THE COMMISSIONER OF INCOME TAX (A) vs. M/S URBAN LADDER HOME DECOR SOLUTIONS PVT LTD

THE COMMISSIONER OF INCOME TAX (A) INTERNATIONAL TAXATION 4TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU 560095

THE ASSISTANT COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE-2(2) 4TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU 560095 …APPELLANTS (BY SRI. RAVI RAJ Y V.,ADVOCATE A/W SRI. DILIP M, ADVOCATE)

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 17.08.2021 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in IT(IT)A.No.619/Bang/2020 for the assessment year 2017-18, raising the following substantial questions of law:

Whether on the facts and in the circumstances of the case, the Tribunal is right in law allowing appeal of the assessee by holding that there was no obligation on part of assessee to deduct TDS on payments made to Facebook Ireland, Ireland, Rocket Science Group, LLC, US and Amazon Web Services, Inc non-resident companies on the ground that the payments cannot be regarded as ‘Royalty’ ignoring that nature of usage of technology, model or process and equipment’s are covered by Explanation 2(iii) to Section 9(1)(vi) of the Act and therefore assessee ought to have deducted TDS on such payments.?

Whether on the facts and in the circumstances of the case, the Tribunal is right in law allowing appeal of the assessee by holding that there was no obligation on part of assessee to deduct TDS on payments made to non-resident companies without analyzing the facts and materials of the present case with provisions of respective DTAA’s? ”

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the questions of law are kept open to be adjudicated in an appropriate proceeding.