ORDER : 1. In this petition, petitioner seeks for the following reliefs:- “i. this Hon’ble Court may be pleased to issue a writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records of the Petitioner’s case and after examining the legality and validity thereof quash the impugned Order dated 04.02.2022 passed by the Respondent No.1 under Section 264 of the IT Act in DIN & Order No.ITBA/REV/F/REV7/2021-22/1039395687(1) for the AY 2019-20 vide ANNEXURE ‘J’. ii. this Hon’ble Court may be pleased to issue a writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing the Respondent No.3 to issue the eligible refund of taxes along with applicable interest under section 244A of the IT Act; iii. issue any other writ, order or direction to which the Petitioner is found entitles to in the present facts and circumstances.” 2. Heard learned Senior counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned Senior counsel for the petitioner submits that on 28.11.2019, the petitioner filed income tax returns, which was processed by respondent No.2, who issued a notice under Section 143(1) of the Income Tax Act. It was pointed out that when the petitioner filed the said returns, the various High Courts had delivered judgments as regards taxability of the income tax classified as royalty on the Income Tax Act and on the basis of the said judgments, the petitioner filed returns to seek refund in the event the said issue is answered in favour of the assessee by the Apex Court. It is submitted that subsequently, the judgment of this Court in the case of CIT Vs. Samsung Electronics Co. It is submitted that subsequently, the judgment of this Court in the case of CIT Vs. Samsung Electronics Co. Ltd. (2012) 345 ITR 494 was reversed by the Apex Court, which answered the issue in favour of the petitioner-assessee by holding that the amounts paid as resident Indian end users/distributors to non-resident computer software manufacturers/supplies as consideration for the resale/use of the computer software through end-user license agreement (EULA)/distribution agreements were not in the nature of royalty and that the same did not give rise to any taxable income in India and the persons referred to under Section 198 of the I.T. Act were not liable for TDS under Section 90 of the I.T. Act. It is accordingly submitted that pursuant to the aforesaid judgment of the Apex Court which attained finality and became conclusive and binding upon the respondents, petitioner filed revision application under Section 264 of the I.T. Act, which was rejected by the respondent by passing the impugned order at Annexure-J dated 04.02.2022, which is assailed in the present petition. 4. Per contra, learned counsel for the respondents would support the impugned order and submits that there is no merit in the petition and that the same is liable to be dismissed. 5. Before adverting to the rival submissions, it would be necessary to extract Income Tax Returns in particular, the notes appended to the Income Tax Returns, which is hereunder: “Qualys Inc., US AY 2019-20 Notes to the return of Income for the financial year 2018-19 1. Background Qualys Inc ('Qualys'/ ‘the Company') is a company incorporated in the USA. The Company is engaged in providing Software as Service (‘SaaS’) to its clients across the world. The Company is a 'tax resident’ of USA and holds a valid tax residency certificate (‘TRC’) issued by the US tax authorities, covering the period 1 April 2018 to 31 March 2019. The Company does not have a permanent establishment in India. During the Financial Year (FY) 2018-19, the Company has earned income from Saas from various third parties, Software Licence Fees and certain reimbursements from Qualys Security Techservices Pvt Ltd ('Qualys India'). 2. Income not chargeable to tax in India i. Income received under SaaS Licences model Qualys Inc offers solutions through the Saas Licenses to its customers, either directly or through-its authorized resellers/distributors in India, primarily through renewable annual subscriptions. 2. Income not chargeable to tax in India i. Income received under SaaS Licences model Qualys Inc offers solutions through the Saas Licenses to its customers, either directly or through-its authorized resellers/distributors in India, primarily through renewable annual subscriptions. Saas related income can be classified as 'Royalty' under the India Income Tax Act 1961 ('Act') and also as per the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and USA. Accordingly, the amount of INR INR 16,58,57,000 has been offered to tax by Qualys Inc in its return of income for the year. Saas related subscription fees has been classified as 'Royalty' under the IT Act as also under the provisions of the Double Taxation Avoidance Agreement (DTAA) in view of the contrary rulings of the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. Ltd (345 ITR 494) and Hon'ble Delhi High Court in the case of Infrasoft Limited (264 CTR 329) others similar judgements on this issue; and accordingly, the same has been offered to tax in the return of income filed by