IN INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NOS. 2619 TO 2622/MUM/2014 : (A.Ys : 2003-04, 2005-06, 2008-09, & 4534/MUM/2014 2009-10 & 2010-11) M/s. Gartner Ireland Limited Vs. DDIT (IT), Range-3(1), C/o. BSR & Co., 1st Floor, Lodha Mumbai (Respondent) Execlus, Apollo Mills Compound, N.M. Joshi Marg, Mahalakshmi, Mumbai 400 011 (Appellant) PAN : AACCG2919B Assessee by : Shri Farrok V. Irani Revenue by : Shri Jasbir Chouhan Date of Hearing : 20/07/2016 Date of Pronouncement : 21/09/2016 ORDER PER G.S. PANNU, AM : captioned are five appeals preferred by assessee for Assessment Year 2003-04, 2005-06, 2008-09, 2009-10 & 2010-11. In all appeals, common substantive issue relates to taxability of amount received by assessee-company from Indian customers as subscription fee. 2. At time of hearing, it was common point between parties that facts and circumstances in relation to said dispute are similar in all assessment years, therefore, appeal of assessee 2 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 for Assessment Year 2003-04 is taken as lead case in order to appreciate controversy. ITA NO. 2619/MUM/2014 (A.Y : 2003-04) 3. This appeal by assessee is directed against order of CIT(A)-10, Mumbai dated 08.11.2013, pertaining to Assessment Year 2003-04, which in turn has arisen from order passed by Assessing Officer, Mumbai under section 144C(3) r.w.s. 147 r.w.s. 143(3) of Income Tax Act, 1961 (in short Act ). 4. Briefly put, relevant facts are that appellant is tax resident of Ireland and is engaged in business of distributing Gartner group s research products in form of subscription, both in Ireland and through distributors in territories where Gartner group does not have local presence. research products of assessee entail qualitative research and analysis which aids decision-making for information technology buyers, users and vendors. Assessee-company sells its subscription to Indian customers/subscribers by providing them access to its products over internet from its data server which is located outside India. Assessee-company enters into service agreements with its Indian customers/subscribers for each of Gartner services purchased, which sets out details of services to be provided and applicable subscription fee, etc. In accordance with such service agreements, Indian subscribers/customers pay subscription/access fee to assessee-company. During year under consideration, assessee-company received amount of 3 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 Rs.24,94,591/- from its Indian subscribers/customers in terms of service agreements. stand of assessee was that such receipts are not liable to be taxed in India as assessee does not have any fixed place of business or permanent establishment in India. However, Assessing Officer took view that such subscription fee was liable to be taxed in India as Royalty within meaning of Sec. 9(1)(vi) of Act as also per Article 12 of Double Taxation Avoidance Agreement (DTAA) between India and Ireland. Accordingly, Assessing Officer treated amount of Rs.24,94,595/- received by assessee from Indian customers/subscribers as Royalty. total income was determined at Rs.24,94,591/- and it has been taxed @ 10% on gross basis by relying on Article 12 of Indo-Ireland DTAA. 5. Notably, said assessment has been finalised by Assessing Officer after issuance of notice of reopening u/s 148 of Act on 30.3.2010. Assessing Officer reopened assessment for Assessment Year 2003-04 on ground that similar amounts earned by assessee in Assessment Years 2004-05 and 2007-08 were held to be taxable as Royalty in terms of Article 12 of Indo-Ireland DTAA read alongwith Sec. 9(1)(vi) of Act. CIT(A) has also sustained stand of Assessing Officer primarily by relying on judgment of Hon'ble Karnataka High Court in case of CIT (International Taxation) v. Wipro Ltd., 203 Taxman 621 (Kar). Against such decision of CIT(A), assessee is in further appeal before us. 6. Before us, it was common point between parties that similar issue had come up before Tribunal in assessee s own case 4 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 for Assessment Year 2007-08 whereby vide ITA No. 7101/Mum/2010 dated 24.7.2013 stand of Revenue has been upheld. In this context, following discussion in order of Tribunal dated 24.7.2013 (supra) is relevant :- 4. We have heard rival submissions and perused relevant material on record. At very outset, learned Departmental Representative relied on judgment of Hon ble Karnataka High Court in case of CIT (IT) v. Wipro Limited [(2011) 203 Taxman 621 (Kar.)] and submitted that Wipro Limited, customer of present assessee made payment without deduction of tax at source u/s 195 of Act. When matter finally came up before Hon ble Karnataka High Court, it was held that payments made by Wipro Limited to Gartner for online use of database was for licence to use said database and hence consideration was royalty, liable for deduction of tax at source u/s 195 of Act. 5. learned AR countered submissions advanced on behalf of Revenue by stating that issue as to whether payment should be considered as `royalty or `business profits is not free from doubt in view of conflicting judgments rendered by Hon ble Karnataka High Court in case of Wipro Limited (supra) and Hon ble Delhi High Court in case of Ericsson A.B. *(2012) 204 Taxman 192 (Del.)]