2022 (5) TMI 1071 - HC - Income Tax

Income accrued in India - Taxability of receipt as 'Royalty - revenue from sale of software - India USA DTAA - revenue challenging the remand order passed by ITAT - HELD THAT - As in pursuance to the impugned remand orders, the AO and Dispute Resolution Panel (DRP) have decided the matter. In fact, appeal of the assessee in second round is pending before the ITAT. ITAT in Assessment Year 2010-11 2011-12 in its order dated 13th April, 2022 (passed during the pendency of the present appeals) has not only followed the decision of the Supreme Court Engineering Analysis Centre of Excellence Pvt. Ltd 2021 (3) TMI 138 - SUPREME COURT but has also followed the decisions of this Court dated 15th March, 2022 and 7th March, 2022 whereby the appeals filed by the Revenue against the respondent/assessee on similar questions of law were dismissed. Consequently, keeping in view the subsequent orders deciding the issue of royalty passed by the ITAT, this Court is of the view that the present appeal challenging the orders of remand and seeking a decision by the ITAT is infructuous. In fact, some of the cross-appeals filed by the respondent/assessee against the same impugned orders have today been dismissed as infructuous.

Summary

Issues:
1. Challenge to remand order passed by ITAT.
2. Interpretation of previous judgments by Supreme Court and High Court.
3. Decision on the issue of royalty.
4. Adjudication of the matter by Assessing Officer and DRP.
5. Pending appeal before ITAT.

Analysis:

1. The appellant, the revenue, challenged the remand order passed by the Income Tax Appellate Tribunal (ITAT). The appellant argued that instead of remanding the matter to the Assessing Officer to decide the issue of royalty in accordance with a previous judgment, the ITAT should have made a decision itself.

2. The Supreme Court's judgment in Engineering Analysis Centre of Excellence Pvt. Ltd. v. Commissioner of Income Tax & Anr. confirmed the view taken by the High Court in a previous case. The appellant contended that the matter on merits is not covered by the Supreme Court's judgment, while the respondent argued that the issue is squarely covered by the Supreme Court's decision.

3. Following the remand orders, the Assessing Officer and Dispute Resolution Panel (DRP) made decisions on the matter. Additionally, the ITAT in a subsequent order referred to decisions by the Supreme Court and the High Court, dismissing appeals filed by the Revenue against the respondent on similar legal questions.

4. Considering the subsequent orders by the ITAT, the Court deemed the present appeal challenging the remand orders as infructuous. The Court noted that some cross-appeals filed by the respondent against the same orders had been dismissed as infructuous, indicating that the issue of royalty had been addressed in subsequent decisions by the ITAT.

This comprehensive analysis covers the various issues involved in the legal judgment, including challenges to the remand order, interpretation of previous judgments, decision on royalty, actions by the Assessing Officer and DRP, and the status of the pending appeal before the ITAT.