Landmark Ruling: Oracle USA Wins Major Tax Dispute on Software Royalty and PE

By | March 6, 2026
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Landmark Ruling: Oracle USA Wins Major Tax Dispute on Software Royalty and PE

The Income Tax Appellate Tribunal (ITAT) has ruled in favor of Oracle (USA) in a series of complex international tax disputes involving the characterization of software income, the existence of a Permanent Establishment (PE), and the applicability of surcharges on DTAA tax rates.

I. Software Revenue: Global Deals vs. Royalty (Section 9 & Article 12)

A significant part of the dispute involved the Software Support Services Agreement (SSSA) between Oracle USA and its Indian subsidiary, Oracle India (OIPL).

  • The Conflict: Oracle USA received 56% of revenue transfers from OIPL and paid tax on it as “Royalty.” The Assessing Officer (AO) attempted to tax 100% of the compensation, including revenues from training, education, and consultancy, as Royalty.

  • The Ruling: The ITAT held that revenue from global deals cannot be taxed as royalty in India. Under the SSSA, OIPL was merely granted a license to use software to provide support.

  • Key Principle: Since the US parent was neither entitled to nor had a right to receive royalty on global deals beyond the agreed 56%, the AO’s addition had no legal basis.

II. Permanent Establishment (PE): The ‘Disposal Test’ (Article 5)

The Revenue alleged that OIPL’s offices in Bangalore and Hyderabad constituted a Fixed Place PE for Oracle USA.

  • The Evidence: OIPL leased the premises, owned the equipment, operated the business, and claimed depreciation.

  • The ‘Disposal Test’: For a Fixed Place PE to exist, the foreign enterprise must have a specific part of the premises at its disposal or under its control. The AO failed to prove that Oracle USA had such control over OIPL’s offices.

  • Agency PE: Since OIPL’s transactions with the parent were at Arm’s Length Price (ALP) and OIPL did not act solely on behalf of the parent in a dependent manner, no Agency PE was formed.

  • Outcome: No PE exists; therefore, no business profits can be attributed or taxed in India.

III. Tax Rate: Surcharge and Cess under DTAA (Article 12)

A critical clarification was provided regarding the cap on tax rates provided by treaties.

  • The Issue: The AO treated OIPL as a PE and taxed royalties at 42.23%. Oracle claimed the DTAA rate of 15%.

  • The Ruling: Once it was held that no PE existed, the royalty became taxable under Article 12(2) of the India-USA DTAA.

  • Crucial Holding: The ITAT ruled that the tax rate on royalty cannot exceed 15%. Surcharge and Health & Education Cess cannot be added on top of the DTAA rate, as the treaty rate is inclusive of all taxes.

IV. Interest and Refund Adjustments (Sections 234B & 237)

The Tribunal also addressed procedural grievances and remanded specific matters:

  • Section 234B Interest: Following the Supreme Court decision in Mitsubishi Corporation, the ITAT directed the AO to recompute interest. For years prior to FY 2012-13, the advance tax liability must be calculated after reducing the tax deductible at source (TDS), even if the payer failed to deduct it.

  • Refund Mismanagement: The AO had adjusted a refund incorrectly, increasing the tax demand. As the Commissioner (Appeals) failed to address this, the matter was remanded for a fresh adjudication on merits.

IN THE ITAT DELHI BENCH ‘D’
Oracle Systems Corporation
v.
Addl. Director of Income-tax
Raj Kumar Chauhan, Judicial Member
and Ramit Kochar, Accountant Member
IT Appeal Nos.5671 (Del) of 2011 and others
[Assessment years 2006-07 to 2012-13]
MARCH  2, 2026
G.C. Srivastava, Kalrav Mehrotra, Shubham Bansal, Advs., O.P. Mehra, Atishay Jain and Pushpak Garg, CAs for the Appellant. Indruj Singh Rai, Special Counsel for the Respondent.
ORDER
1. These seven appeals for the respective assessment year’s detailed hereunder have been filed by the assessee against the separate assessment orders read with ld. Dispute Resolution Panel orders , or ld. Commissioner of Income-tax(Appeals) appellate orders, as detailed below:-
Appeal No(s).Assessment Year(s)Ld. CIT(A)/DRP who passed the order/directions and the date of orderDate of order of the AOSection under which the AO passed the assessment order
3314/Del/20132006-07CIT(A)-XXIX, New Delhi, dated 12.03.201326.02.2010144C(3) r.w.s. 143(3)
5671/Del/20112007-08DRP dated 20.09.2011 u/s 144C(5)27.09.2011144C r.w.s. 143(3)
4054/Del/20142008-09CIT(A)-XXIX, New Delhi, dated 15.01.201422.02.2012143(3) r.w.s. 144C
1974/Del/20142009-10DRP Directions dated 20.12.2013 u/s 144C(5)29.01.2014144C(13) r.w.s. 143(3)
2088/Del/20172010-11CIT(A)-43, New Delhi, dated 31.01.201709.05.2014144C/143(3)
2089/Del/20172011-12CIT(A)-43, New Delhi, dated 31.01.201715.05.2015143(3) r.w.s. 144C(3)
2090/Del/20172012-13CIT(A)-43, New Delhi, dated 31.01.201703.05.2016144C(3) r.w.s. 143(3)

 