. It was submitted that Mumbai Bench of Tribunal in case of DDIT (IT) v. M/s. Solid Works Corporation [ITA No.3219/Mum/2010] vide its order dated 08.01.2012 considered both judgments and thereafter took view in favour of assessee by holding that amount was in nature of `business profits and not `royalty . said decision of Mumbai Bench was subsequently followed by Mumbai Bench in another case and Pune Bench of tribunal in Allianz SE v. ADIT (IT) [(2012) 51 SOT 399 (Pune)]. In view of these three decisions given by Tribunal in assessee s favour, learned AR contended that view taken in assessee s favour should be taken. 5 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 6. We are not convinced with submissions advanced on behalf of assessee for obvious reason that Hon ble Karnataka High Court considered case in which Wipro Limited made payment to assessee and same has been held to be in nature of `royalty , liable for deduction of tax at source u/s 195. Hon ble High Court noticed in penultimate para of judgment that : payment made by respondent to M/s.Gartner, which is non-resident company, would amount to `royalty and wherefor, there is statutory obligation on part of respondent to make tax deduction ...... . We are unable to see as to how contrary view expressed by Tribunal in three orders can be adopted in case of payee-assessee, when Hon ble Karnataka High Court has rendered judgment on very same transaction in hands of payers. If argument tendered by ld. AR is accepted, it would amount to delivering opinion contrary to that of Hon ble High Court, which is obviously out of question. We, therefore, do not find any substance in arguments put forth by ld. AR. impugned order is upheld. 7. learned representative for assessee did not controvert that aforesaid decision of Tribunal continues to hold field inasmuch as it has not been altered by any higher authority. So however, learned representative pointed out that judgment of Hon ble Karnataka High Court in case of Wipro Ltd. (supra), which has been relied by Tribunal, to decide issue against assessee be not be followed for varied reasons. Firstly, according to him, assessee was not party before Hon ble Karnataka High Court and it was case where issue related to nature of payments made by M/s. Wipro Ltd. as customer of assessee-company; and secondly, that subsequently Hon ble Delhi High Court in case of Infrasoft Ltd., 39 Taxmann.com 88 (Delhi) has examined payment of similar nature and found it to be not in nature of royalty after 6 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 specifically dissenting from view of Hon ble Karnataka High Court. It has been canvassed that aforesaid development has taken place after decision of Tribunal in assessee s case for Assessment Year 2007-08 on 24.7.2013 (supra) and, therefore, under changed circumstances, later view represented by decision of Hon ble Delhi High Court in case of Infrasoft Ltd. (supra) be preferred, which ostensibly supports plea of assessee that impugned sums are in nature of business receipts not taxable in India in absence of any permanent establishment or fixed place of business. In this regard, it is pointed out in case of M/s. Capgemini Business Services (India) Ltd., ITA No. 7779/M/2011 dated 29.2.2016 Mumbai Bench has followed decision of Hon'ble Delhi High Court in preference to that of Hon'ble Karnataka High Court. Apart therefrom, learned representative for assessee also referred to certain decisions of various Benches of Tribunal, including that of Mumbai Benches, to point out that similar payments have not been found to be in nature of royalty. On this aspect, learned representative also referred to relevant discussion in para 10 of order of CIT(A) to point out that it is case which involves payment for use of copyrighted work and not for transacting in copyright itself. Such decisions are as follows :- i) M/s. Baan Global B V, ITA No. 7048/Mum/2010 dated 13.6.2016 ii) Allianz SE, [2012] 21 taxmann.com 62 (Pune) iii) M/s. Reliance Industries Ltd., [2016] 69 taxmann.com 311 (Mumbai Trib) iv) M/s. Solid Works Corporation, ITA No. 3219/Mum/2010 dated 8.1.2012 7 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 8. On other hand, ld. DR has reiterated decision of Tribunal in assessee s own case for Assessment Year 