Forum
Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

11-06-2019, Celltick Technologies, Section 144C(13), 9(1)(vi), Tribunal Mumbai

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
More
5 days 20 hours ago #9734 by amit
Section - 144C(13), 9(1)(vi), 271(1)(c)
Order Date - 11-06-2019
Favouring - Assessee
Court - Tribunal Mumbai
Appellant - Celltick Technologies Ltd.
Respondent - DCIT
Justice - M.Balaganesh AM & Ravish Sood JM
Citation - 619Taxpundit150
Appeal No. - ITA No.4167/Mum/2017
Asstt. Year - 2014-15

Order

PER : RAVISH SOOD, JM

The present appeal filed by the assessee is directed against the order passed by the A.O under Sec. 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 (for short „I-T Act‟), dated 26.04.2017. The assessee assailing the assessment framed by the A.O pursuant to the directions of the Dispute Resolution Panel-1, Mumbai (for short „DRP‟) under Sec.144C(5) of the I.T Act, dated 29.03.2017 has raised before us the following grounds of appeal:

“Based on the facts and in the circumstances of the case and in law, the Appellant respectfully craves leave to prefer an appeal against the assessment order issued by the learned Deputy Commissioner of Income-tax-2(1)(1) ('learned AO') under Section 143(3) read with Section 144C(13) of the Act ('Assessment order'), in pursuance of the directions issued by the Dispute Resolution Panel - 1 ('Hon'ble DRP'), Mumbai.

On the facts and in the circumstances of the case and in law, the learned AO based on the directions of Hon'ble DRP has:

Wrong determination of the total taxable income of the Appellant

1. erred in determining the total income of the Appellant at Rs.6,52,66,290/- as against 'Nil' income declared in the return of income filed by the Appellant for the subject AY; Non-taxability of the income earned by the Appellant as ‘royalty’ income

2. erred in holding that the income received by the Appellant From provision of software solutions to Celltick Mobile Media (India) Private Limited ('Celli.ick India') for onward distribution to third party customers in India is taxable in India as 'royalty' income under Section 9(1)(vi) of the Act;

3. erred in holding that the income received by the Appellant from provision of software solutions to Celltick India for onward distribution to third party customers in India is taxable in India as 'royalty' income under the provisions of Article 12 of the India-Israel Tax Treaty;

4. erred in holding that the income received by the Appellant from provision of software solutions to Celltick India for onward distribution to third party customers in India is taxable in India as 'royalty' income under the provisions of Article 12 of the India-Israel Tax Treaty, without appreciating the fact that there is no 'use' or 'right to use' of the „copyright‟ in the software solutions provided by the Appellant to Celltick India for onward distribution to third party customers in India;

5. erred in holding that the income received by the Appellant from p ovi ion f the software solutions for onward distribution to third party customers in India is taxable in India as 'royalty' income under the provisions of Article 12 of the India-Israel Tax Treaty, without appreciating the fact that the definition of the term 'royalty' under the India-Israel Tax Treaty is restrictive in nature as compared to the 'royalty' definition under the Act; Wrongly treating Celltick India as a Dependent Agent Permanent Establishment (‘DAPE’) of the Appellant in India and taxing the income of the appellant as ‘business profits’ under the IndiaIsrael Tax Treaty

6. erred in holding that Celitick India is the DAPE of the Appellant in India under Article 5 of the India- Israel Tax Treaty and taxing the ncome received by the Appellant as 'business profits' under Article 7 of the India-Israel Tax Treaty;

7. erred in holding that Celltick India is the DAPE of the Appellant in India under Article 5 of the India- Israel Tax Treaty without appreciating the fact that the agreement between the Appellant and Celltick India. and, between Celltick India and third party customers, are entered on a principal to principal basis and hence, Celltick India cannot be treated as a DAPE of the Appellant in India;

8. erred in holding that Celitick India is the DAPE of the Appellant in India under Article 5 of the India- Israel Tax Treaty ithout appreciating the fact that the conditions prescribed in Article 5(5) of the India-Israel Tax Treaty for treating Celltick India as a DAPE of the Appellant are not satisfied; Wrong attribution of inc me and Profits to the alleged DAPE of the Appellant in India Without prejudice to ground No. 6 to 8 above, even assuming (without admitting) that the Appellant has a DAPE in India;