2. At the outset, the Ld. counsel for the assessee, Shri G.C. Srivastava, Advocate brought to the notice of the Bench that the assessee has raised an additional ground of appeal in the respective years with respect to limitation i.e. that the assessment order passed by ld. AO u/s 143(3) is barred by limitation keeping in view the provisions of Section 144C of the Act with respect to assessment years in which draft assessment order passed by the AO is challenged before ld. DRP. It was prayed that the assessee does not wish to press the said additional ground of appeal raised with respect to challenge on grounds of limitation, and prayers were made to dismiss the aforesaid ground of limitation as raised by the assessee with the Tribunal. The ld. CIT-DR has no objection if the aforesaid additional ground of appeal raised by the assessee with respect to limitation is dismissed as being withdrawn. After hearing both the parties, we dismiss the additional ground of appeal raised by the assessee with respect to the assessment order(s) being barred by limitation as being withdrawn , in the aforesaid relevant assessment years wherein draft assessment order is challenged by the assessee before ld. DRP. We order accordingly.
3. Further, when these bunch of seven appeals were taken up for hearing, both the parties, at the outset, brought to the notice of the Tribunal that the majority of the issues which have arisen in these seven appeals have already been adjudicated by the Tribunal in asssessee’s own case vide recent common order dated 2nd January, 2026 in Oracle Systems Corporation v. ADIT, International Taxation  (Delhi – Trib.)/ITA Nos.1833 to 1836/Del/2009 and ITA No.3313/Del/2013 for AYs 2001-02 to 2005-06. Both the parties are ad-idem that the factual matrix are same in the instant assessment years presently before this Bench for adjudication vis-a-vis for ay(s) : 2001-02 to 2005-06 except variation in the amounts, and both the parties are ad-idem that the aforesaid decision rendered by the Tribunal in assessee’s own case vide common order dated 02.01.2026 for the assessment year(s) 2001-02 to 2005-06 could be considered/applied while adjudicating the appeals for the assessment year(s) 2006-07 to 2012-13 in order to maintain the consistency.
4. The appeal in ITA No.3314/Del/2013 for AY 2006-07 is, thus, now taken up by us for adjudication.
ITA No.3314/Del/2013 (AY 2006-07)
5. The grounds of appeal raised by the assessee in the memo of appeal filed with the Tribunal for assessment year 2006-07 , reads as under:-
1. That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallowances made by the Assessing Officer and that the order so passed by the Ld. CIT(A) is bad in law.
2. That on facts and in law the Ld. CIT(A) erred in passing a non speaking order and confirming the additions made by the AO by mechanically following the consolidated order passed by CIT(A) dated January 20, 2009 in appellant’s own case for AY 1997-98 to 2004-05 without any independent application of mind.
3. That on facts and in law the Learned Commissioner of Income Tax (Appeals) – XXIX, New Delhi [‘Ld. CIT(A)’] has failed to appreciate the fact that the Appellant has already offered to tax Rs.177,705,703 as royalty on account of revenue transfers received by Oracle India Private Limited (hereinafter referred to as “OIPL”) under Software Support Services Agreement (‘SSSA’) dated 01st June 2003 and has erred in holding that the entire compensation for services, under SSSA, of Rs.330,861,280 received by OIPL constituted royalty payable to the appellant and that such alleged Royalty was chargeable to tax as such u/s 9(1)(vi) of the Act and/or under Article 12 of the Double Taxation Avoidance Agreement (DTAA) between India and USA.
3.1 That on facts and in law the Ld. CIT(A) erred in not appreciating that payment of royalty is a matter of contractual arrangement and therefore in the absence of any agreement/arrangement to pay Royalty of an amount equivalent to the entire revenue transfers received by OIPL under global deals; the Appellant cannot be subjected to tax on notional imputed royalty to the extent of Rs.153,155,577/-.
3.2 That on facts and in law the Ld. CIT(A) erred in not appreciating that once the TPO had opined in affirmative on the issue of Arm’s Length Price of the Royalty Income received by the appellant from OIPL vide order dated 24th August 2009, the Assessing Officer (‘the AO’) was then required to compute the total income of the appellant in conformity with such order.
3.3 That on facts and in law the Ld. CIT(A) erred in confirming that the alleged additional royalty income is taxable in India in the hands of the Appellant under the provisions of Article 12(7) of the India-USA DTAA.
4. That on facts and in law the Ld. CIT(A) erred in confirming that OIPL constituted a Permanent Establishment (PE) of the appellant in India with regard to the Software Development activities carried out by OIPL in India.
4.1 That on facts and in law the Ld. CIT(A) erred in holding that OIPL constituted a PE of the Appellant in India under paragraph 5(1), 5(2) and 5(4)/ 5(5) of the India-USA DTAA.
5. That without prejudice, on facts and in law the Ld. CIT(A) erred in confirming the attribution of profits to the alleged Permanent Establishment of the appellant in India.
5.1 That without prejudice, on facts and in law, while affirming the total taxable income of the alleged PE at Rs. 3,130,301,214, the Ld. CIT(A) erred in:
(i)Attributing profit margins of Rs 6,590,107,818/- to such PE.
(ii)Not considering the correct figure of India Development cost as a percentage of the Oracle Group’s total worldwide R&D cost, i.e., 4.65%.
(iii)Restricting the admissibility of deduction u/s 44C to 5% of the “net profits” ignoring the provisions of Article 26 of the DTAA.
(iv)Holding that 50% of the profits were attributable to the activities of the PE in India.
(v)Not allowing a deduction of the revenues earned and offered to tax by OIPL in respect of software development services provided by it to the appellant.
6. That on facts and in law the Ld. CIT(A) further erred in ignoring the fact that the Software Development Services rendered by OIPL to the Appellant were at arm’s length price and therefore nothing further can be attributed to the alleged PE.
7. That on facts and in law the Ld. CIT(A) erred in confirming the action of the AO in withdrawing interest u/s 244A of the Act.
8. That on facts and in law the Ld. CIT(A) erred in confirming the action of the AO in levying interest u/s 234D of the Act.
The appellant craves leave to add, alter, amend, modify or withdraw any one of the Grounds of Appeal herein and submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.”
6. The Grounds of appeal No(s).1 and 2 raised by the assessee in the Memorandum of Appeal filed with the Tribunal are general in nature , and does not require separate adjudication. Accordingly, Ground no(s). 1 and 2 stand dismissed. We order accordingly.
7. Ground No.3 raised by the assessee in the Memorandum of Appeal filed with the Tribunal concerns itself with the bringing to tax royalty on account of revenue transfers received by Oracle India Private Limited under (In Short “OIPL”) Software Support Services Agreement (In Short “SSSA”) dated 01st June, 2003 wherein the authorities below have held and brought to tax the entire compensation for services under SSSA being royalty payable to the assessee , and the said royalty were held to be chargeable to Income-tax u/s 9(1)(vi) of the Act and/or under Article 12 of the DTAA.
7.1 The brief facts of the case are that the assessee entered into a Software Support Service Agreement dated 1st June, 2003 with its 100% subsidiary in India namely Oracle India Pvt. Ltd., wherein the assessee has received royalty by way of 56% of the revenue transfers received by the Oracle India Pvt. Ltd. , and the aforesaid amount is admittedly offered to income-tax by the assessee in the return of income filed with the Department, but the authorities have brought to income-tax the said income @ 100% of the amount received by the OIPL. It is to be noted that the assessee has not offered to income-tax , income with respect to revenue transfers to OIPL pertaining to training, consultancy etc. . The said issue’s are duly dealt with by the Tribunal in assessee’s own case vide its common order dated 2nd January, 2026 in ITA Nos.1833 to 1836/Del/2009 and ITA No.3313/Del/2013, for AYs 2001-02 to 2005-06 in paras 43 to 48 and 50 of the aforesaid common order dated 02.01.2026 wherein the Tribunal has deleted the notional royalty being brought to tax from OIPL under SSSA dated 1st June, 2003 i.e. royalty in excess of 56% received by the assessee from OIPL under SSSA, as against the 56% royalty received by the assessee from OIPL which was admittedly offered to income-tax by the assessee. Similarly, the Tribunal deleted notional royalty brought to tax by the AO with respect to revenue transfers to OIPL on account of training and consultancy. The Tribunal has discussed in its aforesaid common order dated 02.01.2026 in assessee’s own case in details about the factual matrix and its conclusion thereof, and it is an admitted position by both the parties that the facts are similar in this year except for the variation in the figures. The relevant para’s of the aforesaid common order of the Tribunal dated 02.01.2026 in assessee’s own case for assessment years 2001-02 to 2005-06, are reproduced hereunder:-
“43. From the above factual matrix of the instant case, we find that there is no dispute on the entitlement of the assessee to receive royalty @30% under SDDLA, for duplication and sub-licensing of software by OIPL to its customers in India, which is offered to taxation by the assessee. The point of dispute raised is with respect to Royalty on Revenue transfer on global deals under Sofware Support Services Agreement (SSSA) dated 01.06.2000, governing global deals between the assessee and OIPL. To understand the applicability of Section 9(1)(vi) of the Act and Article 12(7)(b), for treating the Revenue Transfer as Royalty, it would be prudent to refer the same as under:

(9)(1)(vi) income by way of royalty payable by-

(a)the Government ; or
(b)a person who is a resident, except where the royalty is payable in respect of any right , property or information used or services utilized for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or
(c)a person who is a non-resident, where the royalty is payable in respect of any right, property or information used or services utilized for the purposes of a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India:

Article 12 of DTAA

3.The term “royalties” as used in this Article means:

(a)payments of any kind received as consideration for the use of , or the right to use, any copyright or a literary , artistic or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting , any patents , trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity , use, or disposition thereof’ and
(b)payments of any kind received as consideration for the use of , or the right to use, any industrial, commercial , or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8(Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8.

(7)(a)

(b) Where under sub-paragraph (a) royalties or fees for included services do not arise in one of the Contracting States, and the royalties relate to the use of , or the right to use, the right or property , or the fees for included services relates to services performed , in one of the Contracting States, the royalties or fees for included services shall be deemed to arise in that Contracting State.

