THE COMMISSIONER OF INCOME TAX vs. M/S.RATIONAL SOFTWARE CORPORATION (INDIA) PVT LTD

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 30TH DAY OF AUGUST 2012 PRESENT THE HON’BLE MR. JUSTICE K. SREEDHAR RAO AND THE HON'BLE MR. JUSTICE B. MANOHAR I.T.A. NO.1096/2008 BETWEEN: 1. The Commissioner of Income Tax, International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore. 2. The Income-Tax Officer (Intl., Taxn.) Ward-19(2), Rastrothana Building, Nrupathunga Road, Bangalore. … APPELLANTS (By Sri K.V. Aravind, Adv.) AND: M/s.Rational Software Corporation (India) Ltd., 3K, Esteem Asram, Koramangala Industrial Layout, Sarjapur Road, Bangalore-25. … RESPONDENT (By Smt. Vani. H., Adv.)

2 THIS ITA IS FILED UNDER SECTION.260-A OF IT ACT, 1961 ARISING OUT OF ORDER DATED 25.7.2008 PASSED IN ITA NO.1046/BNG/2007 FOR THE ASSESSMENT YEAR 2004-2005, PRAYING TO: (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. (2) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT BANGALORE IN ITA NO.1046/BNG/2007 DATED. 25.7.2008 CONFIRM THE ORDERS OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER, (INTL. TAXN.) WARD 19(2), BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA COMING ON FOR HEARING THIS DAY, SRI K. SREEDHAR RAO, J. DELIVERED THE FOLLOWING: J U D G M E N T This court in Commissioner of Income Tax & Another Vs. Samsung Electronics Co. Ltd., and others reported in (2011) 245 CTR (KAR) 481, has held that purchase of software amounts to licence to use software for the agreed consideration and the amount so paid towards consideration, amounts to royalty. 2. In the present appeal, similar question of fact and law is involved. Therefore, the question is answered in favour of the Revenue.

3 Accordingly, the appeal is allowed. Sd/- JUDGE Sd/- JUDGE PL