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HC-KAR NC: 2025:KHC:32055-DB ITA No. 247 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 247 OF 2024 BETWEEN:
PR. COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION), KORMANGALA, BANGALORE.
THE ASSISTANT COMMISSIONER INCOME OF TAX, INTERNATIONAL TAXATION, CIRCLE 1(2) KORMANGALA, BANGALORE. …APPELLANTS (BY SRI E.I. SANMATHI, SENIOR STANDING COUNSEL) AND:
M/S. IBM SINGAPORE PTE LTD., No.12, SUBRAMANYA ARCADE, BANNERGATTA MAIN ROAD, DHARMARAM COLLEGE, S.O. BANGALORE-560029, PAN: AACCI2917B REP. BY ITS DIRECTOR. …RESPONDENT (BY SMT. TANMAYEE RAJKUMAR, ADVOCATE)
Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2025:KHC:32055-DB ITA No. 247 of 2024
THIS ITA / INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 27/3/2024 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN IT (IT)A No.1139/BANG/2023 FOR A.Y. 2021-12 (ANNEXURE-A).
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 K. V. ARAVIND)
Heard Sri E.I. Sanmathi, learned Senior Standing Counsel for the appellants-Revenue, and Smt. Tanmayee Rajkumar, learned counsel for the respondent-Assessee.
The Revenue is in appeal against the order of the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (hereinafter referred to as ‘ITAT’), in IT(IT)A No.1139/Bang/2023, dated 27.03.2024, for the Assessment Year 2021-22.
The Revenue has raised the following substantial questions of law
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HC-KAR NC: 2025:KHC:32055-DB ITA No. 247 of 2024
" 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?
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 of royalty as defined in Explanation 2 to Section 9(1)(vii) of the Act and the Double Taxation Avoidance Agreement as well?
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 deemed to accrue in India under section 9(1)(vi) of the Act, requiring the deduction of tax at source?
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
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HC-KAR NC: 2025:KHC:32055-DB ITA No. 247 of 2024
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?
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 copy right 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)?"
The Tribunal has passed the impugned order by following its earlier order in ITA Nos.1311 to 1313/Bang/2018, dated 03.09.2021. The appeals filed by the Revenue against the said order, in ITA No.681/2023 and connected matters, were dismissed by this Court by judgment dated 12.08.2025.
The substantial questions of law raised in the present appeal are identical to those raised in ITA No.681/2023 and connected matters.
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HC-KAR NC: 2025:KHC:32055-DB ITA No. 247 of 2024
In view of the judgment in ITA No.681/2023 and connected matters, dated 12.08.2025, the present appeal is dismissed.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (K. V. ARAVIND) JUDGE
MV List No.: 1 Sl No.: 35