Allowing the petition the Court held\u00a0 that while passing the order rejecting the application for certificate for nil deduction of tax at source under section\u00a0197, the authority had clearly failed to examine the aspect whether the income in question was chargeable to tax. The authority had clearly had confused the issues which arose out of two distinct revenue streams, namely, the one which pertained to the outsourcing of back-end services and the other which pertained to the providing of licensed software copies to group entities subject to reimbursement to the assessee by those entities. The orders in question were essentially founded on the draft assessment order. For the assessment year 2020-21, the objections which had been preferred by the assessee before the Dispute Resolution Panel were rejected and in the final order passed accordingly, the Assessing Officer had held that the revenue received by the assessee was in the nature of royalty. The Tribunal had set aside such order holding that the cost-to-cost reimbursement of price paid towards software usage could not be treated as royalty. The order of the Tribunal was sufficient for the orders in question being quashed and set aside. \u00a0That the submissions of the assessee that the supply or licensing of software could not be treated as royalty, either under the Act or the Double Taxation Avoidance Agreement should not have been negated merely on the basis of a draft assessment order. Consequently, the applications of the assessee under section\u00a0197\u00a0for grant of nil withholding tax certificates should be examined afresh in accordance with law bearing in mind the observations made in the judgment.\u00a0 (AY.2023-24, 2024-25)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 197 : Deduction at source-Certificate for lower rate-Payment to Non-Resident-Reimbursement of cost-to-cost payment-Payment for authorisation to use licensed computer software-No transfer of copyright-Payment not royalty-Duty of Assessing Officer to examine whether income in question chargeable to tax Eligible assessee-Draft assessment order-Rejection of application for certificate of nil deduction of tax based on draft assessment order is not proper-Rejection order is set aside.[9(1)(vi), 144C, 195, Art. 226, R.28AA(2)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-47482","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-clQ","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=47482"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47482\/revisions"}],"predecessor-version":[{"id":47483,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/47482\/revisions\/47483"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=47482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=47482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=47482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}