Karnataka High Court
Prl., Commissioner Of Income Tax vs M/S Ibm India Pvt Ltd on 4 March, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
-1-
NC: 2025:KHC:9113-DB
ITA No. 632 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 4TH DAY OF MARCH, 2025
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
INCOME TAX APPEAL NO. 632 OF 2023
BETWEEN:
1. PRL., COMMISSIONER OF INCOME TAX,
(INTERNATIONAL TAXATION),
KORMANGALA, BANGALORE.
2. THE DEPUTY COMMISSIONER OF
INCOME TAX, INTERNATIONAL TAXATION,
CIRCLE1(2), KORMANGALA,
BANGALORE.
...APPELLANTS
(BY SRI. E.I.SANMATHI, ADVOCATE)
AND:
M/S. IBM INDIA PVT. LTD.,
NO.2, SUBRAMANYA ARCADE,
Digitally signed BANNERGHATTA MAIN ROAD,
by SHAKAMBARI
BANGALORE - 560 029, PAN:AACCI2917B.
Location: HIGH
COURT OF ...RESPONDENT
KARNATAKA (BY SMT.TANMAYEE RAJKUMAR, ADVOCATE)
THIS ITA/INCOME TAX APPEAL IS FILED UNDER SEC.260-
A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED
08/06/2023 PASSED IN ITA NO.318/BANG/2023, FOR THE
ASSESSMENT YEAR 2017-18 PRAYING TO 1.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 08/06/2023 PASSED BY THE INCOME TAX
APPELLATE TRIBUNAL, 'C' BENCH, BANGALORE, AS SOUGHT
-2-
NC: 2025:KHC:9113-DB
ITA No. 632 of 2023
FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL
PROCEEDINGS IN ITA NO.318/BANG/2023 FOR A.Y. 2017-18
(ANNEXURE - A) AND GRANT SUCH OTHER RELIEF AS DEEMED
FIT, IN THE INTEREST OF JUSTICE.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
and
HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
ORAL JUDGMENT
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
This appeal by the Revenue calls in question the ITAT
order dated 08.06.2023 whereby its appeals vide ITA
Nos.317 & 318/Bang/2023 for the Assessment Years
2015-16 & 2017-18 have been negatived. The Revenue
has framed the following as the substantial questions of
law:
"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"?
2. Whether on the facts and in the
circumstances of the case, the Tribunal's order
NC: 2025:KHC:9113-DB
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?
3. 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 deeded to accrue in India under section
9(1)(vi) of the Act, requiring the deduction of
tax at source?
4. 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 the development of advanced cloud-based
computer software by Section 14(a)/14(b) of
the Copy Right Act?
5. 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)?"
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2. Learned counsel representing the assessee submits
that the fact matrix of this appeal is substantially similar to
the one in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE
(P) LTD., VS. COMMISSIONER OF INCOME TAX1, wherein the
questions raised by the Revenue are answered in favour of
the assessee and that even the review petition in Diary
No.35475/2023 in C.A.Nos.106/2013 & 1407/2013, vide
order dated 23.04.2024 has been negatived. Despite
vehement submissions learned Panel Counsel appearing
for the Revenue is not in a position to demonstrate that
this appeal is not covered by the said decision.
3. Our system operates ordinarily on the principle of
parity and equality, in the sense that like cases should be
decided alike, unless there are demonstrable differences,
which are absent in this case.
In the above circumstances, this appeal is liable to
be and accordingly rejected, costs having been made
easy.
[2021] 125 taxmann.com 42 (SC)
NC: 2025:KHC:9113-DB
The request of learned panel counsel that liberty
should be reserved to seek review of this judgment
depending upon the outcome of the review in
ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD.
(SUPRA), is liable to be rejected inasmuch as the
assessee's review, as mentioned above, itself is rejected.
Sd/-
(KRISHNA S DIXIT)
JUDGE
Sd/-
(RAMACHANDRA D. HUDDAR)
JUDGE
RD/snb
