M/S. IBM INDIA PRIVATE LTD V. DEPUTY DIRECTOR OF INCOME TAX

ITA/411/2015

AI Insights

The case involves IBM India Private Ltd. appealing against an order by the Income Tax Appellate Tribunal, which had classified payments made to IBM Singapore for software purchases as 'royalty' under the Income Tax Act read with the India-Singapore DTAA, thus liable for tax deduction at source. The appeal was based on substantial questions of law regarding the classification of these payments and the consequent tax implications. The Supreme Court's decision in a related case, which favored the assessee, was cited as a precedent, leading to the quashing of the Tribunal's order in this case.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 754580 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-03-2021
• Assessment Year: misc
• Other Referred Cases: ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VS. THE COMMISSIONER OF INCOME TAX & ANOTHER
• Laws Referred To: Income Tax Act, 1961, India-Singapore DTAA
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K ARAVIND
• Assessee Lawyers: H VANI
• Keywords: Assessment year 2012-2013; Income Tax; International Taxation; Royalty; Tax deduction at source
• Section: 201(1); 201(1A); 260-A

Judgement Text

"IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF MARCH 2021 PRESENT THE HON'BLE MR. JUSTICE ALOK ARADHE AND THE HON'BLE MR. JUSTICE ASHOK S. KINAGI I. T. A. NO.411 OF 2015 BETWEEN: M/S. IBM INDIA PRIVATE LTD., SUBRAMANYA ARCHADE, NO.12, BANNERGHATTA MAIN ROAD, BENGALURU - 560 029 REPRESENTED BY ITS DIRECTOR, SHRI AMIT SHARMA, S/O SRI JAGADISH CHANDER SHARMA AGED ABOUT 44 YEARS. ...APPELLANT (BY SMT. H VANI, ADVOCATE) AND: DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) 6TH FLOOR, R P BHAVAN, NO.14/3, NRUPATHUNGA ROAD, BENGALURU -560 001. …RESPONDENT (BY SRI. K V ARAVIND, ADVOCATE) 2 THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX APPEAL ACT 1961, ARISING OUT OF ORDER DATED 17.04.2015 PASSED IN ITA Nos.1491 AND 1492/BANG/2013, FOR THE ASSESSMENT YEAR 2012-2013 PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE (ii) ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER DATED 07.04.2015 OF THE ITAT PASSED IN ITA Nos.1491 AND 1492/BANG/2013 RELATING TO ASSESSMENT YEAR 2012-2013. THIS ITA COMING ON FOR ADMISSION THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mrs. H.Vani, learned counsel for the assessee. Mr. K.V.Aravind, learned counsel for the Revenue. 2. This appeal under Section 260-A of the Income Tax Act, 1961, has been filed by the Revenue against the order dated 17.04.2015 passed by the Income Tax Appellate Tribunal. The appeal pertains to the assessment year 2012- 13. This appeal was admitted on the following substantial questions of law: \"1. Whether on the facts and circumstances of the case, the findings of the Appellate Authorities were perverse to the effect that the authorities have held that the payments made by the Appellant to IBM Singapore towards purchase 3 of software amounts to \"royalty\" under the Act read with the India-Singapore DTAA and thus liable for tax deduction at source? 2 . Whether on the facts and in the circumstances of the case, the appellant Tribunal was justified in upholding the orders passed by the respondent under Section 201(1) and Section 201(1A) of the Income Tax Act, 1961 by treating the Appellant as an assessee-in-default?\" 3. When the matter was taken up today, learned counsel for the assessee submitted that the issue involved in this appeal has been put to rest in view of the decision rendered by the Supreme Court in Civil Appeal Nos.8733- 8734/2018 between ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VS. THE COMMISSIONER OF INCOME TAX & ANOTHER, vide order dated 02.03.2021 and the issue involved in this appeal has been answered against the Revenue and in favour of the assessee. 4. Learned counsel for the Revenue was unable to dispute the aforesaid submission. 4 5. For the reasons assigned in the aforesaid judgment rendered by the Supreme Court in Civil Appeal Nos. 8733- 8734/2018 vide order dated 02.03.2021, the substantial questions of law involved in this appeal are answered in favour of the assessee and against the Revenue. In the result, the order dated 17.04.2015 passed by the Income Tax Appellate Tribunal is hereby quashed. In the result, the appeal is allowed. SD/- JUDGE SD/- JUDGE RD "