MOL CORPORATION vs. ADDITIONAL DIRECTOR OF INCOME TAX

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ITA/205/2017HC DelhiDLHC01037635201713 May 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA3 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court of Delhi held that the present appeals had become infructuous. This decision was based on subsequent orders passed by the Income Tax Appellate Tribunal (ITAT) in the remand proceedings. The ITAT had decided the issue of royalty on shrink-wrapped computer software in favour of MOL Corporation on February 14, 2022, and in favour of M/S Microsoft Regional Sales Pte. Ltd. on April 13, 2022. Consequently, as the substantive issues had been resolved by the ITAT in favour of the appellants, the High Court found no further necessity to adjudicate on the framed question of law. The appeals were therefore disposed of without a decision on the merits of the original question of law, as the underlying dispute had been settled by a higher appellate authority.

What were the facts?

The appeals were filed by MOL Corporation and M/S MICROSOFT REGIONAL SALES PTE. LTD. (collectively referred to as the Appellants) against orders passed by various income tax authorities. The core dispute revolved around the classification of payments for shrink-wrapped computer software as royalty. The High Court of Delhi had admitted these appeals on March 10, 2017, and framed a specific question of law concerning the justification of a remand on the royalty issue. Subsequent to the High Court's admission, the Assessing Officer, Dispute Resolution Panel (DRP), and the Income Tax Appellate Tribunal (ITAT) proceeded to decide the matter. Notably, the ITAT, in remand proceedings, ruled in favour of MOL Corporation on the royalty issue on February 14, 2022, and in favour of M/S Microsoft Regional Sales Pte. Ltd. on April 13, 2022.

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 contentions: The Assessee (MOL Corporation and M/S MICROSOFT REGIONAL SALES PTE. LTD.) argued that the issue of royalty on shrink-wrapped software had been decided in their favour by subsequent orders of the Income Tax Appellate Tribunal (ITAT). They relied on the ITAT's decisions dated February 14, 2022, and April 13, 2022, which ruled in their favour on the royalty issue. Revenue's contentions: The Revenue (Additional Director of Income Tax and Deputy Commissioner of Income Tax) did not record any specific contentions in the provided text. However, their participation as respondents indicates their opposition to the Assessee's claims, likely contesting the Assessee's interpretation of royalty or the applicability of the Infrasoft Ltd. precedent.

AI-generated summary — verify with the full judgment below

$~21 to 25 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 204/2017 MOL CORPORATION ..... Appellant Through: Mr.Nageswar Rao, Advocate with Ms.Deepika Agarwal and Mr.Akshay Uppal, Advocates. versus ADDITIONAL DIRECTOR OF INCOME TAX ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel with Ms.Zehra Khan, Jr.Standing Counsel and Mr.Shray Nargotra, Advocate. 22 + ITA 205/2017 MOL CORPORATION ..... Appellant Through: Mr.Nageswar Rao, Advocate with Ms.Deepika Agarwal and Mr.Akshay Uppal, Advocates. versus ADDITIONAL DIRECTOR OF INCOME TAX ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel with Ms.Zehra Khan, Jr.Standing Counsel and Mr.Shray Nargotra, Advocate. 23 + ITA 206/2017 M/S MICROSOFT REGIONAL SALES PTE. LTD. ..... Appellant Through: Mr.Nageswar Rao, Advocate with Ms.Deepika Agarwal and Mr.Akshay Uppal, Advocates. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/06/2026 at 01:24:07

versus DEPUTY COMMISSIONER OF INCOME TAX ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel with Ms.Zehra Khan, Jr.Standing Counsel and Mr.Shray Nargotra, Advocate. 24 + ITA 212/2017 MOL CORPORATION ..... Appellant Through: Mr.Nageswar Rao, Advocate with Ms.Deepika Agarwal and Mr.Akshay Uppal, Advocates. versus ADDITIONAL DIRECTOR OF INCOME TAX ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel with Ms.Zehra Khan, Jr.Standing Counsel and Mr.Shray Nargotra, Advocate. 25 + ITA 213/2017 MOL CORPORATION ..... Appellant Through: Mr.Nageswar Rao, Advocate with Ms.Deepika Agarwal and Mr.Akshay Uppal, Advocates. Versus DEPUTY DIRECTOR OF INCOME TAX ..... Respondent Through: Mr.Kunal Sharma, Sr.Standing Counsel with Ms.Zehra Khan, Jr.Standing Counsel and Mr.Shray Nargotra, Advocate. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/06/2026 at 01:24:07

CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE DINESH KUMAR SHARMA O R D E R % 13.05.2022 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?” 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 or royalty in favour of MOL Corporation on 14th February, 2022 and M/S Microsoft Regional Sales Pte. Ltd.(MRSC) on 13th April, 2022 respectively. In view of the subsequent orders passed by the ITAT, the present appeals are disposed of as infructuous. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 13, 2022 TS This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 15/06/2026 at 01:24:07

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