PCIT Vs Blue Yonder Inc (Karnataka High Court)
No royalty on software use-Software payments to Blue Yonder not ‘royalty’ – Karnataka HC rejects Revenue’s attempt to reopen settled matter
Karnataka High Court dismissed the Revenue’s appeal challenging ITAT Bengaluru’s order dated 03.01.2024 for AY 2019-20 which had held that payments for software usage made to the non-resident assessee were not taxable as “royalty”.
The Bench observed that the issue was already concluded in the Assessee’s own cases for earlier years—AYs 2008-09, 2010-11 & 2014-15—where both the Tribunal & the High Court had held that such software-related receipts were not “royalty” either under the Act or the Indo-US DTAA. The earlier ruling of this Court dated 29.05.2023 in ITA No.977/2017 had already affirmed that the assessee could not be called upon to pay royalty.
The Revenue urged for liberty to reopen the appeal depending on the outcome of the pending review petition against the Supreme Court’s landmark decision in Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (2021) 432 ITR 471 (SC). However, the Court noted that the Supreme Court itself has declined such liberty in similar cases, referring to DDIT v. Vodafone Idea Ltd (SLP Diary No.24154/2024) & the dismissal of review petitions in CIT v. GE India Technology Pvt. Ltd.
