been specified in the Section notes or Chapter notes in respect of petroleum bitumen falling under Tariff Item 27132000 or even in respect of bituminous mixtures falling under Tariff Item 27150090 to indicate that the said process amounts to manufacture. Thus it is evident that the said process of adding polymers and additives to the heated bitumen to get a better quality bitumen, viz., PMB or CRMB cannot be given an extended meaning under the expression manufacture in terms of Section 2(f) of the Act;
There was no change in the characteristics or identity of bitumen and only its grade or quality was improved. The said process did not result in transformation of bitumen into a new product having a different identity, characteristic and use. The end us also maintained the same, namely, for mixing of aggregates for constructing the roads.
The Supreme Court, therefore, held that PMB or CRMB cannot be treated as bituminous mixtures falling under CSH 27150090 and shall continue to be classified under CSH 27132000 pertaining to tariff for petroleum bitumen.

Whether income from unsold flats of builder, given on rent, is to be treated as income from HP or Business

 

I-T- Whether income from unsold flats of builder, given on rent, is to be treated as income from house property or income from business - Income from house property, rules Calcutta HC

KOLKATA, NOV 11, 2011: THE issue before the High Court is - Whether income from unsold flats of a builder, given on rent, is to be treated as income from house property or income from business. Income. And, the HC rules in favour of the assessee.

Facts of the case

Assessee is a property developer and builder. Assessee constructed a building in which there were some unsold flats which were appearing as stock-in-trade under the current assets and were meant for sale. Costs of these unsold flats were Rs.26.09 lacs and the rental income of Rs.49.00 lacs from these flats were shown under the head `operating income'. Assessee had shown the rental income under the head "income from house property" and, thus, claimed statutory reduction of 1/5th on account of repair from annual letting out value. AO stated that in the wealth tax proceedings, the assessee had considered the unsold flats as stock in trade and not assets for the purpose of wealth tax. Since the assessee had been treating the unsold flats as stock-in-trade of its business, the income from such business assets in the nature of stock-in-trade should be treated as business income and not income from house property, as claimed by the assessee and thus the AO rejected the claim of statutory deduction on account of repair to the extent of 1/5th of the gross rental income.

CIT (A) allowed the appeal of the assessee observing that the appropriate head for the income derived by way of letting out the unsold flats should be income from house property and not business income. ITAT set aside the order passed by the CIT (A) and restored the order passed by the AO.

Assessee contended that following the decision of Apex Court in the case of East India Housing and Land Development Trust Ltd. vs. Commissioner of Income-Tax (2002-TIOL-420-SC-IT) that the distinct heads specified in the Act indicating the sources are mutually exclusive and the income derived from different sources falling under specific heads has to be computed for the purpose of taxation in the manner provided by the appropriate section. The assessee had a business of developing house property and the unsold flats, income derived from such unsold flats by way of letting out so long a buyer was not procured amounts to income from house property by letting out and could not be a business income.

After hearing both the parties, the High Court held that,

++ what was to be seen was whether the asset was being exploited commercially by the letting out or whether it was being let out for the purpose of enjoying the rent. The distinction between the two is a narrow one and has to depend upon certain facts peculiar to each case. The commercial assets like machinery, plants, tools, industrial sheds or godowns having high business potentials stand on a different footing from assets like land and building;

++ the subject matter of exploitation of unsold flats still owned by the assessee, the CIT (Appeals) rightly concluded that the same should be treated as income from house property by way of letting it out. The unsold flats being house property, pure and simple and having fallen under the head, income from house property, as provided in section 22 of the Act, thus the rental income of such property should be assessed u/s 22 of the Act;

++ the income of an assessee is one and various sections of the Act direct the modes in which the income is to be taxed. None of those sections can be treated as general or specific for the purpose of any one particular source of income; they are all specific and deal with various heads in which an item of income, profits and means of an assessee falls. These sections are mutually exclusive and where an item of income falls specifically under one head, it has to be charged under that head and no other.