the Company for the year under consideration. In order to avoid litigation, the Company is offering the same to tax in its return of income, although it believes that such income ought not to be made liable to tax in India as per the provisions of India USA DTAA. As the issue of taxation of software royalty is currently sub-judice and is pending before the Supreme Court of India, the Company reserves its right to claim refund by lodging an appropriate claim basis the outcome of the matter. ii. Income received under the 'Buy-Sell Model Further, the Company has sold software subscriptions amounting to INR 63,901,598 to Qualys India. Qualys Inc considers the amount as taxable as it would be considered as "Royalty" as per the Act as may be considered as Royalty as per the DTAA. Income earned by sale of software under the buy sell model has also been classified as 'Royalty' under the IT Act as also under the provisions of the Double Taxation Avoidance Agreement (DTAA) in view of the contrary rulings of the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. Income earned by sale of software under the buy sell model has also been classified as 'Royalty' under the IT Act as also under the provisions of the Double Taxation Avoidance Agreement (DTAA) in view of the contrary rulings of the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. Ltd (345 ITR 494) and Hon'ble Delhi High Court in the case of Infrasoft Limited (264 CTR 329) and other similar judgments on this issue; and accordingly, the same has been offered to tax in the return of income filed by the Company for the year under consideration. The Company is offering the same to tax although it believes that such income ought not to be made liable to tax in India. As this matter is currently sub-judice and is before the Supreme Court of India, the Company reserves its right to claim refund basis outcome of the matter. iii. Reimbursement expenses by. Qualys India Qualys India has also made certain payments towards recharges to Qualys Inc., pertaining to various expenses, such as Payroll Processing Charges, ESOP cross-charge, Travd charges, etc. Qualys Inc had accordingly raised a debit note of INR 268,303,753 on Qualys India, the break-up of which is as follows: Payroll Processing Charges. ADP Payroll Processing has entered into a global contract with Qualys Inc for carrying out payroll processing services for Qualys Group. As such costs amounting to INR 5,705,892, attributable to Qualys India, has been charged by Qualys Inc to Qualys India, without any profit element. These charges are "reimbursements" in nature without any profit element and hence, have been treated as not chargeable to tax. As such costs amounting to INR 5,705,892, attributable to Qualys India, has been charged by Qualys Inc to Qualys India, without any profit element. These charges are "reimbursements" in nature without any profit element and hence, have been treated as not chargeable to tax. This position has also been upheld in various judicial precedents such as: • CIT v. Siemens Aktiogesellschaft, 310 ITR 320 (Bombay High Court) • Mahindra and Mahindra Ltd. vs. DCIT, 122 TT 577 • CIT v. Industrial Engineering Projects Pvt. Ltd. 202 ITR 1014 (Delhi HC) • Rolls Royce India Ltd. v ITO, 25 ITD 136 (Del) (TM) • Zuari Agro Chemicals, ITA No. 3834/3835 of 1984 (Mum) • United Hotels Ltd. v. ITO, 93 TT 882 (Delhi HC) • CIT vs. Indian Textile Engineers, 141 ITR 69 (Bombay HC) However, without prejudice to the argument that these are mere reimbursements, the above payments, if regarded as made towards services rendered, would also not fall within the character of "fees for technical services" under Article 12 of the DTAA, as the services rendered do not make available any technical knowledge, experience or skill, know-how or processes to Qualys India, which enable them to apply it independently / utilize it on its own in the future. This contention has been upheld in various judicial pronouncements listed such as: • US Technology Resources (P.) Ltd. 407 ITR 327 (Kerala High Court) • Ernst & Young (P) Ltd. 323 ITR 184 (AAR) • Raymond Ltd. vs. DCIT, 86 ITD 791 (Mumbai Tribunal) • CIT v. De Beers India Minerals Private Limited, 346 ITR 467 (Karnataka HC) • Sandvik Australia Pty. Ltd. vs. DDIT (Int. Tax)-11, Pune, 141 ITD 598 (Pune Tribunal) • C.E.S.C. Ltd. 87 ITD 653 (Karnataka HC) • Federation of Indian Chambers of Commerce and Industries (FICCI), 320 ITR 124 (AAR) • DIT v. Guy Carpenter & Co. Ltd. 346 ITR 504 (Delhi HC) Hence, the reimbursements of payroll processing charges from Qualys India has not been offered to tax by Qualys Inc. ESOPS/RSUS cross recharge Qualys Inc. as a part of Global Policy, grants employees of Qualys India, ESOPs/RSUS. The stock based compensation cost pertaining to India employees is cross- charged from Qualys Inc. to Qualys India through inter-company accounting without any mark-up. ESOPS/RSUS cross recharge Qualys Inc. as a part of Global Policy, grants employees of Qualys India, ESOPs/RSUS. The stock based compensation cost pertaining to India employees is cross- charged from Qualys