THE COMMISSIONER OF INCOME TAX vs. M/S INFORMATICA LLC

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ITA/176/2022HC KarnatakaKAHC01041850202102 July 2026Author: S.G.PANDIT,RAJESH RAI K4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises for consideration. The Court noted that the issue for Assessment Year 2016-17 was similar to that for Assessment Year 2015-16, where the ITAT had followed the Supreme Court's decision in Engineering Analysis Centre for Excellence Private Limited vs. Commissioner of Income Tax and Another. The Court further observed that a review petition against the Supreme Court's decision in Engineering Analysis was also dismissed. Therefore, in light of the binding precedent from the Apex Court, the High Court found no substantial question of law to adjudicate and dismissed the appeal. No specific finding was given on the merits of the ITAT's decision regarding Section 12(4)(b) or Article 12(4)(a) of the DTAA, as the appeal was disposed of on the preliminary ground of no substantial question of law.

What were the facts?

The appeal is filed by the Commissioner of Income-Tax and the Assistant Commissioner of Income-Tax (Revenue) against an order dated 05/07/2021 passed by the Income Tax Appellate Tribunal (ITAT), Bengaluru. The ITAT's order was in IT(IT)A No. 913/BANG/2019 for the Assessment Year 2016-2017. The Revenue is challenging the ITAT's decision to allow the assessee's appeal, which had treated the sale of ancillary services as software services akin to the sale of a software license. The Revenue seeks to set aside the ITAT's order and confirm the order of the Appellate Commissioner, which had confirmed the order of the Deputy Commissioner of Income Tax. The amount in dispute is not explicitly stated.

What were the issues?

1. Whether, on the facts and circumstances and in law, the ITAT was correct in allowing the assessee's appeal by treating the sale of ancillary services as software services similar to the sale of a software license, by following the decision in Engineering Analysis, without examining the applicability of Section 12(4)(b) of the Act, the nature of the transactions, and the contents of the agreements? (Question of law and fact) 2. Whether, on the facts and circumstances and in law, the ITAT's order is perverse for not acknowledging the assessing authority's findings that receipts from ancillary services should be taxed as Fee for Technical Services under Article 12(4)(a) of the DTAA and for ignoring the materials on record supporting those findings? (Question of law and fact) Assessee's Contentions: The assessee argued that the ITAT's order for Assessment Year 2016-17 was consistent with the ITAT's order for Assessment Year 2015-16, which was followed in the assessee's own case. The ITAT's order for AY 2015-16 was based on the Supreme Court's decision in Engineering Analysis Centre for Excellence Private Limited vs. Commissioner of Income Tax and Another. The assessee also noted that a review petition against the Engineering Analysis decision was dismissed by the Supreme Court. Revenue's Contentions: The Revenue contended that the ITAT erred in treating ancillary services as software services without proper examination of Section 12(4)(b) and the nature of transactions, and by ignoring the agreements. The Revenue also argued that the ITAT's order was perverse for not acknowledging their findings regarding Fee for Technical Services under Article 12(4)(a) of the DTAA.

Which sections of the Income-tax Act were involved?

Section 12(4)(b),Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF JULY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE RAJESH RAI K INCOME TAX APPEAL NO. 176 OF 2022 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX INTERNATIONAL TAXATION, 4TH FLOOR, BMTC BUILDING, 80 FEET ROAD, KORAMANGALA, BENGALURU-560 095. THE ASSISTANT COMMISSIONER OF INCOME-TAX INTERNATIONALTAXATION CIRCLE-1(2) PRESENT ADDRESS DCIT-INTERNATIONAL TAXATION CIRCLE-1(2), 4TH FLOOR, BMTC BUILDILNG, 80 FEET ROAD KORAMANGALA, BENGALURU-560 095. …APPELLANTS (BY SRI. M. DILIP AND SRI. E.I. SANMATHI, ADVOCATES) AND:

M/S INFORMATICA LLC C/O INFORMATICA BUSINESS SOLUTIONS PVT LTD, NO.66/1, BAGMANE COMMEZ 02, BAGMANE TECH PRAK, Digitally signed by PANKAJA S Location: HIGH COURT OF KARNATAKA

C.V RAMAN NAGAR, BENGALURU-560 093 PAN: AACC12354Q …RESPONDENT (BY SMT. MANASA ANANTHAN FOR SRI. TANMAYEE RAJKUMAR, ADVOCATE)

THE ADVOCATE FOR THE APPELLANT HAS FILED THE ABOVE ITA / INCOME TAX APPEAL UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05/07/2021 PASSED IN IT(IT)A NO. 913/BANG/2019, FOR THE ASSESSMENT YEAR 2016-2017, PRAYING TO I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY INCOME TAX APPELALTE TRIBUNAL, BENGALURU IN IT(IT)A NO. 913/BANG/2019 DATED 05/07/2021 FOR ASSESSMENT YEAR 2016-2017 ANNEXUE-C AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING ORDER PASSED BY DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE-1(2), BENGALURU.

THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE RAJESH RAI K ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT)

Heard learned counsel Sri E.I. Sanmathi along with learned counsel Sri Dilip M. for the appellants and learned counsel Smt.Manasa Ananthan for Smt.Tanmayee Rajkumar for the respondent.

This appeal is filed under Section 260A of the Income Tax Act, 1961, questioning the order dated 05.07.2021 in IT(IT)A No.913/Bang/2019 passed by the Income Tax Appellate Tribunal, "C" Bench, Bangalore, raising the following substantial questions of law: 1. "Whether on the facts and circumstances of the case and in law, the Tribunal is right in law in allowing the appeal preferred by assessee by deciding the issue of sale of ancillary services by treating same as software services akin to sale of software license by following the decision of Apex Court in case of Engineering Analysis without examining the applicability of Section 12(4)(b) of the Act and without examining the nature of transactions involved in present case and ignoring contents of agreements entered into by assesssee? Whether on the facts and circumstances of the case and in law, is not acknowledging the findings of the assessing authority relating to tax the receipts from ancillary services as Fee for Technical Services under Article 12(4)(a) of the DTAA and materials brought on record in support of findings of assessing authority and as such order passed by Tribunal is perverse in nature"? 3. However, learned counsel for the respondent would point out that the subject matter relates to Assessment Year 2016-17 and whereas in respect of Assessment Year 2015-16, the order impugned herein was followed by the Tribunal in the

case of respondent itself and the said order passed by the Tribunal for the Assessment Year 2015-16 was the subject matter in ITA No.672/2023. The said ITA was disposed of placing reliance on the decision of Hon'ble Apex Court in Engineering Analysis Centre for Excellence Private Limited vs. Commissioner of Income Tax and Another reported in AIR 2021 Supreme Court 124. Further, it is brought to our notice that the review filed against the Engineering Analysis Centre for Excellence Private Limited (supra) was also dismissed by the Hon'ble Apex Court vide order dated 11.05.2026. 4. In view of the above, we are of the considered opinion that no substantial question of law arises for consideration. Accordingly, the appeal stands dismissed. SD/- (S.G.PANDIT) JUDGE SD/- (RAJESH RAI K) JUDGE HKV List No.: 1 Sl No.: 20

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