S. 9(1)(vi): Income from licence of software assessable as “royalty”

 

CIT vs. Samsung Electronics Co Ltd (Karnataka High Court)

S. 9(1)(vi): Income from licence of software assessable as "royalty"

The assessee imported "shrink-wrapped"/ "off-the-shelf" software from suppliers in foreign countries and made payment for the same without deducting tax at source u/s 195. The AO & CIT (A) held that the payments were assessable to tax as "royalty" u/s 9(1)(vi)/ Article 12 and that the assessee was liable to pay the tax u/s 201. On appeal, the Tribunal relied on the judgement of the Supreme Court in Tata Consultancy Services vs. State of AP 271 ITR 401 (SC) and held that the assessee had acquired a "copyrighted article" but not the "copyright" itself and so the amount paid was not assessable as "royalty". On appeal by the department, HELD reversing the Tribunal:

(i) U/s 9(1)(vi) of the Act & Article 12 of the DTAA, "payments of any kind in consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work" is deemed to be "royalty". Under the Copyright Act, 1957, a software programme constitutes a "copyright". A right to make a copy of the software and use it for internal business by making copy of the same and storing it on the hard disk amounts to a use of the copyright u/s 14 (1) of that Act because in the absence of such a licence, there would have been an infringement of the copyright. Accordingly, the argument that there is no transfer of any part of the copyright and the transaction involves only a sale of a copyrighted article is not acceptable. The amount paid to the supplier for supply of the "shrink-wrapped" software is not the price of the CD alone nor software alone nor the price of licence granted. It is a combination of all. In substance unless a licence was granted permitting the end user to copy and download the software, the CD would not be helpful to the end user;

(ii) There is a difference between a purchase of a book or a music CD because while these can be used once they are purchased, software stored in a dumb CD requires a license to enable the user to download it upon his hard disk, in the absence of which there would be an infringement of the owner's copyright. (TCS vs. State of AP distinguished as being in the context of sales-tax);

Note: The same view has been taken in Microsoft/ Gracemac 42 SOT 550 (Del), Millennium IT Software Ltd 338 ITR 391(AAR) & ING Vysya Bank Ltd 61 DTR 401( Bang) while a contrary view has been taken in Motorola Inc 96 TTJ 1 (Del) (SB) & TII Team Telecom International 60 DTR 177. See also Is Income From Software Taxable As "Royalty"?

Related Judgements
CIT vs. Samsung Electronics (Karnataka High Court) The effect of the judgement of the Supreme Court in Transmission Corporation of India 239 ITR 587 is that the moment there is a payment to a non-resident, there is an obligation on the payer to deduct tax at source u/s 195 (1). The only way to escape the…
In Re Millennium IT Software Ltd (AAR) S. 9(1)(vi) & Article 12 define the term "royalty" to include any payment for the use of, or the right to use, a "copyright" of scientific work. Software programmes are a "copyright" and are protected under the Copyright Act, 1957. As the software programme is a "copyright", any payment…
Kansai Nerolac Paints vs. ADIT (ITAT Mumbai) The effect of the judgements in Tata Consultancy Services vs. State of AP 271 ITR 401 (SC), Samsung Electronics Co 94 ITD 91 (Bang), Motorola Inc 95 ITD 269 (SB) & Dassault Systems 229 CTR 105 (AAR) is that the primary condition for coming within the definition of `royalty'…

INCOME TAX REPORTS (ITR) Volume 343 : Part 2 (Issue dated 7-5-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 343 : Part 2 (Issue dated 7-5-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Assessment --Reference to Departmental Valuation Officer--Change of law of with retrospective effect--Effect--Construction in factory building relating to assessment year 1984-85--Reference by Assessing Officer to Departmental Valuation Officer--Not justified--Income-tax Act, 1961, s. 142A-- CIT v. Nabha Solvex (P) Ltd .

