COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -1 vs. ERICSSON, AB SWEDEN

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ITA - 700 / 2023HC Delhi06 December 20233 pages
For Petitioner: RUCHIR BHATIA
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What did the High Court hold?

The High Court noted that one of the proposed questions of law regarding software sales being taxable as royalty was covered by a Supreme Court decision against the Revenue. Therefore, notice was issued only on the question of business connection/PE.

What were the facts?

The Revenue appealed against an ITAT order concerning AY 2004-05. The appeal questioned whether Ericsson AB had a business connection or Permanent Establishment in India for GSM system supply and if software sale receipts were taxable as royalty.

What were the issues?

Whether the ITAT correctly held that Ericsson AB had no business connection or Permanent Establishment in India, and whether receipts from software sales are taxable as royalty under the Act and DTAA.

Which sections of the Income-tax Act were involved?

Section 9,Section 90,Section 90(2)

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$~43 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ ITA 700/2023 & CM Nos.62871-72/2023

COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -1

..... Appellant Through: Mr Ruchir Bhatia, Sr Standing Counsel.

versus

ERICSSON, AB SWEDEN

..... Respondent Through: Ms Sumisha, Adv. for Mr Vishal Kalra, Adv.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA

O R D E R %

06.12.2023

[Physical Hearing/Hybrid Hearing (as per request)] CM No.62871/2023 1. Allowed, subject to just exceptions. CM No.62872/2023 [Application filed on behalf of the appellant seeking condonation of delay of 460 days in re-filing the appeal] 2. This is an application filed on behalf of the appellant/revenue, seeking condonation of delay in re-filing the appeal. 2.1 According to the appellant/revenue, there is a delay of 460 days in re- filing the appeal. 3. Ms Sumisha, who appears on behalf of the respondent/assessee, says that she would have no objection if the delay in re-filing is condoned. ITA 700/2023

page 1 of 3 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 27/03/2026 at 13:33:56

3.1 It is ordered accordingly. 4. The application is, accordingly, disposed of. ITA 700/2023 5. This appeal concerns Assessment Year (AY) 2004-05. 6. Via the instant appeal, the appellant/revenue seeks to assail the order dated 27.10.2021 passed by the Income Tax Appellate Tribunal [in short, “Tribunal”]. 7. The appellant/revenue has proposed the following questions of law: “(i) Whether on the facts and in the circumstances of the case and in law, the Ld. ITAT is correct in holding that Ericsson AB has no business connection in India in respect of supply of GSM System by Ericsson AB to Cellular Operators in India and there is no Permanent Establishment (PE) in the form in India in subject A.Y. and therefore no attribution of profit is required ? (ii) Whether on the facts and in the circumstances of the case and in law, the Ld. ITAT is correct in holding that receipts of assessee from sale of software is not taxable as Royalty under the Act and India -Sweden DTAA?”

8.

Mr Ruchir Bhatia, learned senior standing counsel, who appears on behalf of the appellant/revenue, cannot but accept that insofar as the proposed question of law no. (ii) is concerned, it stands covered against the appellant/revenue by virtue of the decision rendered by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. v. Commissioner of Income Tax & Anr., (2022) 3 SCC 321. 8.1 Therefore, no substantial question of law arises for consideration so far as the proposed question of law no. (ii) is concerned. 9. Thus, notice in the appeal shall be issued to the respondent/assessee, confined to the proposed question of law no. (i).

ITA 700/2023

page 2 of 3 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 27/03/2026 at 13:33:56

10.

Accordingly, issue notice. 10.1 Ms Sumisha accepts notice on behalf of the respondent/assessee. 11. Learned counsel for the parties will file written submissions, not exceeding three pages each, at least five days before the next date of hearing. 12. List the matter on 10.04.2024.

RAJIV SHAKDHER, J

GIRISH KATHPALIA, J

DECEMBER 6, 2023

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ITA 700/2023

page 3 of 3

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 27/03/2026 at 13:33:56

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