2017 (10) TMI 1472

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....d the learned Commissioner of Income tax (Appeals) has erred in confirming the same. The orders passed without jurisdiction being becomes bad in law and are liable to be quashed. 2.1 In any case and without prejudice, the learned Assessing Officer had erred in treating the appellant as assessee in default on the ground that the payments made by the appellant for purchase of Software Licenses constituted royalty payments in terms of sec. 9(1 )(iv) and the appellant had defaulted in not deducting tax at source on the said payment by the authorities below. The learned CIT(A) has also erred in confirming the same. The conclusions drawn are against the facts of the case, evidence and the law applicable. The above conclusions being wholly erro....

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....t learned CIT (A) has followed the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. as reported in 245 CTR 481. He submitted that by a later judgment of Hon'ble Karnataka High Court rendered in the case of WIPRO Ltd. vs. DCIT as reported in 382 ITR 179, similar issue was decided in favour of the assessee by following the earlier judgment of the same High Court rendered in the case of the same assessee in ITA 507 of 2002 on 25.08.2010 and it was held that no disallowance can be made u/s 40 (a) (i) of I. T. Act in respect of software imported which is in the nature of Royalty u/s 9 (1) (vi) of I. T. Act. He submitted a copy of both these judgments of Hon'ble Karnataka High Court. At this ju....

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.... (Supra) rendered on 25.08.2010. In this case, the substantial question of law raised as per Para 37 was as under:- "Whether the Tribunal is correct in allowing expenditure on imported software when the expenditure per se is capital in nature and is not allowable?" 5. From this substantial question of law, it comes out that in that case, this was not a dispute before Hon'ble Karnataka High Court as to whether the import of software is Royalty or not? The dispute in that case was this that the import of software is capital expense in that case and therefore, how the same can be allowed as deduction. In that case also, the A.O. held that the payment for software is Royalty and since TDS was not deducted, it is to be disallowed u/s 40 (a)....