(P&H) . . . 178

Business expenditure --Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)--Income-tax Act, 1961, ss. 37(1), 144(1)(b)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.) (Karn) . . . 126

Capital gains --Transfer--Slump sale--Agreement for transfer of business as going concern--Not of itemised assets--Capital gains not chargeable--Income-tax Act, 1961, s. 45-- CIT v. Polychem Ltd. (Bom) . . . 115

Reassessment --Notice--Assessing Officer finding that claim of depreciation bogus--Notice valid--Income-tax Act, 1961, s. 148-- Indo European Breweries Ltd. v. ITO (Bom) . . . 195

----Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper--Income-tax Act, 1961, ss. 147, 148-- CIT v. Cray Research India Ltd. (Delhi) . . . 212

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Meaning of "primary facts"--Claim for special deduction under sections 80HHC and 80-IB--Audited accounts and auditor's report submitted--Special deductions allowed--Reassessment notice after four years on ground that special deductions were excessive--Notice not valid--Income-tax Act, 1961, s. 147-- CIT v. Purolator India Ltd. (Delhi) . . . 155

----Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--No such failure--Reassessment to correct errors in assessment--Not valid--Income-tax Act, 1961, s. 147-- Titanor Components Ltd . v. Asst. CIT (Bom) . . . 183

----Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts--Income-tax Act, 1961, ss. 10A, 147, 148-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

----Reassessment after four years--Validity--No failure to disclose material facts necessary for assessment--Deduction of expenditure in original assessment--Reassessment proceedings to disallow expenditure--Not valid--Income-tax Act, 1961, s. 147-- BLB Limited v. Asst. CIT (Delhi) . . . 129

----Validity--Failure to disclose material facts necessary for assessment--Details regarding loan not furnished--Assessment order for assessment year 1999-2000 that loan from sister concern was assessable as deemed dividend--Reassessment proceedings to assess such loans as deemed dividend in assessment year 2000-01--Valid--Income-tax Act, 1961, s. 147-- Atma Ram Properties Private Limited v. Deputy CIT

(Delhi) . . . 141

----Validity--Reassessment after four years--Failure to disclose material facts necessary for assessment--Loans from sister concern--Facts disclosed by assessee--Failure to assess loans as deemed dividends--Reassessment proceedings not valid for assessment year 1999-2000--Income-tax Act, 1961, s. 147-- Atma Ram Properties Private Limited v. Deputy CIT (Delhi) . . . 141

Revision --Erroneous and prejudicial to Revenue--General principles--Special deductions under sections 80-I, 80-IA and 80HHC granted without allocation of expenditure to those units--Revision justified--Revision to allocate expenditure on green tea cess, interest and agency commission--Not justified--Income-tax Act, 1961, s. 263-- CIT v. Hindustan Lever Ltd. (Bom) . . . 161

AUTHORITY FOR ADVANCE RULINGS

Advance ruling --Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable--Income-tax Act, 1961, ss. 195, 245N(a)(ii), 245R(2), 245S-- Nuclear Power Corporation of India Ltd. , In re . . . 220

----Maintainability--Question on which ruling sought already pending before income-tax authority--Application not maintainable--Date of filing return is date to be reckoned for determination whether question already pending before authority--Income-tax Act, 1961, s. 245R(2)-- WaveField Inseis ASA , In re . . . 136

Non-resident --Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India--Income-tax Act, 1961, s. 195--Double Taxation Avoidance Agreement between India and France, art. 12(3)(b)-- Poonawalla Aviation Private Limited , In re

. . . 202

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Double Taxation Avoidance Agreement between India and France :

Art. 12(3)(b) --Non-resident--Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India-- Poonawalla Aviation Private Limited , In re

(AAR) . . . 202

Income-tax Act, 1961 :

