Mrs. H.vani, Learned Counsel For The Assessee v. M/S Lenovo (India) Pvt Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6 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.471 OF 2009 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX CENTRAL CIRCLE CENTRAL CIRCLE C R BUILDING, QUEENS ROAD BENGALURU. BENGALURU. 2. THE INCOME TAX OFFICER (INTERNATIONAL TAXATION) WARD-19(3) (INTERNATIONAL TAXATION) WARD-19(3) C R BUILDING, QUEENS ROAD BENGALURU. BENGALURU. ...APPELLANTS (BY SRI. K V ARAVIND, ADVOCATE) AND: M/S LENOVO (INDIA) PVT. LTD., EMBASSY GOLD LINKS BUSINESS PARK FAIR WIND, 10/3, IRR, BENGALURU - 560 071. …RESPONDENT (BY SMT. VANI H., ADVOCATE) THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX APPEAL ACT 1961, ARISING OUT OF ORDER DATED 09.04.2009 PASSED IN ITA Nos.1251 AND 1252/BANG/2008, FOR THE ASSESSMENT YEAR 2006-2007 PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT BANGALORE IN ITA No.1251 AND 1252/BANG/2008, DATED 09.04.2009, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE INCOME TAX OFFICER (INTERNATIONAL TAXATION), WARD-19(3), BANGALORE IN THE INTEREST OF JUSTICE. THIS ITA COMING ON FOR FINAL HEARING THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT Mr. K.V.Aravind, learned counsel for the Revenue. Mrs. H.Vani, learned counsel for the assessee. 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 2012-2013. This appeal was admitted by a Bench of this Court vide order dated 12.10.2010, on the following substantial questions of law: i)Whether the Appellate Authorities should have recorded a finding that in accordance with Section 195 (2), (3) and (4) of the Act, the applications filed for the subsequent period by the assessee should have been made for the earlier period also in respect of payments and having failed to do so was bound to deduct tax as held by the Apex Court in Transmission Corporation of A.P. Ltd., and Anr. Vs. CIT, 239 ITR 587? have recorded a finding that in accordance with Section 195 (2), (3) and (4) of the Act, the applications filed for the subsequent period by the assessee should have been made for the earlier period also in respect of payments and having failed to do so was bound to deduct tax as held by the Apex Court in Transmission Corporation of A.P. Ltd., and Anr. Vs. CIT, 239 ITR 587? ii)Whether the Appellate Authorities were correct in considering the chargeability of tax or not of a non-resident recipient in Section 201(1) and Section 201(1A) of the Act proceedings when the assessee is entitled to show only ‘WITHOUT GOOD AND SUFFICIENT REASONS PAID TO DEDUCT AND PAY TAX’ which aspect was not considered and acted beyond jurisdiction? correct in considering the chargeability of tax or not of a non-resident recipient in Section 201(1) and Section 201(1A) of the Act proceedings when the assessee is entitled to show only ‘WITHOUT GOOD AND SUFFICIENT REASONS PAID TO DEDUCT AND PAY TAX’ which aspect was not considered and acted beyond jurisdiction? iii)Whether the Appellate Authorities were correct in holding that there was purchase of off the shelf shrink wrapped software which was integrated into hardware despite the products being purchased from two separate companies and the particulars having not been furnished including agreements to correct in holding that there was purchase of off the shelf shrink wrapped software which was integrated into hardware despite the products being purchased from two separate companies and the particulars having not been furnished including agreements to demonstrate such conclusions and consequently recorded perverse finding? iii)Whether the Appellate Authorities were correct in holding that there was purchase of off the shelf shrink wrapped software which was integrated into hardware despite the products being purchased from two separate companies and the particulars having not been furnished including agreements to correct in holding that there was purchase of off the shelf shrink wrapped software which was integrated into hardware despite the products being purchased from two separate companies and the particulars having not been furnished including agreements to demonstrate such conclusions and consequently recorded perverse finding? iv)Whether the Tribunal was correct in holding that the assessee is not liable to deduct TDS in respect of payments made for purchase of software as the same cannot be treated as income liable to tax in the India as Royalty or Scientific Work under Section 9 of the Act read with Double Taxation Avoidance Agreements and Treaties? that the assessee is not liable to deduct TDS in respect of payments made for purchase of software as the same cannot be treated as income liable to tax in the India as Royalty or Scientific Work under Section 9 of the Act read with Double Taxation Avoidance Agreements and Treaties? v)Whether the Tribunal was correct in holding that since the assessee had purchased only a right to use the copyright i.e., the software and the entire copyright itself the payment cannot be treated as Royalty as per the Double Taxation Avoidance Agreement and Treaties which is beneficial to the assessee and consequently Section 9 of the Act should not take into consideration?" that since the assessee had purchased only a right to use the copyright i.e., the software and the entire copyright itself the payment cannot be treated as Royalty as per the Double Taxation Avoidance Agreement and Treaties which is beneficial to the assessee and consequently Section 9 of the Act should not take into consideration?" 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. 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 appeal fails and is hereby dismissed. SD/- JUDGE SD/- JUDGE