Case Law Details

Case Name : Commissioner of Income-tax, International Taxation Vs Ansys Software (P.) Ltd. (Karnataka High Court)
Appeal Number : IT Appeal No. 129 OF 2007
Date of Judgement/Order : 20/03/2012
Related Assessment Year :
Courts : All High Courts (5998) Karnataka High Court (303)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, International Taxation

V/s.

Ansys Software (P.) Ltd.

IT Appeal No. 129 OF 2007

MARCH 20, 2012

ORDER

N. Kumar, J.

The Revenue has preferred this appeal challenging the orders passed by the Income Tax Tribunal, which has held that the consideration paid by the assessee do not fall within the mischief of ‘royalty’ as defined under sub-clause [v] to Explanation 2 to Clause [vi] of section 9[1] of the Income-tax Act, 1961.

2. In fact, the substantial question of law which arises for consideration in this appeal arose for consideration before this court in two appeals, firstly, in the case of CIT v. Synopsys International Old Ltd. in IT Appeal Nos. 11 to 15 of 2008 decided on 3.8.2010 where the substantial question of law was as under: –

“Whether the consideration paid by the Indian customers or end users to the assessee – a foreign supplier, for transfer of the right to use the software/ computer programme in respect of the copyrights falls within the mischief of ‘royalty’ as defined under sub-clause [v] to Explanation 2 to Clause [vi] of section 9[1] of the Act.”

3. Again in the case of CIT v. Samsung Electronics (P.) Ltd. [2011] 203 Taxman 477/16 taxmann. com 141 (Kar.) and connected matters decided on 15.10.2011, the substantial question of law framed is as under:

“The question which the High Court will answer is -whether on facts and circumstances of the case, the ITAT was justified in holding that the amount[s] paid by the appellant[s] to the foreign software suppliers was not royalty’ and that the same did not give rise to any ‘income’ taxable in India and, therefore, the appellants] was not liable to deduct any tax at source?”

4. In both the cases, it was held that consideration paid by the Indian customers or end users to the assessee – a foreign supplier, for transfer of the right to use the software/computer programme in respect of the copyrights falls within the mischief of ‘royalty’ as defined under sub-clause [v] to Explanation 2 to Clause [vi] of section 9[1] of the Income-tax Act, 1961.

5. In view of the aforesaid law declared by this court, the substantial questions of law framed in this cases is also answered in favour of the revenue and against the assessee.

6. Ordered accordingly.

7. Appeal is allowed.

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