Solize Partners India Pvt Ltd Vs ITO (Karnataka High Court)
Software Bought, Copyright Not Caught: Karnataka HC Rules Standard Licences Aren’t Royalty u/s 9(1)(vi), No TDS Burden u/s 195
Summary: In Solize Partners India Pvt. Ltd. v. Income Tax Officer, International Taxation, the Karnataka High Court considered the assessee’s appeal u/s 260A concerning AY 2010-11. The company was engaged in resale of computer-software licences, installation, training, services & technical consultation.
The assessee filed its original return declaring nil income & subsequently filed a revised return on 19.07.2011, again declaring nil income. During assessment, the AO treated payments made to non-resident software owners for purchase of standardised software as “royalty” both u/s 9(1)(vi) & Article 12 of the applicable DTAAs. The consequence was an obligation to withhold tax in India.
The AO later invoked section 154, purportedly rectified a mistake & recomputed the tax payable. The CIT(A), by order dated 29.05.2012, upheld the AO’s view. The Bangalore ITAT also sustained the assessment. The appeal papers describe the Tribunal’s order as dated 05.12.2013, while one paragraph of the High Court order mentions 05.12.2023, evidently an internal date inconsistency given that the High Court appeal itself was instituted in 2014.
Issues Before the Court