S. 10A --Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

S. 37(1) --Business expenditure--Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.)

(Karn) . . . 126

S. 45 --Capital gains--Transfer--Slump sale--Agreement for transfer of business as going concern--Not of itemised assets--Capital gains not chargeable-- CIT v. Polychem Ltd. (Bom) . . . 115

S. 142A --Assessment--Reference to Departmental Valuation Officer--Change of law of with retrospective effect--Effect--Construction in factory building relating to assessment year 1984-85--Reference by Assessing Officer to Departmental Valuation Officer--Not justified-- CIT v. Nabha Solvex (P) Ltd . (P&H) . . . 178

S. 144(1)(b) --Business expenditure--Expenditure on higher education of two directors of assessee--Disallowance on ground directors are children of managing director--Not proper--Assessing Officer to consider whether assessee entitled to claim deduction under section 37(1)-- Krishna Fabrications Ltd . v. Joint CIT (Asstt.)

(Karn) . . . 126

S. 147 --Reassessment--Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper-- CIT v. Cray Research India Ltd. (Delhi) . . . 212

----Reassessment--Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--Meaning of "primary facts"--Claim for special deduction under sections 80HHC and 80-IB--Audited accounts and auditor's report submitted--Special deductions allowed--Reassessment notice after four years on ground that special deductions were excessive--Notice not valid-- CIT v. Purolator India Ltd. (Delhi) . . . 155

----Reassessment--Reassessment after four years--Condition precedent--Failure to disclose material facts necessary for assessment--No such failure--Reassessment to correct errors in assessment--Not valid-- Titanor Components Ltd . v. Asst. CIT

(Bom) . . . 183

----Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

----Reassessment--Reassessment after four years--Validity--No failure to disclose material facts necessary for assessment--Deduction of expenditure in original assessment--Reassessment proceedings to disallow expenditure--Not valid-- BLB Limited v. Asst. CIT (Delhi) . . . 129

----Reassessment--Validity--Failure to disclose material facts necessary for assessment--Details regarding loan not furnished--Assessment order for assessment year 1999-2000 that loan from sister concern was assessable as deemed dividend--Reassessment proceedings to assess such loans as deemed dividend in assessment year 2000-01--Valid-- Atma Ram Properties Private Limited v. Deputy CIT

(Delhi) . . . 141

----Reassessment--Validity--Reassessment after four years--Failure to disclose material facts necessary for assessment--Loans from sister concern--Facts disclosed by assessee--Failure to assess loans as deemed dividends--Reassessment proceedings not valid for assessment year 1999-2000-- Atma Ram Properties Private Limited v. Deputy CIT (Delhi) . . . 141

S. 148 --Reassessment--Notice--Assessing Officer finding that claim of depreciation bogus--Notice valid-- Indo European Breweries Ltd. v. ITO (Bom) . . . 195

----Reassessment--Notice--Non-resident company deriving income by maintaining and operating super computer sold to Government of India--Assessment order showing Assessing Officer aware of nature and character of obligation performed for which consideration paid--Reassessment on ground agreement between assessee and Government not produced before Assessing Officer--Not proper-- CIT v. Cray Research India Ltd.

(Delhi) . . . 212

----Reassessment--Reassessment after four years--Permissible on basis of disclosures made by assessee in assessment for subsequent year--Disclosures not made in year in question--Amounts to failure to disclose material facts-- Siemens Information Systems Limited v. Asst. CIT (Bom) . . . 188

S. 195 --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

----Non-resident--Purchase of aircraft by Indian company from company incorporated in France--COFACE, body incorporated on behalf of French State, ensuring credit facility--Promissory notes, for principal and interest separately executed by Indian buyer in favour of foreign seller--Promissory notes irrevocably and unconditionally assigned by seller to BNP Paribas--Interest payable by Indian buyer to seller or to BNP not taxable in India-- Poonawalla Aviation Private Limited , In re (AAR) . . . 202

