Citrix Systems Asia Pacific Pty. Ltd., In re

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The Tax Publishers2012 TaxPub(DT) 1651 (AAR) : (2012) 046 (II) ITCL 0505 : (2012) 343 ITR 0001 : (2012) 248 CTR 0141 : (2012) 205 TAXMAN 0320 : (2012) 068 DTR 0185 AUTHORITY FOR ADVANCE RULINGS (INCOME TAX), NEW DELHI P.K. BALASUBRAMANYAN, & V.K. SHRIDHAR, MEMBER In re Citrix Systems Asia Pacific Pty. Ltd., A.A.R. No. 822 of 2009 6 February, 2012 Applicant by : Rajan R. Vora, Jitesh Bansal and Manoneet Dalal Department by : Meera Srivastava RULING *P.K. Balasubramanyan,* The applicant is a company incorporated in Australia. It claims to be one of the leading providers of software services which help in virtualization, networking and application delivery. It also offers a range of application collaboration, firewall, networking and streaming solutions. The applicant has entered into an agreement with independent Indian distributors for the distribution and sale of its software and hardware products in India. In the year 2006, the applicant entered into a distribution agreement with Ingram Micro India Limited (hereinafter referred to as 'Ingram'), an independent Indian company engaged in the business of distribution of computer software and hardware. Under the agreement, Ingram was appointed as a non-exclusive distributor of the products of the applicant in India. Some of the key products distributed under the agreement are Citrix XenApp, Citrix Access Gatway and Citrix Netscaler. According to the applicant, under the agreement, the software products are purchased by the distributor from the applicant and sold by the distributor. With respect to the hardware products, the applicant shifted the products directly to the distributor which in turn supplied these products to re-sellers and end-user customers. But, for the software product, Citrix XenApp, while sale and collection is made through the distributor, no physical delivery of the product is made to the distributor. On the basis of the demand of the customers for Citrix XenApp, the distributor places orders of purchase with the applicant and makes payments for the same to the applicant. The applicant then directly transmits a 'key' to the end-user customer who is required to download the XenApp software. On receipt of the key, the end-user customer downloads the software from the server of the applicant. The distributor Ingram owns the responsibility for collection of the price for the product from its customers. In addition to the distribution of hardware products and Citrix XenApp under the distribution agreement, Ingram also facilitates the execution of the Citrix Subscription Advantage Programme between the applicant and its existing customers. The programme is offered by the applicant in the form of a package of support services during the period of the programme. The support activities include product version updates, the subscription advantage news and updates and secure portal access. Ingram facilitates execution of the subscription programme in the same manner as in the case of software products. All transactions between Ingram and the applicant are on a principal to principal basis. Ingram effects direct sales to the customers at its discretion and earns a profit on every sale based on a percentage of the sale price. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1651 (AAR) : (2012) 046 (II) ITCL 0505 : (2012) 343 ITR 0001 : (2012) 248 CTR 0141 : (2012) 205 TAXMAN 0320 : (2012) 068 DTR 0185

AUTHORITY FOR ADVANCE RULINGS (INCOME TAX), NEW DELHI

P.K. BALASUBRAMANYAN, & V.K. SHRIDHAR, MEMBER

In re Citrix Systems Asia Pacific Pty. Ltd.,

A.A.R. No. 822 of 2009

6 February, 2012

Applicant by : Rajan R. Vora, Jitesh Bansal and Manoneet Dalal

Department by : Meera Srivastava

RULING

P.K. Balasubramanyan,

The applicant is a company incorporated in Australia. It claims to be one of the leading providers of software services which help in virtualization, networking and application delivery. It also offers a range of application collaboration, firewall, networking and streaming solutions. The applicant has entered into an agreement with independent Indian distributors for the distribution and sale of its software and hardware products in India. In the year 2006, the applicant entered into a distribution agreement with Ingram Micro India Limited (hereinafter referred to as 'Ingram'), an independent Indian company engaged in the business of distribution of computer software and hardware. Under the agreement, Ingram was appointed as a non-exclusive distributor of the products of the applicant in India. Some of the key products distributed under the agreement are Citrix XenApp, Citrix Access Gatway and Citrix Netscaler. According to the applicant, under the agreement, the software products are purchased by the distributor from the applicant and sold by the distributor. With respect to the hardware products, the applicant shifted the products directly to the distributor which in turn supplied these products to re-sellers and end-user customers. But, for the software product, Citrix XenApp, while sale and collection is made through the distributor, no physical delivery of the product is made to the distributor. On the basis of the demand of the customers for Citrix XenApp, the distributor places orders of purchase with the applicant and makes payments for the same to the applicant. The applicant then directly transmits a 'key' to the end-user customer who is required to download the XenApp software. On receipt of the key, the end-user customer downloads the software from the server of the applicant. The distributor Ingram owns the responsibility for collection of the price for the product from its customers. In addition to the distribution of hardware products and Citrix XenApp under the distribution agreement, Ingram also facilitates the execution of the Citrix Subscription Advantage Programme between the applicant and its existing customers. The programme is offered by the applicant in the form of a package of support services during the period of the programme. The support activities include product version updates, the subscription advantage news and updates and secure portal access. Ingram facilitates execution of the subscription programme in the same manner as in the case of software products. All transactions between Ingram and the applicant are on a principal to principal basis. Ingram effects direct sales to the customers at its discretion and earns a profit on every sale based on a percentage of the sale price.