9. erred in attributing further income to the alleged DAPE, without appreciating the fact that the alleged DAPE has been compensated at an arm's length price;

10. erred in attributing 50 percent of the gross revenues of the Appellant as being attributable to the alleged DAPE in India, on an arbitrary and ad-hoc basis, without appreciating the fact that additional attribution of 50 percent of the gross receipts of the Appellant from Celltick India would tantamount to a total attribution of 75 percent of the gross revenues to the alleged DAPE in India;

11. erred in estimating the profits of the alleged DAPE of the Appellant at 40 percent of the gross revenues of the Appellant, on an arbitrary and ad-hoc basis without appreciating the global financial loss position of the Appellant for the subject year under consideration: Initiation of penalty proceedings under Section 271(1)(c) of the Act

12. erred in initiating penalty proceedings under Section 271(1)(c) of the Act, on the ground that the Appellant has concealed and furnished inaccurate particulars of its income.Each of the above ground is independent and without prejudice to one another. The Appellant craves leave to add, to alter, to amend or to delete any or all of the above grounds of appeal, at or prior to hearing of the appeal so as to enable the Income Tax Appellate Tribunal to decide the appeal according to law.

The Appellant prays that appropriate relief be granted based on the above grounds of appeal and the facts and circumstances of the case.”

2. Briefly stated, the assessee which is a foreign company incorporated in Israel is engaged in the business of developing software and marketing active content for mobile phones across the globe. The assessee had filed its return of income for A.Y. 2014-15 on 28.11.2014, declaring total income at Rs. Nil. As per the return of income the assessee had claimed a refund of Rs. 93,32,756/-. Subsequently, the case of the assessee was selected for scrutiny assessment. The A.O as per his draft assessment order passed under Sec. 144C(1) r.w.s 143(3), dated 06.12.2016 proposed to assess the income of the assessee at an amount of Rs. 6,52,66,294/-. Aggrieved, the assessee filed objections with the Dispute Resolution Panel-1, Mumbai (for short „DRP‟), who not finding favour with the contentions advanced by the assessee upheld the proposed action of the A.O.

3. The facts involved in the present case lies in a narrow compass. As stated hereinabove, the assessee which is carrying on the business of developing and marketing active content for mobile phones across the globe is engaged with more than 50 major operators across three continents. As for the year under consideration, the assessee was providing “Live Screen Media technology software solutions” to the telecom operators. The software solutions provided by the assessee allowed telecom operators, advertisers and content providers to send interactive content to mobile phones, which were otherwise not able to access such content. The copyright in the software solutions was at all times owned, developed and maintained by the assessee.

4. During the course of the assessment proceedings, it was observed by the A.O, that the assessee was marketing and distributing its software solutions and also providing certain support services in India through a company incorporated in India viz. M/s Celltick Mobile Media (India) Pvt. Ltd. As per the facts discernible from the

Click to view and download Full Free Judgement of Celltick Technologies Ltd. vs. DCIT

Unable to display Google Map.




Please Log in or Create an account to join the conversation.

Time to create page: 0.147 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

BEST CYBERCITY (INDIA) PVT. LTD. vs ITO

BEST CYBERCITY (INDIA) PVT. LTD. vs ITO

BEST CYBERCITY (INDIA) PVT. LTD. vs ITO Read More
PUNEET SHARMA vs UNION OF INDIA & ORS

PUNEET SHARMA vs UNION OF INDIA & ORS

PUNEET SHARMA vs UNION OF INDIA & ORS Read More
CIT vs HONDA CARS INDIA LTD.

CIT vs HONDA CARS INDIA LTD.

CIT vs HONDA CARS INDIA LTD. Read More
PCIT vs. ROYAL AND SUN ALLIANCES IT SOLUTIONS (INDIA) PVT. LTD.

PCIT vs. ROYAL AND SUN ALLIANCES IT SOLUTIONS (INDIA) PVT. LTD.

PCIT vs. ROYAL AND SUN ALLIANCES IT SOLUTIONS (INDIA) PVT. LTD. Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles

 

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar