Norton Lifelock Singapore PTE Ltd, formerly known as Symantec Asia Pacific PTE Ltd, challenges the Indian tax authorities’ decision from the assessment year 2017-18, wherein software sales were classified as royalty. This classification has significant implications under the Double Taxation Avoidance Agreement (DTAA) between India and Singapore.
The appeal was lodged against the order dated 31.12.2020, which was framed under sections 143(3) and 144C(13) of the Income Tax Act. Norton Lifelock filed a return declaring nil income, which was selected for complete scrutiny. The assessment focused on the revenue from software sales totaling over 2 billion INR, categorizing it as royalty taxable under both Indian law and the DTAA.
During the tribunal hearings, both sides presented their cases. Norton’s advocate, Ms. Deepika Aggarwal, argued against the assessment, citing precedents where similar disputes were ruled in favor of the assessee. On the other hand, the departmental representative, Sh. Sanjay Kumar Bharati, upheld the assessment’s findings. The tribunal, after considering the submissions and following prior rulings, especially the Supreme Court’s decision in the Engineering Analysis Centre of Excellence case, favored the appellant, setting a precedent for subsequent assessments.
The final judgment was pronounced on 27.09.2022, partly allowing the appeal and directing a re-evaluation of certain deductions. This case sets an important legal precedent on how software sales to Indian customers by entities in treaty countries should be treated under tax law, potentially influencing future taxation policies and international business operations involving software products.
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