MERCURY INTERACTIVE SALES V. THE COMMISSIONER OF

ITA/401/2012

AI Insights

The case involves Mercury Interactive Sales & Services India Pvt. Ltd., the appellant, contesting an order from the Income Tax Appellate Tribunal which confirmed the payments made by the appellant as 'royalty' under the Income-tax Act, 1961, and the India-UK DTAA, thus chargeable to tax in India. The High Court of Karnataka, upon reviewing the substantial questions of law admitted in 2014, found that these had been previously addressed in favor of the assessee by the Supreme Court in a similar case. Consequently, the High Court allowed the appeal, quashing the earlier tribunal order.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 691476 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-05-2021
• Assessment Year: misc
• Other Referred Cases: ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED vs. THE COMMISSIONER OF INCOME TAX, Samsung Electronics Co. Ltd. in ITA No.299/Bang/2011, Samsung Electronics Co. Ltd. in ITA No.2808/2005
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: T SURYANARAYANA
• Keywords: DTAA; Income Tax; International Taxation; Royalty; Tax Deduction
• Section: 195; 260A; 9(1)(vi)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF MAY, 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR I.T.A. NO. 401 OF 2012 BETWEEN: MERCURY INTERACTIVE SALES & SERVICES INDIA PVT. LTD., 24, SALARPURIA ARENA HOSUR MAIN ROAD, ADUGODI BANGALORE-560 030 REPRESENTED BY ITS DIRECTOR MR. V. CHANDRASEKHAR ... APPELLANT (BY SRI. T. SURYANARAYANA, ADVOCATE.) AND: 1. THE COMMISSIONER OF INCOME- TAX C.R. BUILDING QUEENS ROAD BANGALORE-560 001 2. THE DEPUTY DIRECTOR OF INCOME –TAX (INTERNATIONAL TAXATION) WARD 1 (1) BANGALORE-560 001 ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE.) - - - 2 THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 18.06.2012 PASSED IN ITA NO.542/BANG/2011 FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTION OF LAW AS STATED THEREIN. (ii) TO ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE ITAT DATED 18/06/2012 IN ITA No.542/BANG/2011 (ANNEXURE-C), IN THE INTEREST OF JUSTICE AND EQUITY THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the assessee against the order dated 18.6.2012 passed by the Income Tax Appellate Tribunal, Bangalore. The subject matter of the appeal pertains to the Assessment year 2008-2009. The appeal was admitted by a bench of this Court vide order dated 15.12.2014 on the following substantial questions of law: “i) Whether the Tribunal was right in placing reliance on its earlier decision in the case of Samsung Electronics Co. Ltd. in ITA No.299/Bang/2011 dated 22.03.2012 where 3 it followed the judgment of this Hon’ble Court also in the case of Samsung Electronics Co. Ltd. in ITA No.2808/2005 dated 15.10.2011 though the said judgment of this Hon’ble Court had not been accepted and the SLP filed against it is pending before the Hon’ble Supreme Court? ii) Whether on the facts, in the circumstances and on the grounds urged, the Tribunal was right in confirming the order passed by the CIT(A) by holding that the payments made by the Appellant was `royalty’ as defined under Explanation 2 to Section 9(1)(vi) of the Income-tax Act, 1961, and under Article 13 of the India-UK, DTAA giving rise to an income chargeable to tax in India and necessitating deduction of tax under Section 195 of the Act?” 2. When the matter was takenup today, the learned counsel for the assessee submitted that aforesaid substantial questions of law have already been answered in favour of the assessee by the Supreme Court vide judgment dated 2.3.2021 in Civil Appeal 4 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 case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra) the substantial questions framed in this appeal are answered in favour of the assessee and against the revenue. The order dated 18.6.2012 passed by the Income Tax Appellate Tribunal is quashed. In the result, appeal is allowed. Sd/- JUDGE Sd/- JUDGE BKM "