2022 (10) TMI 665 - SCH - Income Tax

TDS u/s 195 - Royalty - amounts paid by the concerned persons resident in India to non-resident foreign software suppliers - Royalty paid to foreign software Supplier - Double Tax Avoidance Agreement - HELD THAT - The impugned judgment(s) passed by the High Court of Karnataka at Bangalore had relied on the earlier judgment of the High Court in the case of Samsung Electronics Co. Ltd. 2011 (10) TMI 195 - KARNATAKA HIGH COURT which judgment has been set aside and overruled by this Court in the decision reported as Engineering Analysis Centre of Excellence Private Limited 2021 (3) TMI 138 - SUPREME COURT Before us learned counsel for both parties have rightly stated that the facts as found by the Income Tax Appellate Tribunal and the authorities have not been analyzed by the High Court. We set aside the impugned judgment with an order of remand to the High Court to re-examine the issue and the question of law. Parties would be entitled to raise all pleas and contentions in accordance with law including reliance on the judgment in the case of Engineering Analysis Centre of Excellence Private Limited (supra) and the contention of the Revenue that notwithstanding the said judgment the payments would be covered under the head Royalty etc. We are informed that the Review Petition No. 1422/2021 titled The Commissioner of Income Tax International Taxation Another v. Engineering Analysis Centre of Excellence Private Limited Etc. is pending. In case any order is passed it will be open to the parties to rely upon the said order. The appeals are disposed of in the aforesaid terms.

Summary

Issues:
- Interpretation of earlier judgments by High Court
- Analysis of facts by Income Tax Appellate Tribunal
- Remand order for re-examination by High Court
- Pending Review Petition and its impact on the case

Interpretation of Earlier Judgments by High Court:
The Supreme Court noted that the impugned judgment by the High Court of Karnataka relied on a previous judgment in the case of 'Commissioner of Income Tax & Another v. Samsung Electronics Co. Ltd.' which had been overruled by the Supreme Court in the case of 'Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax & Another.' The Court highlighted that the facts as determined by the Income Tax Appellate Tribunal and authorities were not properly analyzed by the High Court. Consequently, the Supreme Court set aside the impugned judgment and ordered a remand to the High Court for a re-examination of the issue and the question of law.

Analysis of Facts by Income Tax Appellate Tribunal:
The Supreme Court emphasized that the learned counsels for both parties correctly pointed out that the facts determined by the Income Tax Appellate Tribunal were not adequately considered by the High Court. This observation played a crucial role in the decision to remand the case back to the High Court for a fresh examination, ensuring that all facts and contentions are appropriately addressed in accordance with the law.

Remand Order for Re-examination by High Court:
In light of the aforementioned issues, the Supreme Court issued a remand order directing the High Court to re-examine the matter comprehensively. The parties were granted the opportunity to present all their arguments and contentions, including referencing the judgment in the case of 'Engineering Analysis Centre of Excellence Private Limited.' Additionally, the Court acknowledged the pending Review Petition titled 'The Commissioner of Income Tax International Taxation & Another v. Engineering Analysis Centre of Excellence Private Limited Etc.,' and allowed the parties to rely on any orders issued in that regard.

Pending Review Petition and its Impact on the Case:
The Supreme Court acknowledged the existence of a pending Review Petition related to the case. The Court informed the parties that any orders issued in the Review Petition would be relevant and could be utilized by the concerned parties. The appeals were ultimately disposed of in the specified terms, and any pending applications were deemed disposed of accordingly.