CIT v. Infosys Technologies Ltd

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The Tax PublishersITA. No. 613/2006, 614/2006, 615/2006 & 616/2006 2012 TaxPub(DT) 0078 (Karn-HC) : (2012) 349 ITR 0598 : (2012) 246 CTR 0371 : (2012) 065 DTR 0271 INCOME TAX ACT, 1961 Income deemed to accrue or arise in India- Under section 9(1)(vi)-Royalty-No deduction of TDS Assessee made certain payments to non-resident company in respect of which no tax was deducted at source by it. AO issued show cause notice to assessee for non-deduction of tax at source since prima facie, payments appeared to be royalty. Assessee submitted that payments were akin to payments made for railway time table which gives information about train schedules or to obtain a book, therefore, payments would not constitute `royalty`within meaning of Explanation 2 to section 9(1)(vi) or Double Taxation Avoidance Agreement. Explanation made by assessee was rejected by AO on the ground that payments amounted to royalties, so, assessee was liable to deduct tax at source. Order of AO was accepted by CIT(A). *Held:Tribunal was following its earlier judgment passed in Wipro Ltd. v. ITO (2005) 94 ITD 9 (Bang) : (2005) 1 SOT 663 (Bang.) : 2005 TaxPub(DT) 1148 (Bang-Trib)* and was held that payments made by assessee to non-resident company did not constitute royalties and set aside order of CIT (A). The High Court reversed decision of Tribunal in Wipro`s case. Hence, Tribunal had relied upon its earlier decision in Wipro`s case, could not be sustained. [ Income-tax Act, 1961 Section 9 and section 195 Case Law Analysis:Wipro Ltd. v. ITO (2005) 94 ITD 9 (Bang) : (2005) 1 SOT 663 (Bang.) : 2005 TaxPub(DT) 1148 (Bang-Trib) (para 1). Decision: In favour of Revenue. A.Y. 2000-01 to 2003-04 IN THE HIGH COURT OF KARNATAKA AT BANGALORE. CIT v. Infosys Technologies Ltd. *ITA. No. 613/2006, 614/2006, 615/2006 & 616/2006* *15October 2011* Judgment These four appeals arise out of the common order passed by the Income Tax Appellate Tribunal (hereinafther referred to as 'the Tribunal'), Bangalore Bench 'B' in I.T.A. Nos. 145 to 148/Bang/2004 in respect of the assessment years 2000-2001, 2001-2002, 2002-2003 and 2003-2004 dated 11-11-2005, wherein the Tribunal following its earlier decision in Wipro Ltd. v. ITO (2005) 94 ITD 9) (Bang) :2005 TaxPub(DT) 1148 (Bang-Trib) has allowed the appeals filed by the respondent herein and reversed the order passed by the appellate authority confirming the order passed by the assessing officer by holding that the payments made by the respondent herein ' assessee to M/s. Gartner Group, U.S.A. (for short, M/s. Gartner), a non-resident Company was not towards 'royalty' and the same was not liable for taxation in India and consequently, the assessee had no obligation to deduct tax under section 195 of the Act and accordingly, deleted the tax liability under section 201(1) and interest levied under section 201(1A) of the Act. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA. No. 613/2006, 614/2006, 615/2006 & 616/2006
2012 TaxPub(DT) 0078 (Karn-HC) : (2012) 349 ITR 0598 : (2012) 246 CTR 0371 : (2012) 065 DTR 0271

INCOME TAX ACT, 1961

Income deemed to accrue or arise in India- Under section 9(1)(vi)-Royalty-No deduction of TDS

Assessee made certain payments to non-resident company in respect of which no tax was deducted at source by it. AO issued show cause notice to assessee for non-deduction of tax at source since prima facie, payments appeared to be royalty. Assessee submitted that payments were akin to payments made for railway time table which gives information about train schedules or to obtain a book, therefore, payments would not constitute `royalty`within meaning of Explanation 2 to section 9(1)(vi) or Double Taxation Avoidance Agreement. Explanation made by assessee was rejected by AO on the ground that payments amounted to royalties, so, assessee was liable to deduct tax at source. Order of AO was accepted by CIT(A). Held:Tribunal was following its earlier judgment passed in Wipro Ltd. v. ITO (2005) 94 ITD 9 (Bang) : (2005) 1 SOT 663 (Bang.) : 2005 TaxPub(DT) 1148 (Bang-Trib) and was held that payments made by assessee to non-resident company did not constitute royalties and set aside order of CIT (A). The High Court reversed decision of Tribunal in Wipro`s case. Hence, Tribunal had relied upon its earlier decision in Wipro`s case, could not be sustained. [

Income-tax Act, 1961 Section 9 and section 195

Case Law Analysis:Wipro Ltd. v. ITO (2005) 94 ITD 9 (Bang) : (2005) 1 SOT 663 (Bang.) : 2005 TaxPub(DT) 1148 (Bang-Trib) (para 1).

Decision: In favour of Revenue.

A.Y. 2000-01 to 2003-04

IN THE HIGH COURT OF KARNATAKA AT BANGALORE.

CIT v. Infosys Technologies Ltd.

ITA. No. 613/2006, 614/2006, 615/2006 & 616/2006

15October 2011

Judgment

These four appeals arise out of the common order passed by the Income Tax Appellate Tribunal (hereinafther referred to as 'the Tribunal'), Bangalore Bench 'B' in I.T.A. Nos. 145 to 148/Bang/2004 in respect of the assessment years 2000-2001, 2001-2002, 2002-2003 and 2003-2004 dated 11-11-2005, wherein the Tribunal following its earlier decision in Wipro Ltd. v. ITO (2005) 94 ITD 9) (Bang) :2005 TaxPub(DT) 1148 (Bang-Trib) has allowed the appeals filed by the respondent herein and reversed the order passed by the appellate authority confirming the order passed by the assessing officer by holding that the payments made by the respondent herein ' assessee to M/s. Gartner Group, U.S.A. (for short, M/s. Gartner), a non-resident Company was not towards 'royalty' and the same was not liable for taxation in India and consequently, the assessee had no obligation to deduct tax under section 195 of the Act and accordingly, deleted the tax liability under section 201(1) and interest levied under section 201(1A) of the Act.