Ita/78/2007 Of The Commissioner Of Income Tax v. M/S Sonata Information Technology Limited

IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THR 13 DAY OF AUGUST, 2012 PRESENT THER HON BLE MR. JUSTICE K.SREEBEDHAR ANT THR HON'BLE MR. JUSTICK B.MANOHAR 1T.A. No.’78 OF 2007C/W. I.T.A.Nos.119, 132, 135, 207, 208, 123, 209, 210, 211,212, 213, 214, 552, 7778/200 1.T.A. No.78 OF 2007:m BETWEEN: 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore. 2.The Additional Commissioner of Income Tax,International Taxation,International Taxation, Range —- 19Rastrothana Building,Nrupathunga Road,Bangalore.Rastrothana Building,Nrupathunga Road,Bangalore. Appellants (By Sri K.V. Aravind & Sri M.V. Seshachala, Advocates) AND: M/s. Sonata Information Technology Limited,No.193, 1[&-]Floor, R.V. Road,Basavanagudi,Bangalore-5s60004 (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated06.07.2006passed%'L.T.A.No.3432/Bang/2004 praying that this Hon’ble Courtmay be pleased to (i) formulate the substantial questions oflaw stated therein and (11) allow the appeal and set-aside theorder of the ITAT, Bangalore in ITA No.3432/Bang/2004dated06.07.2006and|confirmthe.Order|ot-!"Commissioner of Income Tax (Appeals)-IV, Bangalore, in theinterest of justice and equity. 1L.T.A. No.L119 OF 200m BETWEEN: 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road,Bangalore,Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore.International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore. (By Sri K.V. Aravind, Advocate) Appellants ANT) M/s. Ishoni Network India Pvt. Ltd.,No.oO, Brigade MLR Centre,Vani Vilas Road, Basavanagudi,Bangalore-5s60004 Respondent (Notice to Resp. held sufficient vide Order dt.07.09.10) This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTOT Order|dated26.04.2006passed%'I.T.A.No.1404/Bang/2004 for the Assessment Year 2000-01,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (ii) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1404/Bang/2004 dated26.04.2006|confirmingthe|Order|otthe.AppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1.T.A. No.132 OF 2007:; BETWEEN: 1.The Commissioner of Income Tax,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore.International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore. (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Digital Globalsoft Ltd..(formerly Digital Equipment (India) Ltd.) Digital Park-Plot No.30/40,Konappana Agrahara,Electronic City, Phase-2,Hosur Road,Bangalore-560100. (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOutotOrder|datedO2 .06.2006passed%'L.T.A.No.1096/Bang/2004 for the Assessment Year 2001-02,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (ii) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1096/Bang/2004 dated02.06.2006 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1.T.A. No.135 OF 2007:m BETWEEN: 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOutotOrder|datedO2 .06.2006passed%'L.T.A.No.1096/Bang/2004 for the Assessment Year 2001-02,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (ii) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1096/Bang/2004 dated02.06.2006 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1.T.A. No.135 OF 2007:m BETWEEN: 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,International Taxation, Ward — 19(1),Rastrothana Building,Rastrothana Building, Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Digital Globalsoft Ltd..(formerly Digital Equipment (India) Ltd.)Digital Park-Plot No.30/40,Konappana Agrahara,Electronic City, Phase-2,Hosur Road,Bangalore-560100. (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdatedO2 .06.2006passed%'L.T.A.No.10955/Bang/2004 for the Assessment Year 2000-01praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (ii) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1095/Bang/2004 dated02.06.2006 and confirm the order of the AppellateCommissioner confirming the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1.T.A. No.207 OF 2007:mBETWEEN: 1.The Commissioner of Income Tax,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.1190/Bang/2005 for the Assessment Year 2004-05,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1190/Bang/2005 dated04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1L.T.A. No.208 OF 2007m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.980/Bang/2005 for the Assessment Year 2000-01,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.980/Bang/2005_ date04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1L.T.A. No.133 OF 2007m BBRITIWE Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.980/Bang/2005 for the Assessment Year 2000-01,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.980/Bang/2005_ date04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1L.T.A. No.133 OF 2007m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,International Taxation,Ward — 19(1),Rastrothana Building, Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Flextronics Technologies (India) Pvt. Ltd.,No.88A, Electronic City,Hosur Road,Bangalore, Respondent (Service held sufficient vide Order dated 27.05.10) This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated23.06.2006passed%'L.T.A.No.345/Bang/2005 for the Assessment Year 2003-04,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.349/Bang/2005 dated23.06.2006 and confirm the of the Appellate Commissionerconfirming the order passed by the Income Tax Officer,International Taxation, Ward-19(1), Bangalore, in theinterest of justice and equity. 