44. We find that the Act stipulates that Royalty which are ‘payable’ can be considered as income. We further find that under SSSA which governs Revenue transfer on Global deals, there is no provision for payment of any royalty to the assessee on Global deals as OIPL does not carry out any duplication of software supplied to multinational clients outside India. It is also noteworthy that OIPL was not permitted to pay royalty to the assessee, in view of RBI Circular No, 6 dated March 10, 1993 which permitted payment of royalty only on software duplication/reproduction. Moreover, the AO/CIT(A) has not unearthed any evidence/materials on record regarding existence of any arrangements/agreement between the assessee and OIPL to show that any royalty was ‘payable’ to the assessee, on revenue transfers to OIPL in India under global deals.
45. We are therefore, in agreement with the assessee’s contention that Royalty can accrue u/s 9(1)(vi) of the Act only if the right to receive the same arises under a contractual arrangement and since there is no such clause in SSSA, there is no accrual/payable of royalty to the assessee. Furthermore, as RBI at the relevant point of time, permitted payment of royalty only when software is duplicated, there is hardly any scope to consider that royalty would accrue or arise to the assessee on Global deals since no duplication is carried out in Global deals. Furthermore, the licenses granted by the contracting regional/local Oracle entity are standard in nature without any customisation which has not been controverted by the CIT(A) with any cogent evidence. We are therefore of the view that considering 30% of the Revenue transfer on global deals as royalty u/s 9(1)(vi) of the Act and its subsequent enhancement by the CIT(A)’s to 100%, lacks any legal foundation and therefore is invalid.
46. In so far as Royalty under Article 12(3) r.w Article 12(7)(b) of the DTAA is concerned, the same would be attracted only if the payments of any kind received as a consideration for the use of, or the right to use, any copyrighted material. Moreover, the issue of Royalty has been settled by the Hon’ble Supreme Court decision in Engineering Analysis Centre of Excellence (P.) Ltd. (SC), which held that use/copy/distribution of software would not constitute Royalty under DTAA as the end user gets only the right to use software and nothing more. In the facts of the instant case, the revenue transfer on global deal cannot be taxed as royalty under Article 12 of the India-USA since under the SSSA, OIPL is only granted license to use the software and provides support services.
47. We also agree with the assessee that as OIPL already has offered the entire Revenue from global deals as its income, and therefore addition of part of the same as Royalty in the hands of the assessee would tantamount to double addition and hence not justified. Further, once the Regulatory authority DIPP granted its approval for remittance of Royalty by OIPL, even where no duplication was undertaken in India, to the assessee from June 1, 2003 (AY 2004-05 onwards), the inter-company agreements were amended effective June 1, 2003 and OIPL started paying royalty at 56% to assessee on all revenues, including those from global deals. And this 56% royalty received by the assessee has been duly offered to tax in its returns.
48. To summarise at the cost of repetition, during the impugned years, the Assessee only received royalty from OIPL on software duplication in India under the terms of the SDDLA, which is a separate contractual arrangement. No royalty is paid or payable by OIPL to the Assessee on revenue transfers received by OIPL from Global deals under SSSA, because OIPL does not duplicate software in India under such Global deals. Even otherwise, under the prevailing exchange control regulations, payment of any royalty on global deals was prohibited. Furthermore, the Assessee assertion that it has not received royalty from OIPL or any other group entities outside India on the amount of revenue transfers received by OIPL for global deals during the impugned years, has not been controverted. Hence, no royalty accrues/payable to the Assessee to trigger the provisions of section 9(1)(vi) of the Act. Since the assessee is neither entitled to receive nor has acquired any right to receive Royalty on Global deals, we hold that the AO’s action of determining Royalty on global deals for the impugned years, has no legal basis. The same is therefore deleted. The ground 1 is accordingly allowed.”
49. … … …
50. In the above appeals, the facts and grounds are identical to the facts of the case discussed herein above. The decision rendered in ITA 1833/D/2009 for AY 2001-02 is equally applicable mutatis mutandis to the facts in the appeal as above for AYs 2002-03 to 2005-06.Apart from the issue of PE and revenue from Global deal, the AO in AY 2005-06, has also imputed notional royalty on revenue transfers on account of training and consulting services in respect of global deals. The AO has however, not substantiated the same with any evidence that there exist any contractual obligation to pay royalty on the same. Furthermore, we are of the view that the receipts in respect of training and consultancy will not give rise to royalty as there’s no use or right to use any intellectual property including copyright. The appeal of the assessee on this ground is allowed.”
7.2 Respectfully following the aforesaid decision of the Tribunal vide common order dated 02.01.2026 in assessee’s own case in ITA No. 1833/Del/2009 to 1836/Del/2009 and ITA No.3313/Del/2013, for AYs 2001-02 to 2005-06 , and by following the principles of consistency as laid down by Hon’ble Supreme Court in the case of Radhasoami Satsang v. CIT ITR 321 (SC), we allow the grounds of appeal No. 3 raised by the assessee in Memo of Appeal filed with the Tribunal. While allowing the aforesaid ground of appeal , we have duly noted the contentions of both the parties that the facts in the instant year are similar to the facts in the earlier years except for variation in the amounts, and the aforesaid decision of the ITAT vide common dated 02.01.2026 in assessee’s own case can be applied in the instant year also. We order accordingly.
8. Grounds No.4 to 6 deals with the holding of the OIPL as the PE of the assessee and, accordingly, bringing to tax profit attributable to the said PE. We have observed that the authorities below have invoked Article(s) 5(1), 5(2) 5(4) and 5(5) of the India-USA DTAA to hold that the assessee’s wholly owned subsidiary namely OIPL is a fixed place PE as well as service PE and also agency PE of the assessee in India, and accordingly profits attributable to said PE in India were brought to tax by authorities below in the hands of the assessee.
8.1 We have observed that the Tribunal has discussed in detail in the said common order dated 2nd January, 2026 in ITA Nos.1833 to 1836/Del/2009 and ITA No.3313/Del/2013 for AYs 2001-02 to 2005-06 in assessee’s own case, wherein the Tribunal has held that the assessee does not have a PE in India under Articles 5(1), 5(2) 5(4) and 5(5) of the India-USA DTAA. Both the parties are ad-idem that in the instant assessment years before us, that the factual matrix is similar in the instant year vis-a-vis earlier years except variation in the amounts. The Tribunal vide aforesaid common order dated 02.01.2026 in assessee’s own case at para’s 26 to 36 , held as under:-
“26.We have heard the rival submissions and perused the materials on record. On the issue of PE, the assessee having PE in India was first made by the AO in AY 2001-02, vide his order dated 31.03.20004 which continued in subsequent AYs. The CIT(A) has passed a combined appellate order for AY 1997-98 to AY 2004-05 (dated January 20, 2009) and AY 2005-06 and AY 2006-07(dated March 12, 2013) confirming the finding of AO on PE. The orders for AY 1997-98 and AY 2000-01 were passed under section 147 of the Act and the ITAT vide its order in ITA no. 1829 to 1812/Del/2009 dated 26.09.2022, has quashed these assessments on the grounds of improper assumption of jurisdiction u/s 147 which were affirmed by the Hon’ble High Court in ITA 414, 416 , 418 and 424/2024 vide dated 28 Oct 2024.
27. We find that the AO has held that OIPL constitutes PE of Oracle Corp in India in respect of its software development activities. In order to adjudicate the issue of PE, it would be apposite to refer the relevant provisions enumerated in the India-USA DTAA as under:

ARTICLE 5-Permanent establishment

1. For the purposes of this convention, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term ” permanent establishment” includes especially:

(I) the furnishing of services, other than included services as defined in Article 12(Royalties and Fees for Included Services), within a Contracting State by an enterprise through employees or other personnel , but only if:

(i)activities of that nature continues within that State for a period or periods aggregating more than 90 days within any twelve-month period; or
(ii)the services are performed within that State for a related enterprise within the meaning of paragraph 1 of Article 9(Associated Enterprises)

4. Notwithstanding the provisions of paragraphs 1 and 2, where a person— other than an agent of an independent status to whom paragraph 5 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State, if :

(a)he has and habitually exercises in the first-mentioned State an authority to conclude on behalf of the enterprise, unless his activities are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make that fixed place of business a permanent establishment under the provisions of that paragraph ;
(b)he has no such authority but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise, and some additional activities conducted in the State on behalf of the enterprise have contributed to the sale of the goods or merchandise ; or
(c)he habitually secures orders in the first-mentioned State, wholly or almost wholly for the enterprise.

5. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm’s length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph.

*******

28. It is the AO’s findings that the assessee has all 3 kinds of PEs in India as contemplated under the India-USA DTAA namely (i) Fixed Place PE under Article 5(1); (ii) Service PE under Article 5(2)(l); and (iii) Agency PE under Article 5(4) of the India-USA DTAA, in the form of OIPL in respect of Software development activities. We will accordingly deal with each provision of DTAA regarding PE and its application in the facts of the instant case.

