THE COMMISSIONER OF INCOME TAX vs. M/S SOFTWARE AND SILICON SYSTEMS (I) PVT LTD

PDF · subscribers
ITA/165/2007HC KarnatakaKAHC01017050200731 May 2021Bench: ALOK ARADHE,HEMANT CHANDANGOUDAR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed a Supreme Court judgment which held that payments for software are not royalty. Consequently, the assessee was not liable to deduct tax at source on such payments.

What were the facts?

The Revenue appealed against an ITAT order holding that payments made by the assessee to foreign software suppliers were not royalty. The ITAT also held that these payments did not give rise to income taxable in India, and thus, no TDS was required.

What were the issues?

Whether payments made for software to foreign suppliers constitute royalty and are taxable in India, requiring TDS.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 31ST DAY OF MAY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR.JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO.165 OF 2007 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX

INTERNATIONAL TAXATION

RASTROTHANA BUILDING

NRUPATHUNGA ROAD

BANGALORE. 2. THE INCOME-TAX OFFICER

INTERNATIONAL TAXATION

WARD-19(2), RASTROTHANA BUILDING

NRUPATHUNGA ROAD, BANGALORE.

... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: M/S. SOFTWARE AND SILICON SYSTEMS(I) PVT. LTD., NO.136, AIRPORT ROAD BANGALORE-17.

... RESPONDENT (BY SRI. T. SURYANARAYANA, ADV.) - - -

2 THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 26.04.2006 PASSED IN ITA NO.976/BANG/2004, FOR THE ASSESSMENT YEAR 2002-2003, PRAYING TO:

I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. II. ALLOW THE APPEALS AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.976/BANG/ 2004 DATED 26.04.2006 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE INCOME TAX OFFICER, INTERNATIONAL TAXATION, WARD-19(2), BANGALORE, IN THE INTEREST OF JUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr.K.V.Aravind, learned counsel for the revenue. Mr.T.Suryanarayana, learned counsel for the assessee. This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue against the order dated 26.04.2006 passed by the Income Tax Appellate Tribunal, Bangalore. The subject matter of the appeal pertains to the Assessment year 2002-2003. The appeal was admitted by a bench of this Court vide order dated 19.07.2007 on the following substantial question of law:

3 “Whether on facts and circumstances of the case, the ITAT was justified in holding that the amount(s) paid by the appellant(s) to the foreign software Suppliers was not 'royalty' and that the same did not give rise to any 'income taxable in India and therefore, the appellant(s) was not liable to deduct any tax at source?”

2.

When the matter was taken up today, the learned counsel for the assessee submitted that the aforesaid substantial question of law has already been answered in favour of the assessee by the Supreme Court vide judgment dated 02.03.2021 in Civil Appeal Nos.8733-8734/2018 viz., 'ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED Vs. THE COMMISSIONER OF INCOME TAX'. 3. The aforesaid submission has not been disputed by the learned counsel for the revenue.

4.

In view of the decision of the Supreme Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra), the substantial question of law

4 framed in this appeal is answered in favour of the assessee and against the revenue. In the result, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE RV

More judgments on Section 260-A

All 2,570 judgments and leading authorities on Section 260-A →

Recent GST High Court judgments

Search GST case law →