2023 (2) TMI 1251 - HC - Income Tax

Accrual of income in India - sale of software product - royalty receipts - India USA DTAA - HELD THAT - As per revenue the issue raised in the instant appeals is covered against the appellant/revenue by the judgment rendered by the Supreme Court in Engineering Analysis Centre of Excellence 2021 (3) TMI 138 - SUPREME COURT as held 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. Revenue however, informs us that a review petition has been filed qua the aforesaid judgment. In these circumstances, the above-captioned appeals are closed. However, it is made clear that in case a decision is rendered in the review petition, which is against the respondent/assessee, the respondent/assessee will have liberty to approach the court to reopen the appeals.

Summary

Issues:
Condonation of delay in filing/re-filing appeals, Appellant's challenge to Tribunal's orders, Applicability of Supreme Court judgment, Review petition filed, Closure of appeals with liberty to reopen.

Condonation of Delay:
The appellant/revenue filed applications seeking condonation of delay in filing/re-filing the appeals. The delay ranged from 4 to 100 days, and the respondent/assessee raised no objection to the appellant's request. The court allowed the applications subject to just exceptions, disposing of them accordingly.

Appellant's Challenge to Tribunal's Orders:
The appeals pertained to assessment years 2010-11 to 2017-18. The appellant/revenue contested orders issued by the Income Tax Appellate Tribunal on various dates in different appeals. The senior standing counsel for the respondent/revenue acknowledged that the issues raised in the appeals were unfavorable to the appellant/revenue based on a Supreme Court judgment. Additionally, it was mentioned that a review petition had been filed concerning the said judgment.

Applicability of Supreme Court Judgment and Review Petition:
The judgment by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. Vs. CIT 432 ITR 471 (SC) was cited, indicating that the issues raised in the appeals were covered against the appellant/revenue. However, the senior standing counsel informed the court about the pending review petition related to the mentioned judgment. Consequently, the court closed the appeals, clarifying that if the review petition outcome favored the respondent/assessee, they could seek to reopen the appeals.

Closure of Appeals with Liberty to Reopen:
In light of the circumstances and the pending review petition, the court concluded the appeals. It was emphasized that the parties should act based on the digitally signed copy of the order. The judgment was delivered by Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Ms. Justice Tara Vitasta Ganju.