29. Firstly, the AO has held that OIPL constitutes ‘a fixed place of business’ under Article 5(1) of the DTAA as the premises of OIPL in Hyderabad and Bangalore and machinery/equipment installed therein are owned by the assessee. The AO however, has not substantiated the said assertion by any cogent evidence/materials. On the other hand, the assessee statement that the assessee does not own, lease, or otherwise occupy any office premises or establishment in India, remains uncontroverted. We find that the premises in Bangalore and Hyderabad are leased by OIPL and the machinery/equipment are owned and operated by OIPL for its own business and it is OIPL which claims depreciation u/s 32 of the Act on premises and equipment.
30. The issue of ‘fixed place of business’ and PE is no longer res-integra as held by the hon’ble Supreme Court in the case of Hyatt International (supra), referring to the decision of Formula One World Championship Ltd  (SC), which held that for a place to be a Permanent Establishment (PE), two essential conditions must be satisfied (i) the place must be at ‘disposal’ of the enterprise and (ii) the business of the enterprise must be carried on through that place. Even on the aspect of ‘disposal’ test, the AO has not established with any cogent evidence/materials that the assessee has any right of access or control over these premises, and that the premises are at the ‘disposal’ of the assessee. Neither the AO nor the CIT(A) have demonstrated anywhere in their order that a particular space or part of the premises of OIPL at Bangalore or Hyderabad, was available/under control of the assessee for its business and that the employees of the assessee can walk into the said premise and occupy the space/table in its own right. We therefore, are in agreement with the assessee that the crucial “disposal test,” as established by the Hon’ble Supreme Court in the case of Formula One World Championship Ltd (supra), and Hyatt International (supra) is not satisfied. We are therefore of the view that there is thus no fixed place PE under Article 5(1) of the India-USA DTAA.
31. We further find that the assessee has successfully shown that OIPL is a subsidiary of the assessee and is a separate, distinct legal and functional entity assessed in India in its own rights. The assessee has a separate and distinct SDDLA with OIPL dated 01.06.2000 whereby the assessee, as a Licensor, has granted OIPL, the Licensee, right and authority to duplicate software products and to sublicense the same in India. For such grant of right, OIPL pays a royalty of 30% of list price of the Licensed products. We further find that whereas the assessee conceptualizes, designs and specifies the software, OIPL provides software development support services such as coding, testing and bug fixing from its premises at Hyderabad and Bangalore. It would thus be incorrect to assume, as the AO has done, that when an MNC operates in India through a branch or subsidiary, the business of the subsidiary (OIPL) will be regarded as business of the principal (OSC) as held by the hon’ble Supreme Court in the case of E-Funds (supra).
32. We are also of the considered view that the Business Activity Test is also not met for the reason that the AO has failed to show that the assessee has not carried out any part of its business operations in India. The AO’s reliance on CBDT’s Circular 1 of 2004 dated 02.01.2004 for contending that the OPIL software support activities constitute ‘core’ activity of the assessee, is considered as invalid as the said Circular was withdrawn immediately within eight months on 09.08.2004. We therefore, are in conformity with the assessee’s submission that the business of the OIPL, even if it relates to outsourced activity of the assessee, cannot be regarded as the business of assessee. We find support from the hon’ble Delhi High Court and endorsed by the Supreme Court in E-funds(supra) as under:
12. ***Indian entity i.e. subsidiary company will not become location PE under Article 5(1) merely because there is interaction or cross transactions between the Indian subsidiary and the foreign Principal under Article 5(1). Even if the foreign entities have saved and reduced their expenditure by transferring business or back office operations to the Indian subsidiary, it would not by itself create a fixed place or location PE. The manner and mode of the payment of royalty or associated transactions is not a test which can be applied to determine, whether fixed place PE exists.”
33. As far as the Service PE under Article 5(2)(l)of DTAA is concerned, the AO has to demonstrate that the assessee has ‘furnished services’ through its employees who had stayed in India for a period of 90 days or more within any twelve-month period. We find no evidence or material on record to support the view that the assessee ‘furnished any service’ in India or to any entity in India. Though the AO has mentioned hiring of employees, referring to Form10K filed by the Assessee before the SEC, USA, to assert that the assessee has employee based PE in India, we find that the AO has not presented any evidence that the assessee has hired any employees in India or any employees of the Assessee have visited India and remained in India for more than 90 days, for furnishing of any services to any entity. We agree with the assessee that the reference to Form 10K is flawed for the reason that the said Form depicts activities of the group as a whole worldwide and not specific of the Assessee in India and that when Form 10K shows employees were hired in India or China, it only indicates that the Indian or Chinese entities have employed local employees for costsaving, remained uncontroverted by the Revenue. We find that the hon’ble Supreme Court in E Funds(supra) has negated such assumption of Revenue. Further, we do not find any assertion of the AO that the assessee has deployed and posted its personnel in OIPL who were performing services for the OIPL, as was required by the Delhi High Court in the case of Progress Rail Locomotive Inc466 ITR 76(Del). The hon’ble Delhi High Court in the case of Adobe System (supra) had held that when no material is available with AO to substantiate that Foreign Company’s employees have rendered services in India, inference cannot be drawn that assessee has a PE in terms of Article 5(2)(l)of the India-USA DTAA. The Stewardship activities of the assessee, in terms of explaining new Oracle products and services, its marketing and aligning goals of OIPL with Oracle’s worldwide business and vision, also do not constitute Service PE under Article 5(2)(l) of DTAA as ruled by the hon’ble Supreme Court in the case of Morgan Stanley(supra). We are thus of the considered view that the assessee does not have Service PE in India under Article 5(2)(l) of the India-USA DTAA.
34. With respect to Agency PE under Article 5(4) of the DTAA, we agree with the assessee that OIPL is neither a Dependent Agent nor the Assessee has appointed OIPL as agent. Merely because OIPL is wholly and exclusively working for the assessee and does not develop software for any other entity, would not make OIPL as dependent agent of the assessee. We find that for considering OIPL as dependent agent of the assessee, it is essential for the Revenue to demonstrate that the conditions enumerated in the DTAA, available in Article 5(4), is met by OIPL. The AO is required to show that OIPL has the authority to habitually exercise authority to conclude contracts on behalf of the assessee under Article 5(4)(a) of the DTAA; or habitually maintains stock of products on behalf of the assessee under Article 5(4)(b) of the DTAA; or it habitually secures orders for the assessee under Article 5(4)(c) of the DTAA. We find that all the key conditions under Article 5(4) for the creation of an Agency PE remain unsatisfied.
35. We are also of the considered view that an entity acting in the ordinary course of business will be regarded as dependent under Article 5(5) of the DTAA only if both the conditions- (i) it acts for and on behalf of a single principle; and (ii) not being remunerated at arm’s length, are satisfied cumulatively. As we have seen in the case of the assessee, OIPL does not act on behalf of the assessee and the OIPL’s transactions with the Assessee have been remunerated at arm’s length. The hon’ble Supreme Court in its decision in the case of Morgan Stanley (supra) has negated further attribution of profits to the PE when a transfer pricing analysis has been undertaken and found to be in Arm’s length.
36. We are of the opinion that even if OIPL is considered as an agent, it would be an agent of independent status under Article 5(5)of the DTAA and since Article 5(4) does not apply to an Independent Agent as determined under Article 5(5), OIPL cannot be held as Agency PE. In the instant case, the AO has neither established the dependent status of OIPL nor has shown that the conditions of Dependent Agent under Article 5(4) are fulfilled. We are therefore of the considered view that OIPL is an independent legal entity and the existence of OIPL cannot be considered as Permanent Establishment of the Assessee in India. Since we have held that there is no PE of the assessee exists in India, there is no question of attribution of profit to the PE. Accordingly, Ground no 2 and its sub-grounds are allowed while ground no 3 becomes infructuous.”
8.2 Respectfully following the aforesaid decision of the Tribunal vide common order dated 02.01.2026 in assessee’s own case in ITA No. 1833/Del/2009 to 1836/Del/2009 and ITA No.3313/Del/2013, for AYs 2001-02 to 2005-06 , and by following the principles of consistency as laid down by Hon’ble Supreme Court in the case of Radhasoami Satsang(supra) , we allow the grounds of appeal No. 4 to 6 raised by the assessee in memo of appeal filed with the Tribunal. While allowing the aforesaid ground of appeal , we have duly noted the contentions of both the parties that the facts in the instant year are similar to the facts in the earlier years except for variation in the amounts, and decision of the ITAT vide aforesaid common order dated 02.01.2026 in assessee’s own case can be applied in the instant year. Since we hold that there is no PE of the assessee in India, hence no business profits can be attributable to the said PE and brought to tax in India in the hands of the assessee. We order accordingly.
9. Ground No. 7 and 8 are consequential in nature and does not require separate adjudication. Thus, Ground No. 7 & 8 are dismissed accordingly.
10. In the result assessee’s appeal in ITA No. 3314/Del/2013 for assessment year 2006-07 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
ITA No.5671/Del/2011 [AY : 2007-08]
11. The grounds of appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2007-08, reads as under:
1. That on facts and in law the Assessing Officer [herein after referred as the “AO”] / Dispute Resolution Panel [herein after referred as the “DRP”] have failed to appreciate the fact that the Appellant has already offered to tax Rs. 280,812,641 as royalty on account of revenue transfers received by Oracle India Private Limited (hereinafter referred to as “OIPL”) under Software Support Services Agreement (‘SSSA’) dated 01st June 2003 and have erred in holding that the entire compensation for services, under SSSA, of Rs 55,62,54,488 received by OIPL constituted royalty payable to the appellant and that such alleged Royalty was chargeable to tax as such u/s 9(1)(vi) of the Act and/or under Article 12 of the Double Taxation Avoidance Agreement (DTAA) between India and USA.
