Ita/655/2018 Of Anz Operations And Technology Pvt.ltd v. Deputy Director Of Income Tax

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16 DAY OF AUGUST, 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE HEMANT CHANDANGOUDAR BETWEEN: I.T.A. NO. 655 OF 2018 ANZ OPERATIONS AND TECHNOLOGY PVT.LTD., RMZ ECOWORLD, CAMPUS 5A, GROUND FLOOR & LEVEL 4-9, SARJAPUR - MARATHAHALLI, OUTER RING ROAD, VARTHUR HOBLI, BANGALORE - 560 103 REPRESENTED HEREIN BY ITS CHIEF FINANCIAL OFFICER MS KAVITHA RAMESH PAN NO. FORMERLY AT: EMBASSY GOLFLINKS BUSINESS PARK, OFF INTERMEDIATE RING ROAD, BANGALORE - 560 071. ... APPELLANT (BY MISS MANASA ANANTHAN, ADVOCATE FOR SRI T. SURYANARAYANA, ADVOCATE) AND: 1. DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXTION), CIRCLE -1(1), BANGALORE, BMTC BUILDING, KORAMANGALA 6TH BLOCK, BENGALURU - 560 095. 2. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), CIRCLE - 1 (1) BANGALORE (INTERNATIONAL TAXATION), CIRCLE - 1 (1) BANGALORE BMTC BUILDING, KORAMANGALA KORAMANGALA 6TH BLOCK, BENGALURU - 560 095. 3. PRINCIPAL COMMISSIONER OF INCOME TAX, (INTERNATIONAL TAXATION), BANGALORE, BMTC BUILDING, KORAMANGALA 6TH BLOCK, BENGALURU - 560 095. ... RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 23.03.2018 PASSED IN ITA NO.193/BANG/2010 AND IT (IT) A NO.1508/BANG/2012 (ANNEXURE-C) FOR THE ASSESSMENT YEAR 2008-09, PRAYING TO: (i) FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE. (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE TRIBUNAL DATED 23.03.2018 PASSED IN ITA NO.193/BANG/2010 AND IT(IT)A NO.1508/BANG/2012 (ANNEXURE - C) AND ETC., 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 23.03.2018 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 18.10.2019 on the following substantial questions of law: “1) Whether, on the facts and circumstances of the case and on the grounds urged, the Tribunal was right or justified in confirming the order passed by the 1st respondent deeming the appellant to be an assessee-in-default under Section 201(1) of the Act 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 the India Australia DTAA, giving rise to an income chargeable to tax in India and necessitating deduction of tax under Section 195 of the Act? 2) Whether, on the facts and circumstances of the case and the grounds urged, the Tribunal ought to have considered or adjudicated upon the appellant's contention that the retrospective amendment to Section 9(1)(vi) of the Act, having been made only vide the Finance Act, 2012, and thus made subsequent to the assessment year in question, the appellant could not have been fastened with a liability to have withheld taxes during the relevant previous year as the said provision was not in existence at the time when the payments were made to ANZ Australia? 3) Whether, on the facts and circumstances of the case and the grounds urged, the Tribunal ought to have considered or adjudicated upon the appellant's contention that since the payments made by it to ANZ Australia were merely in the nature of reimbursements, they did not give rise to any income chargeable to tax in the hands of the recipient and that, therefore, it was not liable to deduct tax under Section 195 of the Act when making such payments?" to the assessment year in question, the appellant could not have been fastened with a liability to have withheld taxes during the relevant previous year as the said provision was not in existence at the time when the payments were made to ANZ Australia? 3) Whether, on the facts and circumstances of the case and the grounds urged, the Tribunal ought to have considered or adjudicated upon the appellant's contention that since the payments made by it to ANZ Australia were merely in the nature of reimbursements, they did not give rise to any income chargeable to tax in the hands of the recipient and that, therefore, it was not liable to deduct tax under Section 195 of the Act when making such payments?" 2. When the matter was taken up 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 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 23.03.2018 passed by the Income Tax Appellate Tribunal is quashed. In the result, appeal is allowed. Sd/- JUDGE HR Sd/- JUDGE