The Commissioner of Income-tax-International Taxation-2 v. ZTE Corporation
[Citation -2019-LL-0826-83]

Citation 2019-LL-0826-83
Appellant Name The Commissioner of Income-tax-International Taxation-2
Respondent Name ZTE Corporation
Court HIGH COURT OF DELHI AT NEW DELHI
Relevant Act Income-tax
Date of Order 26/08/2019
Judgment View Judgment
Bot Summary: At the outset, Mr. Ruchir Bhatia learned counsel for the Appellant very fairly states that the issues/questions framed in the present appeals are covered by the decision of this Court in Commissioner of Income Tax, International Taxation v. ZTE Corporation 392 ITR 80. Is the impugned order correct in its interpretation of Section 234B of the Income Tax Act, 1961, in the facts and circumstances of the case. The findings returned by this Court in the said decision read as follows: 22. In the present case, the facts are closely similar to Ericson. As far as the question of interest payments and Section 234B is concerned, the court is of the opinion that the issue is covered by GE Packaging. In the present case as well, the same DTAA is under consideration as was considered by this Court in ZTE Corporation. Following the aforesaid decision, we dismiss the present appeals.


$ 3, 4 & 6 * IN HIGH COURT OF DELHI AT NEW DELHI + ITA 763/2019 COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -2 Appellant Through: Mr. Ruchir Bhatia, Advocate. versus ZTE CORPORATION ..... Respondent Through: Mr. Rohan Khare, Advocate. + ITA 769/2019 COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -2 ..... Appellant Through: Mr. Ruchir Bhatia, Advocate. versus ZTE CORPORATION ..... Respondent Through: Mr. Rohan Khare, Advocate. + ITA 771/2019 COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -2 ..... Appellant Through: Mr. Ruchir Bhatia, Advocate. versus ZTE CORPORATION ..... Respondent Through: Mr. Rohan Khare, Advocate. CORAM: HON'BLE MR. JUSTICE VIPIN SANGHI HON'BLE MR. JUSTICE SANJEEV NARULA ORDER % 26.08.2019 CM. APPL. 37076/2019 in ITA 769/2019 & CM. APPL. 37077/2019 in ITA 771/2019 1. Exemption allowed, subject to all just exceptions. 2. application stands disposed of. ITA 763/2019, ITA 769/2019 & ITA 771/2019 3. At outset, Mr. Ruchir Bhatia learned counsel for Appellant very fairly states that issues/questions framed in present appeals are covered by decision of this Court in Commissioner of Income Tax, International Taxation v. ZTE Corporation (2017) 392 ITR 80 (Delhi). questions of law framed in said appeal were as follows: (i) Are ITAT s findings with respect to interpretation of Article 12 (3) of Indo-China Double Taxation Avoidance Agreement (DTAA), in light of Explanations 5 & 6 to Section 9 (1) (vi), erroneous in law. (ii) Is impugned order correct in its interpretation of Section 234B of Income Tax Act, 1961, in facts and circumstances of case. 4. findings returned by this Court in said decision read as follows: 22. In present case, facts are closely similar to Ericson. supplies made (of software) enabled use of hardware sold. It was not disputed that without software, hardware use was not possible. mere fact that separate invoicing was done for purchase and other transactions did not imply that it was royalty payment. In such cases, nomenclature (of license or some other fee) is indeterminate of true nature. Nor is circumstance that updates of software are routinely given to assessee s customers. These facts do not detract from nature of transaction, which was supply of software, in nature of articles or goods. This court is also not persuaded with submission that payments, if not royalty, amounted to payments for use of machinery or equipment. Such submission was never advanced before any of lower tax authorities; moreover, even in Ericson (supra), similar provision existed in DTAA between India and Sweden. 23. As far as question of interest payments and Section 234B is concerned, court is of opinion that issue is covered by GE Packaging (supra). This question of law too is answered against revenue, and in favour of assessee. 5. In present case as well, same DTAA is under consideration as was considered by this Court in ZTE Corporation (supra). Following aforesaid decision, we dismiss present appeals. VIPIN SANGHI, J SANJEEV NARULA, J AUGUST 26, 2019 nk Commissioner of Income-tax-International Taxation-2 v. ZTE Corporation
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