1.1 That on facts and in law the AO/DRP erred in not appreciating that payment of royalty is a matter of contractual arrangement and therefore in the absence of any agreement/arrangement to pay Royalty of an amount equivalent to the entire revenue transfers received by OIPL under global deals; the Appellant cannot be subjected to tax on notional imputed royalty to the extent of Rs 27,54,41,847/-.
1.2 That on facts and in law the AO/DRP erred in not appreciating that once the TPO had opined in affirmative on the issue of Arm’s Length Price of the Royalty Income received by the appellant from OIPL vide order dated 29th October 2010, the AO was then required to compute the total income of the appellant in conformity with such order.
1.3 That on facts and in law the AO/DRP erred in holding that the alleged additional royalty income is taxable in India in the hands of the Appellant under the provisions of Article 12(7) of the India-USA DTAA.
2. That on facts and in law the AO/DRP erred in holding that OIPL constituted a Permanent Establishment (PE) of the appellant in India with regard to the Software Development activities carried out by OIPL in India.
2.1 That on the facts and in law the AO/DRP erred in holding that OIPL constituted a:
(a)Fixed Place PE (under Article 5(1) of the DTAA) allegedly through which the business of the appellant is being carried out.
(b)Equipment PE allegedly through the equipment’s installed at the Hyderabad premises of OIPL.
(c)Service PE (under Article 5(2)(ii) of the DTAA) for allegedly rendering supervisory services.
(c)Agency PE (under Article 5(4) read with Article 5(5) of the DTAA) for allegedly being a dependent agent and not being an independent agent.
2.2 That on facts and in law the AO/DRP erred in holding that:
(i)OIPL developed and transferred intellectual property rights to the appellant in course of performing Software Development Services.
(ii)Cost Plus Method adopted by the appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
(iii)The activities of OIPL are devoted wholly and exclusively for the appellant.
(iv)OIPL has not been compensated on the basis of the profit on business activity carried out in India.
3. That without prejudice, on facts and in law the AO/DRP erred in attributing profits to the alleged Permanent Establishment of the appellant in India.
3.1 That without prejudice, on facts and in law, while computing the total taxable income of the alleged PE at Rs. 296,24,98,512, the AO/DRP erred in:
(i)Attributing profit margins of Rs 623,68,38,972/- to such PE.
(ii)Restricting the admissibility of deduction u/s 44C to 5% of the “net profits” ignoring the provisions of Article 26 of the DTAA.
(iii)Holding that 50% of the profits were attributable to the activities of the PE in India.
(iv)Not allowing a deduction of the revenues earned and offered to tax by OIPL in respect of software development services provided by it to the appellant.
4 That on facts and in law the AO/DRP further erred in ignoring the fact that the Software Development Services rendered by OIPL to the Appellant were at arm’s length price and therefore nothing further can be attributed to the PE.
5. That on facts and in law the AO/DRP erred in levying interest u/234B of the Act.
6. That on facts and in law the Assessment Order under section 144C read with section 143(3) of the Act passed by the AO, as per the directions of / DRP (with regard to the issue of global deals and PE) is bad in law, void, arbitrary inter alia for non-applicability of judicious and objective mind and in complete violation of the rules of natural justice.
7. That on facts and in law the DRP erred in passing a non-speaking order and confirming the additions made by the AO by mechanically following the consolidated order passed by CIT(A) dated January 20, 2009 in appellant’s own case for AY 1997-98 to 2004-05 without any independent application of mind and without providing any basis for doing so.
The appellant craves leave to add, alter, amend, modify or withdraw any one of the Grounds of Appeal herein and submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.”
12. Ground No. 1 to 4 raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2007-08 are similar as those were raised by assessee for the assessment year 2006-07. Both the parties before us are ad-idem that facts are similar in assessment year 2007-08 as were in assessment year 2006-07 except for variation in amounts. Thus, in order to maintain consistency, our decision in the preceding para’s of this order for assessment year 2006-07 shall apply mutatis mutandis for assessment year 2007-08. We order accordingly.
13. Vide Ground No. 5 , the assessee has challenged the chargeability of interest u/s 234B. It is the contention of the ld. Counsel for the assessee that the AO charged interest u/s 234B of the Act while income-tax was deductible at source on the said amount and, hence, no interest can be charged while computing advance tax liability keeping in view the ratio of the decision of the Hon’ble Supreme Court in the case of DIT v. Mitsubishi Corporation ITR 174 (SC), wherein it has been held that prior to financial year 2012-13 , the assessee can reduce the tax deductible or collectible at source while calculating advance tax liability .
13.1 We have observed that the Tribunal has decided this issue in para 49 of the common order dated 2nd January, 2026 in assessee’s own case in ITA Nos.1833 to 1836/Del/2009 and ITA No.3313/Del/2013 for AYs 2001-02 to 2005-06 , by holding as under:-
“49. On the issue of interest under section 234B [Ground No. 5 in A.Y. 2001-02 to 2004-05 & Ground No. 7 in A.Y. 2005-06], the claim of the assessee is that its income was subject to TDS obligations in hands of Indian payers. The AO is directed to charge interest u/s 234B of the Act as per law keeping in mind the decision of the hon’ble Supreme Court in the case of Director of Income-tax, New Delhi v. Mitsubishi Corporation (SC) which has held that prior to the financial year 2012-13, the amount of income-tax which is deductible or collectible at source can be reduced by the assessee while calculating advance tax. The said ground is decided accordingly.”
13.2 Respectfully following the decision of the Tribunal vide common order dated 02.01.2026 in assessee’s own case for assessment year 2001-02 to 2005-06 and in order to maintain consistency, we direct AO to charge interest u/s 234B for assessment year 2007-08 keeping in view ratio of judgment and order of Hon’ble Supreme Court in the case of Mitsubishi Corporation (supra).
Thus , the issue is restored to the file of the AO for re-computation of interest chargeable u/s 234B. Ground No. 5 is allowed for statistical purposes. We order accordingly.
14. Ground No. 6 and 7 are general in nature and are dismissed accordingly. We order accordingly.
15. In the result assessee’s appeal in ITA No. 5671/Del/2011 for assessment year 2007-08 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
ITA No.4054/Del/2014 [AY : 2008-09]
16. The grounds of appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2008-09, reads as under:
1. That on the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) – XXIX, New Delhi [‘Ld. CIT(A)’] has erred in upholding the additions made by the Learned Additional Director of Income Tax, Range-2, International Taxation, New Delhi [the Ld. AO] and that the order so passed by the Ld. CIT(A) is bad in law.
2. That on facts and in law the Ld. CIT(A) erred in passing a non speaking order and confirming the additions made by the Ld. AO by mechanically following the consolidated order passed by Ld. CIT(A) dated January 20, 2009 in appellant’s own case for AY 1997-98 to 2004-05 without any appreciation of facts and independent application of mind.
3. That on facts and in law the Ld. CIT(A) has failed to appreciate the fact that the Appellant has already offered to tax Rs.288,232,006 as royalty on account of revenue transfers received by Oracle India Private Limited (hereinafter referred to as “OIPL”) under Software Support Services Agreement (‘SSSA’) dated 01st June 2003 and has erred in holding that the entire compensation for services from April 01, 2007 to January 24, 2008, under SSSA, of Rs.555,181,530 received by OIPL constituted royalty payable to the Appellant and that such alleged Royalty was chargeable to tax as such u/s 9(1)(vi) of the Act and/or under Article 12 of the Double Taxation Avoidance Agreement (DTAA) between India and USA.
3.1 That on facts and in law the Ld. CIT(A) has erred in holding the entire revenue transfer of Rs.514,700,011 to OIPL on account of program license, updates and product support under SSSA as royalty income in the hands of the Appellant without appreciating the fact that OIPL is already paying 56 percent royalty (Rs.288,232,006) to the appellant on account of revenue transfers in terms of SSSA.
3.2 That on facts and in law, the Ld. CIT(A) has further erred in holding entire revenue transfers to OIPL of Rs.40,481,519 on account of training, education etc under SSSA as royalty income in the hands of the Appellant, ignoring the fact that no royalty is receivable on such revenue transfers by the Appellant as per SSSA.
3.3 That on facts and in law the Ld. CIT(A) erred in not appreciating that payment of royalty is a matter of contractual arrangement and therefore in the absence of any agreement/arrangement to pay Royalty of an amount equivalent to the entire revenue transfers received by OIPL under global deals; the Appellant cannot be subjected to tax on notional imputed royalty to the extent of Rs.266,949,524/-.
3.4 That on facts and in law the Ld. CIT(A) erred in not appreciating that once the Learned Additional Director of Income Tax, Transfer Pricing Officer-11(1) (hereinafter referred to as the Ld. TPO) had opined in affirmative on the issue of Arm’s Length Price of the Royalty Income received by the appellant from OIPL vide order dated 21st October 2011, the Ld. AO was then required to compute the total income of the appellant in conformity with such order.
3.5 That on facts and in law the Ld. CIT(A) erred in confirming that the alleged additional royalty income is taxable in India in the hands of the Appellant under the provisions of Article 12(7) of the India-USA DTAA.
4. That on facts and in law the Ld. CIT(A) erred in upholding that OIPL constituted a Permanent Establishment (‘PE’) of the appellant in India with regard to the Software Development activities carried out by OIPL in India.
4.1 That on facts and in law the Ld. CIT(A) erred in confirming the action of the Ld. AO while holding that the software development services of OIPL constituted a:
(a)Fixed Place PE (under Article 5(1) of the DTAA) allegedly through which the business of the appellant is being carried out.
(b)Equipment PE allegedly through the equipment’s installed at the Hyderabad premises of OIPL.