2007-08 dated 24.7.2013 (supra) which according to him fully covers controversy before us. 9. We have carefully considered rival submissions. At outset, we may notice that so far as similarity of fact-position in instant year vis-a-vis Assessment Year 2007-08 (supra) is concerned, there is no divergence between parties before us. In Assessment Year 2007-08 (supra), Tribunal considered judgment of Hon'ble Karnataka High Court in case of Wipro Ltd. (supra). Wipro Ltd., as customer of captioned assessee, had made payments for subscription/access fee to assessee-company without deduction of tax at source u/s 195 of Act. Tribunal noticed that when matter came up before Hon ble Karnataka High Court it has been held that payment made by Wipro Ltd. to assessee, M/s. Gartner Ireland Ltd., as subscription fee was in nature of royalty, thus liable for deduction of tax at source u/s 195 of Act. Ostensibly, Hon ble Karnataka High Court has considered nature of transaction which is one under consideration before us. Therefore, under these circumstances, in our view, Tribunal made no mistake in following judgment of Hon ble Karnataka High Court in case of Wipro Ltd. (supra) and holding that amounts received by assessee from Indian customers is liable to be treated as royalty. In present year too, said circumstance has not undergone change and we find no reason to depart from earlier stand of Tribunal in assessee s own case for Assessment Year 2007-08 (supra). reliance placed by 8 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 learned representative on subsequent decision of Hon ble Delhi High Court in case of Infrasoft Ltd. (supra), in our view, does not justify departure from decision of Tribunal dated 24.7.2013 (supra) because decision of Hon ble Karnataka High Court in case of Wipro Ltd. (supra) is specific to transaction before us, albeit in hands of payer of such income. Therefore, as per principles of judicial consistency and considering that decision of Tribunal dated 24.7.2013 (supra) has not been altered by any higher authority, we deem it fit and proper to decide issue in favour of Revenue and against assessee. Thus, following precedent, stand of Revenue is upheld and assessee fails. plea of learned representative before us, based on judgment of Hon'ble Supreme Court in case of Vegetable Products Ltd., 88 ITR 192 (SC), that where two views are possible, one that is favourable to assessee should be preferred, is also not acceptable. This is for reason that view of Hon'ble Karnataka High Court is specific to transaction which involves assessee herein, whereas contrary view of Hon'ble Delhi High Court is not specific to assessee before us. In this view of matter and in absence of any decision of jurisdictional High Court, we find no reason to depart from earlier decision of Tribunal in assessee s own case for Assessment Year 2007-08 with view of maintaining consistency. 10. In Assessment Years 2003-04 and 2005-06, assessee has raised another issue whereby initiation of proceedings by issuance of notices u/s 147/148 of Act has been challenged. As noted earlier, assessments have been reopened for said two assessment years 9 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 primarily based on stand of Assessing Officer taken in assessment proceedings for Assessment Years 2004-05 and 2007-08. On this aspect, only plea raised by learned representative was that in Assessment Year 2003-04 only intimation u/s 143(1) was originally made and no assessment was made as such before reopening assessment by issuance of notice u/s 148 of Act dated 30.3.2010. Similarly, for Assessment Year 2005-06 it is pointed out that return of income was filed on 15.11.2006 and no assessment was made and it was reopened by issuance of notice u/s 148 of Act dated 29.3.2010. learned representative has not made any serious arguments on this aspect of matter. 11. In any case, in our view, reopening of assessment in present case is based on stand of assessing authority for other assessment years, and thus there is enough cause and justification for invoking Sec. 147/148 of Act and following judgment of Hon ble Supreme Court in case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., 291 ITR 500 (SC) initiation of proceedings u/s 147/148 of Act are upheld. Thus, on this aspect also assessee fails. 12. Resultantly, captioned appeals of assessee are dismissed. Order pronounced in open court on 21st September, 2016. Sd/- Sd/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Date : 21st September, 2016 *SSL* 10 M/s. Gartner Ireland Ltd. ITA Nos. 2619 to 2622 & 4534/Mum/2014 Copy to : 1) Appellant 2) Respondent 3) CIT(A) concerned 4) CIT concerned 5) D.R, L Bench, Mumbai 6) Guard file By Order Dy./Asstt. Registrar I.T.A.T, Mumbai M/s. Gartner Ireland Limited v. DDIT (IT), Range-3(1), Mumbai