PR. COMMISSIONER OF INCOME TAX vs. M/S IBM INDIA PVT LTD.,

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HC-KAR NC: 2025:KHC:38446-DB ITA No. 649 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL NO. 649 OF 2023 BETWEEN:

AND:

M/S IBM INDIA PVT LTD., NO.2, SUBRAMANYA, ARCADE, BANNERGATTA MAIN ROAD, BANGALORE-560029, PAN AACCI2917B …RESPONDENT (BY SMT. MAHIMA GOUD., AGA)

THIS INCOME TAX APPEAL IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 08/06/2023 PASSED IN ITA NO. 317/BANG/2023, FOR THE ASSESSMENT YEAR 2016-2017 PRAYING TO DECIDE THE

Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2025:KHC:38446-DB ITA No. 649 of 2023

FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HONBLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 08/06/2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO. 317/BANG/2023 FOR A.Y.2016-2017 (ANNEXURE-A) AND ETC.,

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 K. V. ARAVIND

ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT)

This appeal filed under Section 260A of the Income Tax Act, 1961 is directed in its common order in ITA No.317/Bang/2023 dated 08.06.2023 raising the following substantial questions of law: 1. "Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in by holding that the payment made to non-resident entities in respect of purchase of software was not royalty and that the same did not give rise to income taxable in India and therefore, the petitioners were not liable to deduct tax at source under section 195 of the Act"? 2. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the payments made to non-resident entities were not in the nature

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HC-KAR NC: 2025:KHC:38446-DB ITA No. 649 of 2023

of royalty as defined in Explanation 2 to Section 9(1)(vii) of the Act and the Double Taxation Avoidance Agreement as well"? 3. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the sale of software license did not include a right or interest in copyright, which thus did not give rise to payment of royalty and would be an income deeded to accrue in India under section 9(1)(vi) of the Act, requiring the deduction of tax at source"? 4. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in not considering the fact that the development of advanced cloud-based computer software by the assessee would not come under copyright as envisaged in Section 14(a)/14(b) of the Copy Right Act"? 5. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in not appreciating that conditions for holding applying Explanation 2(v) to Section 9(1)(vi) of the Act were fully satisfied in present case as payments were made to a non- resident by way of royalty for use of or the right to use any copyright and Review Petition filed by Revenue is pending for adjudication before Supreme Court in case Engineering Analysis Centre of Excellence (reported in 432 ITR page 471)"?

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HC-KAR NC: 2025:KHC:38446-DB ITA No. 649 of 2023

04.03.2025. In view of the said order the further consideration of the present appeal would not arise.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (K. V. ARAVIND) JUDGE

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