MOL CORPORATION vs. DEPUTY DIRECTOR OF INCOME TAX

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ITA/213/2017HC DelhiDLHC01037672201713 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 noted that on March 10, 2017, it had admitted the batch of matters and framed a question of law concerning 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. The Court observed that subsequent to the framing of this question, the Assessing Officer, Dispute Resolution Panel (DRP), and the ITAT had indeed decided the matter. Specifically, the ITAT, in remand proceedings, had ruled in favor of MOL Corporation on February 14, 2022, and in favor of M/S Microsoft Regional Sales Pte. Ltd. on April 13, 2022. In light of these subsequent decisions by the ITAT, which resolved the core dispute, the High Court deemed the present appeals infructuous. Therefore, the High Court did not decide the framed question of law on its merits but disposed of the appeals as infructuous.

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 the Income Tax Appellate Tribunal (ITAT), Dispute Resolution Panel (DRP), and Assessing Officer. The core issue 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. Subsequently, the ITAT, in 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. These subsequent decisions rendered the pending High Court appeals infructuous.

What were the issues?

1. Whether, in the circumstances of the case and relying on the decision in 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? Assessee's Contentions: The judgment does not record specific contentions made by the assessee (MOL Corporation and M/S MICROSOFT REGIONAL SALES PTE. LTD.) at the High Court stage. However, the framing of the question of law implies that the assessee likely argued that the remand was not justified and that the issue of royalty on shrink-wrapped software should have been decided on merits, potentially in their favor, citing the Infrasoft Ltd. precedent. Revenue's Contentions: The judgment does not record specific contentions made by the revenue (Additional Director of Income Tax and Deputy Commissioner of Income Tax) at the High Court stage. It is implied that the revenue supported the remand proceedings or the original assessment/appellate orders 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 01:24:13

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 01:24:13

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 01:24:13

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