(c)Service PE (under Article 5(2)(ii) of the DTAA) for allegedly rendering supervisory services.
(d)Agency PE (under Article 5(4) read with Article 5(5) of the DTAA) for allegedly being a dependent agent and not being an independent agent.
4.2 That on facts and in law the Ld. CIT(A) erred in upholding that:
(i)OIPL transferred intangibles to the appellant in course of performing Software Development Services.
(ii)Cost Plus Method adopted by the appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
(iii)The activities of OIPL are devoted wholly and exclusively for the appellant.
(iv)OIPL has not been compensated on the basis of the profit on business activity carried out in India.
5. That without prejudice, on facts and in law the Ld. CIT(A) erred in confirming the action of the Ld. AO while attributing profits to the alleged PE of the appellant in India.
5.1 That without prejudice, on facts and in law, while computing the total taxable income of the alleged PE at Rs.4,223,042,980 Ld. CIT (A) and Ld. AO erred in:
(i)Attributing profit margins of Rs.8,890,616,800 to such PE. Further, the Ld. AO has erred in not appreciating that attribution of profits to the PE involved transfer pricing principles (s) and the attribution of profits to a PE needs to be undertaken by the Ld. TPO by applying the transfer pricing provisions.
(ii)In ignoring the provisions of Article 26 of the Treaty by arbitrarily limiting the deduction to 5% of head office expenses to the alleged PE for determining the profit attributable to the Indian activities relating to software development as against the actual expenditure incurred.
(iii)Disregarding the business / commercial realities and the Functions, Assets and Risk (‘FAR’) analysis with respect to software development activities carried out by OIPL in India and estimating on a completely arbitrary / ad-hoc basis that 50% of the profits arrived at by allocating the Indian research and development expenditure over the Global research and development expenditure from the new software license business as attributable to the alleged PE of the Appellant in India.
(iv)Not allowing a deduction of the revenues taxed in the hands of OIPL in respect of software development services provided to the Appellant while computing the profits attributable to the alleged PE of the Appellant in India.
(v)Considering only sales and distribution expenses for arriving at the global profit and wrongly assuming that compensation paid to OIPL is already embedded in arriving at the profit margin; Also the Ld. AO has completely ignored all the other business expenses related to the new software licenses business / segment thus using incorrect global profit as the starting point for attributing profits to the alleged PE in India.
6. That on facts and in law the Ld. CIT (A) and Ld. AO further erred in ignoring the fact that the Software Development Services rendered by OIPL to the Appellant were at arm’s length price and therefore nothing further can be attributed to the PE.
7. That on facts and in law the Ld. CIT (A) and Ld. AO erred in levying interest u/s 234B of the Act.
8. That on facts and in law the Assessment Order under section 143(3) read with section 144C of the Act passed by the Ld. AO is bad in law, void, arbitrary inter alia for non-applicability of judicious and objective mind and in complete violation of the rules of natural justice.
The appellant craves leave to add, alter, amend, modify or withdraw any one of the Grounds of Appeal herein and submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.”
17. Ground No. 1 , 2 and 8 raised by the assessee in Memo of Appeal filed with the Tribunal are general in nature and are dismissed accordingly. We order accordingly.
18. Ground No. 3 to 7 raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2008-09 have similar issues as were raised by assessee for the assessment year 2007-08. Both the parties before us are ad-idem that facts are similar in assessment year 2008-09 vis-a-vis assessment year(s) 2006-07 and 2007-08 except for variation in amounts. Thus, our decision in the preceding para’s of this order for assessment year 2006-07 and 2007-08 shall apply mutatis mutandis for assessment year 2008-09 with respect to ground of appeal number 3 to 7. We order accordingly.
19. In the result assessee’s appeal in ITA No. 4054/Del/2014 for assessment year 2008-09 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
ITA No.1974/Del/2014 [AY : 2009-10]
20. The grounds of appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2009-10, reads as under:
1. That on facts and in law the AO/DRP erred in holding that OIPL constituted a Permanent Establishment (‘PE’) of the appellant in India with regard to the Software Development activities carried out by OIPL in India.
1.1. That on facts and in law the AO/DRP erred in holding that OIPL constituted a:
(a)Fixed Place PE (under Article 5(1) of the DTAA) allegedly through which the business of the appellant is being carried out.
(b)Equipment PE allegedly through the equipment’s installed at the Hyderabad premises of OIPL.
(c)Service PE (under Article 5(2)(ii) of the DTAA) for allegedly rendering supervisory services.
(d)Agency PE (under Article 5(4) read with Article 5(5) of the DTAA) for allegedly being a dependent agent and not being an independent agent.
1.2. That on facts and in law the AO/DRP erred in holding that:
(i)OIPL transferred intangibles to the appellant in course of performing Software Development Services.
(ii)Cost Plus Method adopted by the appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
(iii)The activities of OIPL are devoted wholly and exclusively for the appellant.
(iv)OIPL has not been compensated on the basis of the profit on business activity carried out in India.
2. That without prejudice, on facts and in law the AO/ DRP erred in attributing profits to the alleged Permanent Establishment of the appellant in India.
2.1. That without prejudice, on facts and in law, while computing the total taxable income of the alleged PE at Rs. 3,71,14,83,280 the AO/DRP erred in:
(i)Attributing profit margins of Rs 7,81,36,49,011 to such PE. Further the AO has erred in not appreciating that attribution of profits to the PE involves transfer pricing principle (s) and the attribution of profits to a PE needs to be undertaken by the Ld. TPO by applying the transfer pricing provisions.
(ii)In ignoring the provisions of Article 26 of the treaty by arbitrarily limiting the deduction to 5% of head office expenses to the alleged PE for determining the profit attributable to the Indian activities relating to software development as against the actual expenditure incurred.
(iii)Disregarding the business / commercial realities and the Functions, Assets and Risk (‘FAR’) analysis with respect to software development activities carried out by OIPL in India and estimating on a completely arbitrary / ad-hoc basis that 50% of the profits arrived at by allocating the Indian research and development expenditure over the Global research and development expenditure from the new software license business as attributable to the alleged PE of the appellant in India.
(iv)Not allowing a deduction of the revenue taxed in the hands of OIPL in respect of software development services provided to the appellant while computing the profits attributable to the alleged PE of the appellant in India.
(v)Considering only sales and distribution expenses for arriving at the global profit and wrongly assuming that compensation paid to OIPL is already embedded in arriving at the profit margin; Also the Ld. AO has completely ignored all the other business expenses related to the new software licenses business / segment thus using incorrect global profit as the starting point for attributing profits to the alleged PE in India.
4. That on facts and in law the AO/DRP further erred in ignoring the fact that the Software Development Services rendered by OIPL to the Appellant were at arm’s length price and therefore nothing further can be attributed to the PE.
5. That on facts and in law the AO/DRP erred in levying interest u/s 234B of the Act.
6. That on facts and in law the Assessment Order under section 144C(13) read with section 143(3) of the Act passed by the AO, as per the directions of DRP is bad in law, void, arbitrary inter alia for nonapplicability of judicious and objective mind and in complete violation of the rules of natural justice.
7. That on facts and in law the DRP erred in passing a non-speaking order and confirming the additions made by the AO by mechanically following the consolidated order passed by CIT(A) dated January 20, 2009 in appellant’s own case for AY 1997-98 to 2004-05 without any independent application of mind and without providing any basis for doing so.
The appellant craves leave to add, alter, amend, modify or withdraw any one of the Grounds of Appeal herein and submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.
21. Ground No. 1 to 5 raised by the assessee in memo of appeal filed with the Tribunal for assessment year 2009-10 have similar issues as those were raised by assessee for the assessment year 2008-09. Both the parties before us are ad-idem that facts are similar in assessment year 2009-10 as were in assessment year 2006-07 , 2007-08 and 2008-09 except for variation in amounts. Thus, in order to maintain consistency , our decision in the preceding para’s of this order for assessment year(s) 2006-07 , 2007-08 and 2008-09 shall apply mutatis mutandis for assessment year 2009-10. We order accordingly.
22. Grounds of Appeal No(s). 6 & 7 are general in nature, and are dismissed accordingly. We order accordingly.
23. In the result assessee’s appeal in ITA No. 1974/Del/2014 for assessment year 2009-10 is partly allowed in the manner as indicated in the order. We order accordingly.
ITA No.2088/Del/2017 [AY : 2010-11]
24. The grounds of appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2010-11, reads as under:
The grounds hereinafter taken by the Appellant are independent and without prejudice to one another.
1. That on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)- 43 [hereinafter referred as “Ld. CIT(A)”] has erred in upholding additions of Rs.340,74,06,940 made by the Learned Deputy Director of Income Tax, International Taxation, Circle 2(1), Delhi (“Ld. AO”).
2. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has grossly erred in passing a non-speaking order and confirming the additions made by the Ld. AO by mechanically following the order passed by his predecessor in AY 2005-06 and AY 2006-07, without appreciating the submissions and contentions of the Appellant and independent application of mind.
3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the factually incorrect and legally untenable observations, allegations and conclusions of the Ld. AO that the Software Development Division of Oracle India Private Limited (“OIPL”) constitutes a Permanent Establishment (‘PE’) of the Appellant in India as per the provisions of the Income Tax Act, 1961 (“the Act”) and Article 5 of Double Taxation Avoidance Agreement between India and United States of America (“Tax Treaty”).