S. 245N(a)(ii) --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

S. 245R(2) --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

----Advance ruling--Maintainability--Question on which ruling sought already pending before income-tax authority--Application not maintainable--Date of filing return is date to be reckoned for determination whether question already pending before authority-- WaveField Inseis ASA , In re (AAR) . . . 136

S. 245S --Advance ruling--Authority--Jurisdiction--Prohibition where question in issue before authorities under Act--Application by Indian company whether tax deductible at source on payments to non-resident--Is in effect question of taxability of payments in hands of non-resident--Non-resident already assessed and appeal pending before Tribunal--Question already pending before income-tax authority--Application by Indian company not maintainable-- Nuclear Power Corporation of India Ltd. , In re

(AAR) . . . 220

S. 263 --Revision--Erroneous and prejudicial to Revenue--General principles--Special deductions under sections 80-I, 80-IA and 80HHC granted without allocation of expenditure to those units--Revision justified--Revision to allocate expenditure on green tea cess, interest and agency commission--Not justified-- CIT v. Hindustan Lever Ltd. (Bom) . . . 161

INCOME TAX REPORTS (ITR) Volume 343 : Part 1 (Issue dated 30-4-2012) SUBJECT INDEX TO CASES REPORTED IN THIS PART

INCOME TAX REPORTS (ITR)

Volume 343 : Part 1 (Issue dated 30-4-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

SUPREME COURT

Export --Special deduction--Computation of profits--Sale of DEPB credit--Sale value less value of DEPB--Ninety per cent. of receipt of nature mentioned in Explanation (baa)(1) included in profits alone to be deducted--Ninety per cent. of net interest or net rent, included in profits, and not of gross interest or gross rent, to be deducted--Income-tax Act, 1961, s. 80HHC, Expln. (baa)-- ACG Associated Capsules Pvt. Ltd. v. CIT

. . . 89

HIGH COURTS

Business expenditure --Royalty--Tribunal allowing expenses in earlier years--No question of law--Income-tax Act, 1961-- CIT v. Galaxy Surfactants Ltd .

(Bom) . . . 108

Charitable purpose --Registration of trusts--Commissioner--Power to cancel registration--Amendment of provision empowering Commissioner to cancel registration granted to trust under section 12A--Valid--Income-tax Act, 1961, s. 12AA(3)-- Sinhagad Technical Education Society v. CIT (Bom) . . . 23

Deduction of tax at source --Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch--Double Taxation Avoidance Agreement between India and the Netherlands, arts. 5(2), 7(2)--Income-tax Act, 1961, ss. 40(a)(i), 195(1)-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

Export --Deduction under section 10B--Loss in eligible unit could be set off against profits of business--Income-tax Act, 1961, s. 10B-- CIT v. Galaxy Surfactants Ltd.

(Bom) . . . 108

----Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC--Income-tax Act, 1961, ss. 80HHC, 80HHE-- Anil Kumar v. ITO

(Karn) . . . 30

Interpretation of taxing statutes --Interpretation beneficial to assessee-- Anil Kumar v. ITO (Karn) . . . 30

Recovery of tax --Stay of recovery proceedings--Assessee appointed agent of State Government--Position accepted for assessment years 2003-04, 2004-05, 2005-06--Assessment and demand for tax for assessment year 2006-07--Appeal to Commissioner (Appeals) and application for stay of recovery proceedings--Direction for expeditious disposal of appeal and stay of demand till disposal of appeal--Income-tax Act, 1961-- City and Industrial Development Corporation of Maharashtra Ltd. v. Asst. CIT (Bom) . . . 102

Refund --Refund of income-tax and wealth-tax--General principles--Scope of article 265 of Constitution--Difference between tax collected or paid under statutes declared unconstitutional and tax collected or paid under valid statute but wrong interpretation of statute or wrong determination of facts--Constitution of India, art. 265--Income-tax Act, 1961--Wealth-tax Act, 1957-- Indglonal Investment and Finance Ltd . v. ITO

(Delhi) . . . 44

Revision --Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders--Income-tax Act, 1961, ss. 143(3), 148, 263(2)-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

