MICROSOFT REGIONAL SALES CORPORATION, USA vs. DEPUTY DIRECTOR OF INCOME TAX

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ITA/203/2017HC DelhiDLHC01037682201719 May 20222 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court noted that on March 10, 2017, it had admitted the appeals and framed a specific question of law regarding the justification of remand on the issue of royalty on shrink-wrapped computer software, referencing the case of Director of Income Tax Vs. Infrasoft Ltd. Subsequently, the Income Tax Appellate Tribunal (ITAT) passed orders in the remand proceedings. Specifically, the ITAT decided the issue of royalty in favor of MOL Corporation on February 14, 2022, and M/S Microsoft Regional Sales Pte. Ltd. (MRSC) on April 13, 2022. In light of these subsequent ITAT orders which resolved the core dispute in favor of the assessees, the High Court deemed the present appeals infructuous. Therefore, no decision was made on the merits of the framed question of law by the High Court itself.

What were the facts?

The appeals before the Delhi High Court concerned the assessment years not specified in the judgment. The appellant in ITA 203/2017 was Microsoft Regional Sales Corporation, USA, and in ITA 432/2019 was M/S MOL Corporation. The respondent was the Deputy Director of Income Tax and Assistant Commissioner of Income Tax, respectively. The appeals challenged orders that led to a remand on the question of royalty on shrink-wrapped computer software. Subsequently, the Income Tax Appellate Tribunal (ITAT) decided the issue of royalty in favor of MOL Corporation on February 14, 2022, and M/S Microsoft Regional Sales Pte. Ltd. (MRSC) on April 13, 2022. The High Court had previously admitted the appeals and framed a question of law on March 10, 2017.

What were the issues?

1. Whether, in the circumstances of the case and placing reliance on the case of Director of Income Tax Vs. Infrasoft Ltd. [2014] 264 CTR 329, the remand on the question of royalty on shrink-wrapped computer software was justified? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee in relation to the question of law framed. The framing of the question itself suggests the assessee might have been aggrieved by the remand order on the royalty issue. Revenue's Contention: The judgment does not record any specific contentions made by the revenue in relation to the question of law framed. The revenue would have likely supported the remand order or argued for the royalty to be taxed.

AI-generated summary — verify with the full judgment below

ITA 203/2017 & ITA 432/2019 Page 1 of 2 $~19 & 21 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 203/2017 & CM APPL.18989/2022 MICROSOFT REGIONAL SALES CORPORATION, USA ..... Appellant Through: Mr. Nageswar Rao and Ms. Deepika Agarwal, Advocates. Versus DEPUTY DIRECTOR OF INCOME TAX ..... Respondent Through: Mr. Kunal Sharma, Advocate. 21 + ITA 432/2019 & CM APPL.20132/2019 M/S MOL CORPORATION ..... Appellant Through: Mr. Nageswar Rao and Ms. Deepika Agarwal, Advocates. Versus ASSISTANT COMMISSIONER OF INCOME TAX ..... Respondent Through: Mr. Ruchir Bhatia and Ms. Mansie Jain, Advocates. % Date of Decision: 19th May, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHAN HON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001961

ITA 203/2017 & ITA 432/2019 Page 2 of 2 J U D G M E N T MANMOHAN, J (Oral): 1. On 10th March, 2017, this Court had admitted the present batch of matters and framed the following question of law: “Whether in the circumstances of the case and placing reliance on the case of Director of Income Tax Vs. Infrasoft Ltd. [2014] 264 CTR 329, the remand on the question of royalty on shrink wrapped computer software was justified?” 2. Subsequently, in pursuance to the impugned remand orders, the Assessing Officer, Dispute Resolution Panel (DRP) as well as ITAT have decided the matter. In fact, the Income Tax Appellate Tribunal (‘ITAT’), in remand proceedings has decided the issue of royalty in favour of MOL Corporation on 14th February, 2022 and M/S Microsoft Regional Sales Pte. Ltd.(MRSC) on 13th April, 2022 respectively. 3. In view of the subsequent orders passed by the ITAT, the present appeals are disposed of as infructuous. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J MAY 19, 2022 AS This is a digitally signed Judgement. NEUTRAL CITATION NO: 2022/DHC/001961

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