3.1 That on the facts and circumstances of the case and in law the CIT(A) has erred in upholding the contentions of the Ld. AO that OIPL constitutes:
•Fixed Place PE [under Article 5(1) of the Tax Treaty], allegedly through which the business of the Appellant is being carried out;
•Equipment PE, allegedly through the equipments installed at the Hyderabad premises of OIPL;
•Service PE under Article 5(2)(l) of the Tax Treaty; and
•Dependent Agent PE under Article 5(4) read with Article 5(5) of the Tax Treaty.
3.2 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding incorrect allegations of the Ld. AO in the assessment order inter alia including that:
•OIPL developed and transferred intangibles to the Appellant in course of performing Software Development Services.-
•Cost Plus Method adopted by the Appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
•The activities of OIPL are devoted wholly and exclusively for the Appellant.
•OIPL has not been compensated on the basis of the profit on business activity carried out in India.
4. Without prejudice to ground number 3 above, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the erroneous and incorrect methodology adopted by the Ld. AO to compute and attribute profits to the alleged PE by:
(i)Attributing a sum of Rs. 3,40,74,06,940 as profits attributable to the alleged PE:
(ii)Restricting the admissibility of deduction under section 44C of the Act to 5 percent of the “net profits” ignoring the provisions of Article 26 of the Tax Treaty;
(iii)Disregarding the business/commercial realities and Functions, Assets and Risk (“FAR”) analysis with respect to software development activities carried out by OIPL in India (evidenced by a Transfer Pricing Study under relevant Transfer Pricing Law and Rules) and estimating that 50 percent of the profits were attributable to the activities of the alleged PE in India on an arbitrary and ad-hoc basis.
(iv)Not allowing a deduction of the revenues earned and offered to tax by OIPL in respect of software development services provided by it to the Appellant.
4.1 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the submissions made by the Appellant that attribution of profits to the PE involves Transfer pricing principle(s) and the attribution of profits to a PE needs to be undertaken by applying the transfer pricing provisions.
4.2 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in disregarding the fact that entire functions performed by OIPL (the alleged PE)- viz rendering of software development services have been examined and the arm’s length price of these services has been determined by the Transfer Pricing Officer of OIPL, therefore, nothing further is left to be attributed to OIPL – the alleged PE of the Appellant in India.
4.3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. AO of considering only sales and distribution expenses for arriving at the global profit and wrongly assuming that compensation paid to OIPL is already embedded in arriving at the profit margin.
4.4 That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in upholding the action of the Ld. AO, who has completely ignored all the other business expenses related to the new software licenses business/ segment, thus using incorrect global profit as the starting point for attributing profits to the alleged PE in India.
5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in passing a non-speaking order while confirming the action of Ld. AO who had erroneously levied tax at the rate of 42.23 percent on the returned income, which is taxable as ‘royalty’ at the rate of 15 percent under provisions of the Tax Treaty.
6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating on the Appellant’s ground of appeal against initiation of penalty proceedings by the Ld. AO under section 271(l)(c) of the Act.
That the Appellant prays for leave to add, alter, amend and / or vary the ground(s) of appeals as may be considered necessary and to submit such statements, documents and papers as may be considered either before or during the appeal hearing.”
25. Ground of Appeal Nos. 1 & 2 are general in nature, and are dismissed accordingly. So far as Ground No. 6 relates to initiation of penalty u/s 271(1)(c) is consequential in nature , thus stands dismissed. We order accordingly.
26. Ground No. 3 & 4 raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2010-11 have similar issues as those were raised by assessee for the assessment year 2007-08 to 2009-10. Both the parties before us are ad-idem that facts are similar in assessment year 2010-11 as were in assessment year(s) 2006-07 to 2009-10 except for variation in amounts. Thus, in order to maintain consistency, our decision in the preceding para’s of this order for assessment year 2006-07 to 2009-10 shall apply mutatis mutandis for assessment year 2010-11. We order accordingly.
27. Vide Ground No. 5 , the assessee is contending that royalty income received by assessee from OIPL was offered to income tax @15% keeping in view Article 12 of India-USA DTAA. But, however, the same was brought to tax by the AO at the rate of 42.23 percent instead of rate of tax at 15% as provided under Article 12 of India-USA DTAA for bringing to tax royalty in the source state. It was further submitted that even education and health cess as well surcharge cannot be levied in view of tax-rates being provided under India-USA DTAA. It was submitted that treaty provisions will prevail upon the normal taxation rates, and the assessee is eligible for applicability of beneficial rates as provided under DTAA. The assessee has relied upon the order of ITAT, Delhi Bench in the case of JC Decaux S.A. v. ACIT/DCIT [IT Appeal No. 1630/Del/2015, dated 20-3-2020]/2020(3) TMI 1075-ITAT Delhi to support its contentions. The ld. CIT-DR relied upon the orders of the authorities below. No contrary decision is brought to our notice by either of the parties. After hearing both the parties , we are of the considered view that the assessee has earned royalty income from its Wholly owned subsidiary in India namely OICL , which royalty income was duly offered to tax by the assessee in the return of income filed in India. The provisions of Article 12 of India US DTAA stipulates that Royalties arising in the Contracting State i.e. India in this case and paid to a resident of other Contracting State (i.e. assessee in this case) may be taxed in that other State. Article 12 further stipulates that the royalties may be taxed in the Contracting State in which they arise i.e. source country according to the laws of that State but if the beneficial owner of the royalties is a resident of the other Contracting State , the tax so charged ,inter-alia, shall not exceed 15% (rate relevant to the issue before us) of the gross amount of the royalties. The AO has held that OIPL is PE of the assessee under Article 5(1), 5(2), 5(4) and 5(5) of India-USA DTAA, and accordingly business profits attributable to PE were brought to tax . Keeping in view our decision in the preceding para’s of this order wrt PE of the assessee in India, the exclusion clause 6 & 7 in Article 12 of India USA DTTA will then be not applicable. Thus, keeping in view facts and circumstances of the instant case before us, royalty income earned by the assessee is to be brought to tax @15% as provided under Article 12(2) of the India USA DTAA. So far as leviability of education cess and higher cess is concerned, Respectfully following the decision of ITAT in the case of J C Decaux S.A. (supra), and with a view to maintain consistency , we hold that health & education cess cannot be further added to the aforesaid rate of 15% as provided for bringing to tax royalty income under India-USA DTAA. We also note that ITAT in several other decisions have taken similar view i.e. in Dy. CIT, International Taxation v. Marubeni Corporation (Mumbai – Trib.), DIC Asia Pacific Pte. Ltd. v. Asstt. DIT (Kolkata); Capgemini SA v. Dy. CIT  (Mumbai). Thus, we allow the ground raised by the assessee in the manner as indicated above. We order accordingly.
28. In the result assessee’s appeal in ITA No. 2088/Del/2017 for assessment year 2010-11 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
ITA No.2089/Del/2017 [AY : 2011-12]
29. The Grounds of Appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2011-12, reads as under:
The grounds hereinafter taken by the Appellant are independent and without prejudice to one another.
1. That on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)- 43 [hereinafter referred as “Ld. CIT(A)”] has erred in upholding additions of Rs.4,65,18,51,328 made by the Learned Deputy Director of Income Tax, International Taxation, Circle 2(2)(2), Delhi (“Ld. AO”).
2. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has grossly erred in passing a non-speaking order and confirming the additions made by the Ld. AO by mechanically following the order passed by his predecessor in AY 2005-06 and AY 2006-07, without appreciating the submissions and contentions of the Appellant and independent application of mind.
3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the factually incorrect and legally untenable observations, allegations and conclusions of the Ld. AO that the Software Development Division of Oracle India Private Limited (“OIPL”) constitutes a Permanent Establishment (‘PE’) of the Appellant in India as per the provisions of the Income Tax Act, 1961 (“the Act”) and Article 5 of Double Taxation Avoidance Agreement between India and United States of America (“Tax Treaty”).
3.1 That on the facts and circumstances of the case and in law the CIT(A) has erred in upholding the contentions of the Ld. AO that OIPL constitutes:
•Fixed Place PE [under Article 5(1) of the Tax Treaty], allegedly through which the business of the Appellant is being carried out;
•Equipment PE, allegedly through the equipments installed at the Hyderabad premises of OIPL;
•Service PE under Article 5(2)(l) of the Tax Treaty; and
•Dependent Agent PE under Article 5(4) read with Article 5(5) of the Tax Treaty.
3.2 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding incorrect allegations of the Ld. AO in the assessment order inter alia including that:
•OIPL developed and transferred intangibles to the Appellant in course of performing Software Development Services.-
•Cost Plus Method adopted by the Appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
•The activities of OIPL are devoted wholly and exclusively for the Appellant.
•OIPL has not been compensated on the basis of the profit on business activity carried out in India.
4. Without prejudice to ground number 3 above, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the erroneous and incorrect methodology adopted by the Ld. AO to compute and attribute profits to the alleged PE by:
(i)Attributing a sum of Rs.4,65,18,51,328 as profits attributable to the alleged PE:
(ii)Restricting the admissibility of deduction under section 44C of the Act to 5 percent of the “net profits” ignoring the provisions of Article 26 of the Tax Treaty;
(iii)Disregarding the business/commercial realities and Functions, Assets and Risk (“FAR”) analysis with respect to software development activities carried out by OIPL in India (evidenced by a Transfer Pricing Study under relevant Transfer Pricing Law and Rules) and estimating that 50 percent of the profits were attributable to the activities of the alleged PE in India on an arbitrary and ad-hoc basis.