1L.T.A. No.209 OF 2007 BBRITIWE 1.The Commissioner of Income Tax,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.1188/Bang/2005 for the Assessment Year 2002-03,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1188/Bang/2005 dated04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. I1L.T.A. No.210 OF 200m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent I1L.T.A. No.210 OF 200m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.1189/Bang/2005 & C.O.No.134/Bang/2005 for theAssessment Year 2003-04, praying that this Hon’ble Courtmay be pleased to (i) formulate the substantial questions oflaw stated therein and (ii) allow the appeal and set-aside theOrder|passedby|the.ITAT,Bangalore1n ITANo.1189/Bang/20056C.O.No.134/Bang/20050+-"004.08.2006confirmingthe|order|ofthe AppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1.T.A. No.211 OF 2007:mBBRITIWE 1.The Commissioner of Income Tax,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore,International Taxation,Rastrothana Building,Nrupathunga Road,Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore,International Taxation,Ward — 19(1),Rastrothana Building,Nrupathunga Road,Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. L.G. Soft India Private Ltd.,<[-!]Floor, Golf View Homes,Murgesh Palya,Bangalore-56001/7 (By M/s. King & Patridge, Advocates) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'I.T.A.No.981/Bang/2005 for the Assessment Year 2001-02,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.981/Bang/2005_ date04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1L.T.A. No.21232 OF 20m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(1),Rastrothana Building,International Taxation,Ward — 19(1),Rastrothana Building, Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Tata Elxsi Ltd.,White Field Road,Hoody,Bangalore-48. (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'L.T.A.No.1187/Bang/2005 for the Assessment Year 2002-03,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1187/Bang/2005 dated04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(1), Bangalore,in the interest of justice and equity. 1L.T.A. No.213 OF 2007 BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Tata Elxsi Ltd.,White Field Road,Hoody,Bangalore-48. (By Smt. Vani H., Advocate) Respondent 1L.T.A. No.213 OF 2007 BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Tata Elxsi Ltd.,White Field Road,Hoody,Bangalore-48. (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'L.T.A.No.1186/Bang/2005 for the Assessment Year 2001-02,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.1186/Bang/2005 dated04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(2), Bangalore,in the interest of justice and equity. 1L.T.A. No.214 OF 2007 BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Tata Elxsi Ltd.,White Field Road,Hoody,Bangalore-48. (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOUTotorderdated04.08.2006passed%'L.T.A.No.979/Bang/2005 for the Assessment Year 2000-01,praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (11) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.979/Bang/2005_ date04.08.2006confirmingtheorderottheAppellateCommissioner and confirm the order passed by the IncomeTax Officer, International Taxation, Ward-19(2), Bangalore,in the interest of justice and equity. 1L.T.A. No./778 OF 200 BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, 2.The Income Tax Officer,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road,International Taxation,Ward — 19(2),Rastrothana Building,Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Sonata Information Technology Limited,No.193, 1[&-]Floor,R.V. Road,Basavanagudi,Bangalore — 560004, (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingOultoforder|dated13.04.2007passed%'L.T.A.No.299/Bang/2007, praying that this Hon’ble Courtmay be pleased to (i) formulate the substantial questions oflaw stated therein and (11) allow the appeal and set-aside theorder|passedby|the ITAT,Bangalore1nNITANo.299/Bang/2007 dated 13.04.2007 confirming the orderof the Commissioner of Income Tax (Appeals)-IV, Bangalore,in the interest of justice and equity. 1.T.A. No.552 OF 2007:m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, oDThe Income Tax Officer, International Taxation, Ward — 19(2), Rastrothana Building, Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Sonata Information Technology Limited,No.193, 1[&-]Floor,R.V. Road,Basavanagudi, Bangalore — 560004, (By Smt. Vani H., Advocate) Respondent 1.T.A. No.552 OF 2007:m BBRITIWE 1.The Commissioner of Income Tax,International Taxation,International Taxation, Rastrothana Building, Nrupathunga Road, Bangalore, oDThe Income Tax Officer, International Taxation, Ward — 19(2), Rastrothana Building, Nrupathunga Road, Bangalore, (By Sri K.V. Aravind, Advocate) Appellants AND: M/s. Sonata Information Technology Limited,No.193, 1[&-]Floor,R.V. Road,Basavanagudi, Bangalore — 560004, (By Smt. Vani H., Advocate) Respondent This I.T.A. is filed U/s.260-A of I.T. Act, 1961 arisingout of order dated 31.01.2007 passed in I.T.A.No.100, 101,127, 1006 to 1065/Bang/2006 tor the Assessment Year2006-07, praying that this Hon’ble Court may be pleased to(i) formulate the substantial questions of law stated thereinand (ii) allow the appeal and set-aside the order passed bythe ITAT, Bangalore in ITA No.100, 101, 127, 1006 to1069/Bang/2006 dated 31.07.2007 confirming the order oithe Commissioner of Income Tax (Appeals)-IV, Bangalore andconfirm the order passed by the Income Tax Officer (Intl.Taxation), in the interest of justice and equity. These appeals are coming on for final hearing this day,SREEDHAR RAO, J.,delivered the following: JU DBiGMENT The fee paid towards use of Software is held to beroyalty in the case ofCommissioner of Income Tax & Anr.Vs. Samsung Electronics Co. Ltd., & Ors.,reported in 5����:�=>������?F���'�8%"C�#)�-!"�+A#8"�0"*%&%#'��-!"B/"&-%#'�#)�.+C�%&�+'&C"("0�%'�)+8#/(�#)�("8"'/"��**#(0%'1.6��-!"�+22"+.&�+("�+..#C"0� �0; ����� ��G ��0; �����