2024 (9) TMI 1697 - HC - Income Tax

Accrual of income in India - treating the payments made to the foreign Companies towards purchase of licensed software as royalty u/s 9(1)(vi) - HELD THAT - Taking note of the above in terms of the order passed by the Hon ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. 2021 (3) TMI 138 - SUPREME COURT we answer the above question of law in favour of the Assessee and against the Revenue. Revenue as submits that the Revenue has preferred Review Petition before the Hon ble Apex Court praying to review the order passed in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P.) LTD. we deem it appropriate to grant liberty to the respondent- Revenue to file review petition based on the outcome of the review pending before the Hon ble Apex Court and it is for the respondent-Revenue to make out a case for review. Till then question of law is answered in favour of the Assessee

Summary

The Karnataka High Court heard an appeal by the Assessee challenging the ITAT's decision treating payments to foreign companies for licensed software as 'royalty' under Section 9(1)(vi) of the Act. The Assessee relied on a Supreme Court case and the Court ruled in favor of the Assessee, quashing the ITAT's order. The Revenue sought to file a review petition based on another Supreme Court case emphasizing finality in litigation, and the Court granted liberty for the Revenue to file a review petition depending on the outcome of the pending review before the Supreme Court. The appeal was allowed, and the order in ITA No. 897/B/2012 was quashed.