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

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ITA/206/2017HC DelhiDLHC01037687201713 May 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE DINESH KUMAR SHARMA3 pages
AI SummaryWithdrawn

What did the High Court hold?

The Delhi High Court held that the appeals were disposed of as 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 favor of MOL Corporation on February 14, 2022, and in favor of M/S Microsoft Regional Sales Pte. Ltd. on April 13, 2022. Therefore, the High Court found no necessity to adjudicate the framed question of law as the underlying issue had been resolved by the ITAT in the assessee's favor. The operative direction was to dispose of the appeals as infructuous, implying no further action was required by the High Court on the merits of the original question.

What were the facts?

The appeals were filed by MOL Corporation and M/S MICROSOFT REGIONAL SALES PTE. LTD. (referred to collectively as the appellants) against orders passed by the Additional Director of Income Tax and Deputy Commissioner of Income Tax. The assessment years are not explicitly stated. The core issue revolved around the taxability of royalty on shrink-wrapped computer software. On March 10, 2017, the Delhi High Court admitted the appeals and framed a question of law concerning the justification of a remand on the royalty issue. Subsequently, the Assessing Officer, Dispute Resolution Panel (DRP), and the Income Tax Appellate Tribunal (ITAT) made decisions in the remand proceedings. The ITAT, in its remand proceedings, decided the royalty issue in favor of MOL Corporation on February 14, 2022, and 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 Contention: The assessee's argument, as implied by the framing of the question of law, is that the remand on the issue of royalty on shrink-wrapped computer software was not justified, particularly in light of the decision in Director of Income Tax Vs. Infrasoft Ltd. The assessee likely argued that the issue should have been decided on merits without further remand. Revenue's Contention: The revenue's contention is not explicitly recorded in the provided text. However, their participation in the proceedings and the existence of the impugned orders suggest they supported the remand or the original assessment/order that led to the remand.

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 01:24:10

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 01:24:10

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 01:24:10

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