AUTHORITY FOR ADVANCE RULINGS

Advance ruling --Value as precedent--Income-tax Act, 1961, s. 245R(4)-- Citrix Systems Asia Pacific Pty. Limited, In re . . . 1

Royalty --Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments--Income-tax Act, 1961, ss. 9(1)(vi), 195--Double Taxation Avoidance Agreement between India and Australia, art. 12-- Citrix Systems Asia Pacific Pty. Limited , In re . . . 1

Words and phrases --"Royalty"--"Licence"-- Citrix Systems Asia Pacific Pty. Limited , In re . . . 1

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 265 --Refund--Refund of income-tax and wealth-tax--General principles--Scope of article 265 of Constitution--Difference between tax collected or paid under statutes declared unconstitutional and tax collected or paid under valid statute but wrong interpretation of statute or wrong determination of facts-- Indglonal Investment and Finance Ltd . v. ITO (Delhi) . . . 44

Double Taxation Avoidance Agreement between India and Australia :

Art. 12 --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

Double Taxation Avoidance Agreement between India and the Netherlands :

Arts. 5(2), 7(2) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

Income-tax Act, 1961 :

S. 9(1)(vi) --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

S. 10B --Export--Deduction under section 10B--Loss in eligible unit could be set off against profits of business-- CIT v. Galaxy Surfactants Ltd. (Bom) . . . 108

S. 12AA(3) --Charitable purpose--Registration of trusts--Commissioner--Power to cancel registration--Amendment of provision empowering Commissioner to cancel registration granted to trust under section 12A--Valid-- Sinhagad Technical Education Society v. CIT (Bom) . . . 23

S. 40(a)(i) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

S. 80HHC --Export--Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC-- Anil Kumar v. ITO (Karn) . . . 30

S. 80HHC, Expln. (baa) --Export--Special deduction--Computation of profits--Sale of DEPB credit--Sale value less value of DEPB--Ninety per cent. of receipt of nature mentioned in Explanation (baa)(1) included in profits alone to be deducted--Ninety per cent. of net interest or net rent, included in profits, and not of gross interest or gross rent, to be deducted-- ACG Associated Capsules Pvt. Ltd. v. CIT (SC) . . . 89

S. 80HHE --Export--Special deduction under section 80HHC--Conditions precedent--Export and receipt of sale proceeds in convertible foreign exchange--No condition that exports must be from India--Assessee purchasing goods from one foreign country and transporting it to another foreign country--Entitled to special deduction under section 80HHC-- Anil Kumar v. ITO (Karn) . . . 30

S. 143(3) --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

S. 148 --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74

S. 195 --Royalty--Sale or licensing for use of copyrighted software is grant of right to use copyright--Payment therefor is royalty--Non-resident--Appointment of non-exclusive distributor of software products in India--Payment from distributor for sale of software product--Subscription for updates--Payment for subscription advantage programme--Royalty--Indian distributor to withhold taxes in India on payments-- Citrix Systems Asia Pacific Pty. Limited , In re (AAR) . . . 1

S. 195(1) --Deduction of tax at source--Non-resident--Permanent establishment--Convention between India and Netherlands treating branch office in India as a separate entity--No obligation on part of branch office in India to deduct tax while making interest remittance to its head office or any other foreign branch-- ABN Amro Bank, N. V . v. CIT (Cal) . . . 81

S. 245R(4) --Advance ruling--Value as precedent-- Citrix Systems Asia Pacific Pty. Limited, In re (AAR) . . . 1

S. 263(2) --Revision--Jurisdiction--Limitation--Doctrine of merger--Order of assessment does not merge in orders of reassessment as regards issues not forming subject-matter of reassessment--Limitation for revision of assessment order in respect of those issues--Runs from date of assessment order not from date of reassessment orders-- CIT v. ICICI Bank Ltd. (Bom) . . . 74