Inc. to Qualys India through inter-company accounting without any mark-up. As such, the cross charge by Qualys Inc pertaining to ESOP expenses is on a cost to cost basis and there is no income element involved. Appropriate taxes have been withheld as per provisions of section 192 of the Act with respect to ESOP perquisite in the hands of the employee. The Company had placed reliance on the ruling pronounced by Mumbai Tribunal in the case of Temasek Holdings Advisors (1) (P.) Ltd. vs. DCIT and the ruling pronounced in the case of Burt Hill Design (P) Ltd vs DDIT², wherein the principle emerging is that if the income embedded in the payments, being in the nature of income chargeable to tax under the head 'income from salaries, the assessee cannot be said to have any tax withholding obligations under section 195. Thus, the reimbursement of employee cost to Qualys Inc. is already taxed as "Salary" in the hands of the employees and appropriate withholding is also done under section 192. Accordingly, the Qualys India had not withheld taxes on such reimbursement and hence, the same is not taxable in the hands of Qualys inc. Travel expenses: Qualys Inc has incurred various costs in relation to travel charges, amounting to INR 1,688,922/ on behalf of Qualys India. The said expenses has been cross-charged to Qualys India on a 'cost to cost basis without any profit mark-up. As there is no profit element involved in such reimbursement, the same is not taxable in India. Reliance in this regard has been placed inter alia, on the following judicial precedents: • CIT v. Siemens Aktiogesellschaft, 310 ITR 320 (Bombay High Court) • Mahindra and Mahindra Ltd. vs. DCIT, 122 TT 577 • CIT v. Industrial Engineering Projects Pvt. Ltd. 202 ITR 1014 (Delhi HC) • Rolls Royce India Ltd. v ITO, 25 ITD 136 (Del) (TM) • Zuari Agro Chemicals, ITA No. 3834/3835 of 1984 (Mum) • United Hotels Ltd. v. ITO, 93 TTJ 882 (Delhi HC) • CIT vs. Indian Textile Engineers, 141 ITR 69 (Bombay HC) and Accordingly, Qualys Inc has not offered the payment received towards recharges of expenses to tax, in its tax computation. Refund After considering all the above mentioned incomes earned during the year under consideration and the taxes deducted thereon by various parties, the Company is eligible for tax refund of INR 24,350 plus due interest. 3. Transfer pricing compliance The Company has entered into ‘international transactions' with 'associated enterprises' as per the provisions of section 92A of the Income-tax Act, 1961 [‘the Act'). The transactions have been carried out at an arm's length price as defined in section 92F (ii) of the Act. A copy of the accountant's report under section 92E of the Act has been uploaded alongwith the original return of income filed within the due date as per the Act.” 6. As can be seen from the aforesaid notes to the Return of Income filed by the petitioner, the petitioner’s income is declared as taxable income and the petitioner paid taxes on the basis of the judgment of this Court in the case of Samsung Electronics (supra) and filed returns and paid taxes by reserving liberty to seek liberty upon disposal of the matter by the Apex Court. Subsequently, vide final order dated 02.03.2021 passed in Civil Appeal Nos. 8733 and 2734 of 2018, Engineering Analysis Centre of Excellence Private Limited Vs. The Commissioner of Income Tax and another (Annexure-D) , the Apex Court held as under: “2. The appeals in these cases are by both the assessees as well as the Department of Revenue, Ministry of Finance [“Revenue”]. Whereas the 6 assessees have succeeded in the question that was posed before the High Court of Delhi,1 the Revenue has succeeded insofar as the same question was posed before the High Court of Karnataka,2 and in the ruling by the Authority for Advance Rulings [“AAR”], impugned in C.A. No. 8990/2018. 3. One group of appeals arises from a common judgment of the High Court of Karnataka dated 15.10.2011 reported as CIT v. Samsung Electronics Co. 3. One group of appeals arises from a common judgment of the High Court of Karnataka dated 15.10.2011 reported as CIT v. Samsung Electronics Co. Ltd., (2012) 345 ITR 494, by which the question which was posed before the High Court, was answered stating that the amounts paid by the concerned persons resident in India to nonresident, foreign software suppliers, amounted to royalty and as this was so, the same constituted taxable income deemed to accrue in India under section 9(1)(vi) of the Income Tax Act, 1961 [“Income Tax Act”], thereby making it incumbent upon all such persons to deduct tax at source and pay such tax deductible at source [“TDS”] under section 195 of the Income Tax Act. This judgment dated 15.10.2011 has been relied upon by the subsequent impugned judgments passed by the High Court of Karnataka to decide the same question in favour of the Revenue. 