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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.166 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.) - - - THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961 ARISING OUT OF ORDER DATED 26.04.2006
2 PASSED IN ITA NO.977/BANG/2004, FOR THE ASSESSMENT YEAR 2003-2004, PRAYING TO:
I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.977/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 2003-2004. The appeal was admitted by a bench of this Court vide order dated 08.08.2007 on the following substantial questions of law: "a) Whether the consideration paid by the Indian customers or end users to the assessee -
3 a foreign supplier, for transfer of the right to use the software/computer programme in respect of the copyrights falls within the mischief of 'royalty' as defined under sub-clause (v) to Explanation 2 to Clause (vi) of section 9(1) of the Act? b) 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?"
When the matter was taken up today, the learned counsel for the assessee submitted that the aforesaid substantial questions of law have 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.
In view of the decision of the Supreme Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra), the substantial questions of law framed in this appeal are answered in favour of the assessee and against the revenue. In the result, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE RV