(iv)Not allowing a deduction of the revenues earned and offered to tax by OIPL in respect of software development services provided by it to the Appellant.
4.1 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the submissions made by the Appellant that attribution of profits to the PE involves Transfer pricing principle(s) and the attribution of profits to a PE needs to be undertaken by applying the transfer pricing provisions.
4.2 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in disregarding the fact that entire functions performed by OIPL (the alleged PE)- viz rendering of software development services have been examined and the arm’s length price of these services has been determined by the Transfer Pricing Officer of OIPL, therefore, nothing further is left to be attributed to OIPL – the alleged PE of the Appellant in India.
4.3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. AO of considering only sales and distribution expenses for arriving at the global profit and wrongly assuming that compensation paid to OIPL is already embedded in arriving at the profit margin.
4.4 That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in upholding the action of the Ld. AO, who has completely ignored all the other business expenses related to the new software licenses business/ segment, thus using incorrect global profit as the starting point for attributing profits to the alleged PE in India.
5. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in passing a non-speaking order while confirming the action of Ld. AO who had erroneously levied surcharge and education cess while calculating tax liability on Royalty income (as offered to tax in the return of income), without appreciating that the rate of taxation on royalty should not exceed 15 percent as per the beneficial provisions of Article 12 of the Tax Treaty.
6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating on the Appellant’s ground of appeal against action of the Ld. AO of erroneously increasing the tax demand by erroneous adjustment of refund in the assessment order.
7. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. AO who had erroneously levied interest under section 234A and under section 234C of the Act
8. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating on the Appellant’s ground of appeal against initiation of penalty proceedings by the Ld. AO under section 271(l)(c) of the Act.
That the Appellant prays for leave to add, alter, amend and / or vary the ground(s) of appeals as may be considered necessary and to submit such statements, documents and papers as may be considered either before or during the appeal hearing.”
30. Ground No(s). 1 & 2 general in nature , and are dismissed accordingly. So far as Ground No. 7 & 8 are concerned, they being consequential stands dismissed. We order accordingly.
31. Ground No. 7 concerns itself with non adjudication of ground of appeal raised by the assessee before ld. CIT(A) as to its claim that the AO has erroneously adjusted refund, which as per assessee has led to increase in tax demand. The said issue was raised by the assessee before ld. CIT(A) vide Ground of Appeal No. 6. Both the parties before us agreed that the matter can go back to the file of ld. CIT(A) for adjudication of this ground of appeal. Thus, the issue is restored to the file of ld. CIT(A) for adjudication of this issue on merits in accordance with law. We order accordingly.
32. Ground No(s). 3, 4 & 5 raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2011-12 have similar issues as those were raised by assessee for the assessment year(s) 2007-08 to 2010-11. Both the parties before us are ad-idem that facts are similar in assessment year 2011-12 as were in assessment year(s) 2006-07 to 2010-11 except for variation in amounts. Thus, in order to maintain consistency , our decision in the preceding para’s of this order for assessment year(s) 2006-07 to 2010-11 shall apply mutatis mutandis for assessment year 2011-12. We order accordingly.
33. In the result appeal of the assessee in ITA No. 2089/Del/2017 for assessment year 2011-12 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
ITA No.2090/Del/2017 [AY : 2012-13]
34. The Grounds of Appeal raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2012-13, reads as under:
The grounds hereinafter taken by the Appellant are independent and without prejudice to one another.
1. That on the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals)- 43 [hereinafter referred as “Ld. CIT(A)”] has erred in upholding additions of Rs.5,54,16,01,858 made by the Learned Deputy Director of Income Tax, International Taxation, Circle 2(2)(2), Delhi (“Ld. AO”).
2. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has grossly erred in passing a non-speaking order and confirming the additions made by the Ld. AO by mechanically following the order passed by his predecessor in AY 2005-06 and AY 2006-07, without appreciating the submissions and contentions of the Appellant and independent application of mind.
3. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the factually incorrect and legally untenable observations, allegations and conclusions of the Ld. AO that the Software Development Division of Oracle India Private Limited (“OIPL”) constitutes a Permanent Establishment (‘PE’) of the Appellant in India as per the provisions of the Income Tax Act, 1961 (“the Act”) and Article 5 of Double Taxation Avoidance Agreement between India and United States of America (“Tax Treaty”).
3.1 That on the facts and circumstances of the case and in law the CIT(A) has erred in upholding the contentions of the Ld. AO that OIPL constitutes:
•Fixed Place PE [under Article 5(1) of the Tax Treaty], allegedly through which the business of the Appellant is being carried out;
•Equipment PE, allegedly through the equipments installed at the Hyderabad premises of OIPL;
•Service PE under Article 5(2)(l) of the Tax Treaty; and
•Dependent Agent PE under Article 5(4) read with Article 5(5) of the Tax Treaty.
3.2 That on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding incorrect allegations of the Ld. AO in the assessment order inter alia including that:
•OIPL developed and transferred intangibles to the Appellant in course of performing Software Development Services.-
•Cost Plus Method adopted by the Appellant while reimbursing OIPL is not adequate considering that OIPL is conducting core business activities in India.
•The activities of OIPL are devoted wholly and exclusively for the Appellant.
•OIPL has not been compensated on the basis of the profit on business activity carried out in India.
4. Without prejudice to ground number 3 above, on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the erroneous and incorrect methodology adopted by the Ld. AO to compute and attribute profits to the alleged PE by:
(i)Attributing a sum of Rs.5,54,16,01,858 as profits attributable to the alleged PE:
(ii)Restricting the admissibility of deduction under section 44C of the Act to 5 percent of the “net profits” ignoring the provisions of Article 26 of the Tax Treaty;
(iii)Disregarding the business/commercial realities and Functions, Assets and Risk (“FAR”) analysis with respect to software development activities carried out by OIPL in India (evidenced by a Transfer Pricing Study under relevant Transfer Pricing Law and Rules) and estimating that 50 percent of the profits were attributable to the activities of the alleged PE in India on an arbitrary and ad-hoc basis.
(iv)Not allowing a deduction of the revenues earned and offered to tax by OIPL in respect of software development services provided by it to the Appellant.
4.1 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the submissions made by the Appellant that attribution of profits to the PE involves Transfer pricing principle(s) and the attribution of profits to a PE needs to be undertaken by applying the transfer pricing provisions.
4.2 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in disregarding the fact that entire functions performed by OIPL (the alleged PE)- viz rendering of software development services have been examined and the arm’s length price of these services has been determined by the Transfer Pricing Officer of OIPL, therefore, nothing further is left to be attributed to OIPL – the alleged PE of the Appellant in India.
4.3 That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in upholding the action of the Ld. AO of considering only sales and distribution expenses for arriving at the global profit and wrongly assuming that compensation paid to OIPL is already embedded in arriving at the profit margin.
4.4 That on the facts and in the circumstances of the case and in law, the CIT(A) has erred in upholding the action of the Ld. AO, who has completely ignored all the other business expenses related to the new software licenses business/ segment, thus using incorrect global profit as the starting point for attributing profits to the alleged PE in India.
5. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in levying surcharge and education cess while calculating tax liability on Royalty income (as offered to tax in the return of income), without appreciating that the rate of taxation on royalty should not exceed 15 percent as per the beneficial provisions of Article 12 of the Tax Treaty.
6. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not adjudicating on the Appellant’s ground of appeal against initiation of penalty proceedings by the Ld. AO under section 271(l)(c) of the Act.
That the Appellant prays for leave to add, alter, amend and / or vary the ground(s) of appeals as may be considered necessary and to submit such statements, documents and papers as may be considered either before or during the appeal hearing.”
35. Ground No(s). 1 & 2 are general in nature , and are dismissed accordingly. So far as Ground No. 7 is concerned, it is consequential in nature and hence stands dismissed. We order accordingly.
36. Ground No(s). 3, 4 & 5 raised by the assessee in Memo of Appeal filed with the Tribunal for assessment year 2012-13 have similar issues as those were raised by assessee for the assessment year(s) 2007-08 to 2011-12. Both the parties before us are ad-idem that facts are similar in assessment year 2012-13 as were in assessment year(s) 2006-07 to 2011-12 except for variation in amounts. Thus, in order to maintain consistency , our decision in the preceding para’s of this order for assessment year 2006-07 to 2011-12 shall apply mutatis mutandis for assessment year 2012-13. We order accordingly.
37. In the result assessee’s appeal in ITA No. 2090/Del/2017 for assessment year 2012-13 is partly allowed in the manner as indicated in the preceding para’s of this order. We order accordingly.
38. In the result, all the seven appeals of the assessee in ITA Nos. 3314/Del/2013, 5671/Del/2011, 4054/Del/2014 , 1974/Del/2014 , 2088 to 2090/Del/2017 for assessment year(s) 2006-07 to 2012-13 are partly allowed in the manner as indicated in the preceding para’s of this common order.