2021 (11) TMI 1146 - HC - Income Tax

Royalty Income to be treated as Income from business - whether Royalty Income was not derived from business carried by assessee but was only attributable to business of the assessee? - HELD THAT - Assessee placing reliance on the judgment of the coordinate bench of this Court passed in the case of very same assessee 2018 (11) TMI 1929 - KARNATAKA HIGH COURT would contend that the very identical substantial questions of law raised by the revenue were considered and answered by this Court as covered by the judgment of this Court in Motorola India Electronics (P) Ltd. 2014 (1) TMI 1235 - KARNATAKA HIGH COURT was pleased to dismiss the appeal. Hence, the substantial questions of law raised herein, being identical, the appeal deserves to be dismissed answering the substantial questions of law raised, against the revenue and in favour of the assessee. It is not in dispute that the judgment of this Court 2018 (11) TMI 1929 - KARNATAKA HIGH COURT has been carried by the revenue in appeal before the Hon ble Apex Court 2023 (3) TMI 1328 - SC ORDER in SLP No.21055/2019 which is pending consideration. In view of the aforesaid, we are not inclined to either differ from the judgment of the coordinate bench or venture to sit in judgment over the said decision to adjudicate upon the issues fully covered and decided, referring to the judgments now cited by the revenue. Substantial questions of law raised herein, against the revenue and in favour of the assessee.

Summary

Issues:
1. Whether Royalty Income should be treated as Income from business when not derived from the business carried by the assessee but only attributable to the business of the assessee.
2. Whether the Tribunal's order confirming the CIT(A)'s decision regarding Royalty Income as Income from business is perverse in nature.

Analysis:
1. The appeal filed by the revenue under section 260A of the Income Tax Act, 1961 challenges the order of the Income Tax Appellate Tribunal related to the assessment year 2009-10. The substantial questions of law raised include the treatment of Royalty Income as Income from business when it is not directly derived from the assessee's business but is attributable to it. The learned counsel for the assessee relied on a previous judgment of the court in a similar case involving the same assessee, where the court dismissed the appeal by stating that the substantial questions of law raised were covered by a previous judgment. Therefore, the appeal in question deserves to be dismissed based on the previous decision.

2. The counsel for the revenue attempted to distinguish the judgment in the previous case by referring to various other judgments. However, it is noted that the judgment in the previous case has been appealed before the Supreme Court and is pending consideration. In light of this, the court declined to differ from the previous decision or re-examine the issues already settled. Consequently, the court dismissed the appeal and upheld the treatment of Royalty Income as Income from business in favor of the assessee, based on the previous judgment and pending appeal at the Supreme Court.

This detailed analysis of the judgment provides a comprehensive understanding of the issues raised and the court's decision based on the interpretation of relevant legal provisions and precedents.