The Commissioner of Income Tax V. M/S INFOSYS LTD

ITA/354/2023

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Deputy Commissioner of Income Tax against M/s. Infosys Ltd. concerning the applicability of Section 206AA of the Income Tax Act, 1961, to payments made to non-resident companies. The Revenue challenged the tribunal's decision which held that Section 206AA does not apply when the benefit of DTAA is available, arguing that the assessing authority correctly applied Section 195 and that Section 206AA should be applicable as PAN was not quoted. The High Court of Karnataka dismissed the appeal, referencing a similar decision in The Commissioner of Income-tax and Another Vs. M/s.WIPRO Ltd.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 733237 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 26-06-2023
• Assessment Year: misc
• Other Referred Cases: The Commissioner of Income-tax and Another Vs. M/s.WIPRO Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: M DILIP
• Keywords: Condonation of delay; DTAA; Income tax appeal; Non-resident Companies; Permanent Account Number; Deducting Tax
• Section: 195; 206AA; 260-A

Judgement Text

"- 1 - NC: 2023:KHC:21936-DB ITA No. 354 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26TH DAY OF JUNE, 2023 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 354 OF 2023 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION 4TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BANGALORE–560 095. 2. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(1) 4TH FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA BENGALURU-560 095. …APPELLANTS (BY SHRI. M. DILIP, STANDING COUNSEL) AND: M/S. INFOSYS LTD., ELECTRONIC CITY, HOSUR ROAD BENGALURU-560 100. PAN: AAACI 4798L …RESPONDENT THIS ITA IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLANT TRIBUNAL, BENGALURU IN IT(IT)A NO.04/BANG/2014 DATED 11.04.2022 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C AND CONFIRM THE ORDER OF THE APPELLANT COMMISSIONER Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA - 2 - NC: 2023:KHC:21936-DB ITA No. 354 of 2023 CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION CIRCLE-1(1), BENGALURU AND TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HONBLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY. THIS ITA, COMING ON FOR ORDERS, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the Revenue challenging the order dated April 11, 2022 in IT(IT)A No.4/Bang/2014 for the A.Y.2011-12 has been filed to consider the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the provisions of Section 206AA of Act relating to deducting of tax at higher rate in the absence of Permanent Account Number is not applicable to the payments made to Non Resident – Companies on the ground that benefit of DTAA is available to the assessee when assessing authority rightly held that assessee is to be in default for non-compliance of Section 195 of the Act by holding that Section 206AA of Act is applicable as PAN was not quoted in respect of the payers and ignoring Circular No.5 of 2010, whereby it is specifically stated that provisions of Section 206AA will also be applied when payments are made to Non Resident companies where tax is not deducted on source or credit made to them even when recipient is not having PAN? - 3 - NC: 2023:KHC:21936-DB ITA No. 354 of 2023 2. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature in not appreciating that Notification dated 24/6/2016 issued by CBDT only relaxed the condition of the tax at high rate under section 206AA in case of Non- Residents only if the deductee furnishes details and documents specified in sub clause(2) of the notification? 2. To a pointed question as to whether the issues raised in this appeal are covered by the decision of this court in The Commissioner of Income-tax and Another Vs. M/s.WIPRO Ltd1., Shri Dilip, learned standing counsel for the Revenue fairly submitted that questions raised in this appeal have been considered in the aforesaid decision. 3. This appeal is filed belatedly after 273 days along with I.A.No.1/2023 for condonation of delay. Having considered the appeal on both delay and merits, the following; ORDER (i) Appeal is dismissed; and 1 ITA No.181/2019 & connected matters (D.D. 29.11.2022) - 4 - NC: 2023:KHC:21936-DB ITA No. 354 of 2023 (ii) Questions of law are answered in the favour of assessee and against the Revenue. 4. Consequently, I.A.No.1/2023 for condonation of delay also stands disposed of. No costs. Sd/- JUDGE Sd/- JUDGE AV List No.: 1 Sl No.: 3 "