2023 (11) TMI 1238 - HC - Income Tax

Nature of expenses - license fees paid to the DoT - ITAT justification in holding the license fee paid by the assesses was properly deductible as revenue expenditure as against capital expenditure held by the AO - HELD THAT - As proposed questions A and B do not emanate from the impugned order passed by the Tribunal. In any event proposed questions A and B are covered by the judgment of a coordinate bench of this Court 2021 (3) TMI 1182 - DELHI HIGH COURT concerning AY 2010-2011. Therefore insofar as the proposed questions A and B are concerned no substantial questions of law arise for our consideration. Foreign Tax Credit - claim was not made in the ITR and never raised before the AO and CIT(A) - whether ITAT was justified in holding that credit for tax paid in a country outside India in relation to the income eligible for deduction u/s 10A of the Act would be available u/s 90(1)(a) of the Act? - HELD THAT - As perused the lead judgment of the Karnataka High Court in the Wipro Ltd. case 2015 (10) TMI 826 - KARNATAKA HIGH COURT The facts which obtained therein are pari materia with the instant appeal. Therefore according to us no substantial question of law arises insofar as proposed questions C D and E are concerned. However as informed by assessee that an appeal has been preferred by the appellant/revenue with the Supreme Court against the judgment rendered by the Karnataka High Court in the Wipro Ltd. case. Thus it is made clear that insofar as proposed questions C D and E are concerned the appellant/revenue will have the liberty to approach the court for reviving the instant appeal in case it were to succeed in the aforementioned matter pending adjudication in the Supreme Court.

Summary

Issues:
The appeal concerns Assessment Year (AY) 2008-09. The appellant/revenue seeks to challenge the order passed by the Income Tax Appellate Tribunal (Tribunal) regarding the addition of Rs. 3,93,02,416/- made on account of disallowance of license fees paid to the DoT, the deductibility of the license fee as revenue expenditure, the allowance of Foreign Tax Credit, and the availability of credit for tax paid in a country outside India under section 10A of the Act.

Disallowed Questions "A" and "B":
The proposed questions "A" and "B" do not arise from the impugned order passed by the Tribunal. They are covered by a judgment of a coordinate bench of the Court concerning AY 2010-2011. Therefore, no substantial questions of law arise for consideration regarding these issues.

Remaining Questions "C," "D," and "E":
The proposed questions "C," "D," and "E" are linked, with "D" and "E" being connected to "C." These questions are claimed to be covered by judgments of the Karnataka High Court, specifically the Wipro Ltd. case and other related decisions. The High Court, after perusing the lead judgment of the Wipro Ltd. case, found the facts similar to the instant appeal and agreed with the view taken by the Karnataka High Court. As a result, no substantial question of law arises concerning these issues.

Appeal and Liberty to Approach Supreme Court:
An appeal has been preferred by the appellant/revenue with the Supreme Court against the judgment rendered by the Karnataka High Court in the Wipro Ltd. case. The Special Leave Petition was admitted, and it is clarified that the appellant/revenue will have the liberty to approach the court for reviving the instant appeal if successful in the matter pending before the Supreme Court.

Disposition:
The appeal is disposed of in the aforementioned terms, and the parties are directed to act based on the digitally signed copy of the order.