Karnataka High Court
Pr. Commissioner Of Income Tax vs M/S Ibm India Pvt Ltd on 24 September, 2025
Author: S.G.Pandit
Bench: S.G.Pandit
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NC: 2025:KHC:38446-DB
ITA No. 649 of 2023
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF SEPTEMBER, 2025
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
INCOME TAX APPEAL NO. 649 OF 2023
BETWEEN:
1. PR. COMMISSIONER OF
INCOME TAX
(INTERNATIONAL TAXATION)
KORMANGALA,
BANGALORE.
2. THE DEPUTY COMMISSIONER
OF INCOME TAX
INTERNATIONAL TAXATION,
CIRCEL-1(2), KORMANGALA,
BANGALORE.
...APPELLANTS
(BY SRI. E I SANMATHI., SENIOR STANDING COUNSEL)
Digitally signed
by SUMA B N
Location: HIGH AND:
COURT OF
KARNATAKA
M/S IBM INDIA PVT LTD.,
NO.2, SUBRAMANYA,
ARCADE, BANNERGATTA MAIN ROAD,
BANGALORE-560029,
PAN AACCI2917B
...RESPONDENT
(BY SMT. MAHIMA GOUD., AGA)
THIS INCOME TAX APPEAL IS FILED UNDER SEC. 260-A
OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED
08/06/2023 PASSED IN ITA NO. 317/BANG/2023, FOR THE
ASSESSMENT YEAR 2016-2017 PRAYING TO DECIDE THE
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NC: 2025:KHC:38446-DB
ITA No. 649 of 2023
HC-KAR
FOREGOING QUESTION OF LAW AND / OR SUCH OTHER
QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HONBLE
COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE
ORDER DATED 08/06/2023 PASSED BY THE INCOME TAX
APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU, AS SOUGHT
FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL
PROCEEDINGS IN ITA NO. 317/BANG/2023 FOR A.Y.2016-2017
(ANNEXURE-A) AND ETC.,
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT
and
HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE S.G.PANDIT) This appeal filed under Section 260A of the Income Tax Act, 1961 is directed in its common order in ITA No.317/Bang/2023 dated 08.06.2023 raising the following substantial questions of law:
1. "Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in by holding that the payment made to non-resident entities in respect of purchase of software was not royalty and that the same did not give rise to income taxable in India and therefore, the petitioners were not liable to deduct tax at source under section 195 of the Act"?
2. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the payments made to non-resident entities were not in the nature -3- NC: 2025:KHC:38446-DB ITA No. 649 of 2023 HC-KAR of royalty as defined in Explanation 2 to Section 9(1)(vii) of the Act and the Double Taxation Avoidance Agreement as well"?
3. Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in holding that the sale of software license did not include a right or interest in copyright, which thus did not give rise to payment of royalty and would be an income deeded to accrue in India under section 9(1)(vi) of the Act, requiring the deduction of tax at source"?
4. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in not considering the fact that the development of advanced cloud-based computer software by the assessee would not come under copyright as envisaged in Section 14(a)/14(b) of the Copy Right Act"?
5. 'Whether on the facts and in the circumstances of the case, the Tribunal's order is perverse in nature in not appreciating that conditions for holding applying Explanation 2(v) to Section 9(1)(vi) of the Act were fully satisfied in present case as payments were made to a non- resident by way of royalty for use of or the right to use any copyright and Review Petition filed by Revenue is pending for adjudication before Supreme Court in case Engineering Analysis Centre of Excellence (reported in 432 ITR page 471)"?
2. This appeal is against ITA No.317/Bang/2023 for the assessment year 2016-17 arising from the common order relating to ITA No.318/Bang/2023, which was the subject matter of ITA No.632/2023, which was disposed of on -4- NC: 2025:KHC:38446-DB ITA No. 649 of 2023 HC-KAR 04.03.2025. In view of the said order the further consideration of the present appeal would not arise.
3. The present Income Tax Appeal stands disposed of in the same terms of judgment dated 04.03.2025 in I.T.A.No.632/2023.
Sd/-
(S.G.PANDIT) JUDGE Sd/-
(K. V. ARAVIND) JUDGE RL List No.: 1 Sl No.: 12