4. The appeals before us may be grouped into four categories: i) The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer. ii) The second category of cases deals with resident Indian companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users. iii) The third category concerns cases wherein the distributor happens to be a foreign, non- resident vendor, who, after purchasing software from a foreign, non-resident seller, resells the same to resident Indian distributors or end-users. iv) The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment by foreign, non-resident suppliers to resident Indian distributors or end-users. 168. Given the definition of royalties contained in Article 12 of the DTAAs mentioned in paragraph 41 of this judgment, it is clear that there is no obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end- users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9(1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases. 169. Our answer to the question posed before us, is that the amounts paid by resident Indian end- users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use 226 of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment. 170. The appeals from the impugned judgments of the High Court of Karnataka are allowed, and the aforesaid judgments are set aside. The ruling of the AAR in Citrix Systems (AAR) (supra) is set aside. The appeals from the impugned judgments of the High Court of Delhi are dismissed.” 7. A perusal of the impugned order at Annexure-J dated 04.02.2022 will indicate that despite the said judgment of the Apex Court having been produced and relied upon by the petitioner, the respondent summarily rejected the revision petition on the erroneous premise that the petitioner having declared income on its own will and volition and never challenged the taxability of the amount before any judicial forum, cannot be permitted to retract from the same, I am of the considered opinion that the said finding recorded by the respondent in rejecting the revision application on the ground that the petitioner having declared his income on its own will and volition cannot take benefit of the judgment of Engineering Analysis (supra), in as much as the notes appended to the Income Tax Returns, the petitioner has categorically stated that in the event the petitioner files a revision application, the respondent would pass order in favour of the assessee and the petitioner would be entitled to seek refund of the tax paid by him. Consequently, the said finding recorded by the respondent deserves to be set aside. 8. Consequently, the said finding recorded by the respondent deserves to be set aside. 8. The respondent has also committed an error in coming to the conclusion that the petitioner was not a party to the order passed in the case of Engineering Analysis (supra) and the said judgment would not enure to the benefit of the assessee. In this context also, the respondent failed to appreciate that the Apex Court is dealing with the issue/question as to whether the income in the hands of the assessee was taxable or not including the petitioner, who was similarly situated and consequently, the respondents clearly fell in error in coming to the conclusion that it is not permissible for the petitioner to seek judgment on the erroneous premise that the petitioner was not a party to the said order/proceedings and as such, the said finding recorded by the respondent also deserves to be set aside. However, since the claim of the petitioner seeking revision of the notice/intimation issued under Section 143(1) has been summarily rejected without adverting to the merits of the petition and claim for refund of the tax paid by the petitioner, I deem it just and appropriate to allow the petition by setting aside the impugned order and by remitting the matter back to the respondent for reconsideration afresh in accordance with law, within a stipulated timeframe.9. In the result, I pass the following: ORDER (i) The petition is allowed. (ii) The impugned order at Annexure-J dated 04.02.2022 passed by respondent No.1, is hereby set aside. (iii) The matter is remitted back to respondent No.1 for reconsideration of the revision application at Annexure-E submitted by the petitioner dated 30.03.2021, for reconsideration afresh in accordance with law, bearing in mind the observations made in body of the order and the judgment of the Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited Vs. The Commissioner of Income Tax and another, Civil Appeal Nos. 8733 and 2734 of 2018 dated 02.03.2021 and also the observations made in the body of this order. (iv) The petitioner shall appear before respondent No.1 on 15.12.2025, without awaiting further notice. (v) Liberty is reserved in favour of the petitioner to file pleadings, documents etc. The Commissioner of Income Tax and another, Civil Appeal Nos. 8733 and 2734 of 2018 dated 02.03.2021 and also the observations made in the body of this order. (iv) The petitioner shall appear before respondent No.1 on 15.12.2025, without awaiting further notice. (v) Liberty is reserved in favour of the petitioner to file pleadings, documents etc. which shall be considered by the respondents, who shall pass appropriate orders within a period of three months from the date of receipt of a copy of this order.