2021 (9) TMI 1528 - HC - Income Tax

Income taxable in India - royalty receipts - amounts paid by the concerned persons resident in India to non-resident for foreign software suppliers - HELD THAT - Assessee submits that the substantial questions of law raised herein are squarely covered by the ruling of the Hon ble Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited 2021 (3) TMI 138 - SUPREME COURT held that amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. Revenue could not dispute the same. Substantial questions of law are answered in favour of the assessee and against the revenue.

Summary

The Karnataka High Court ruled in favor of the appellant (assessee) based on the precedent set by the Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited vs. The Commissioner of Income Tax. The substantial questions of law were answered in favor of the assessee, and the appeal was disposed of accordingly.