- 1 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF AUGUST, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL NO. 708 OF 2023 BETWEEN: 1. PRINCIPAL COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION) KORAMANGALA, BANGALORE. 2. THE INCOME TAX OFFICER INTERNATIONAL TAXATION BMTC COMPLEX, KORAMANGALA BANGALORE. …APPELLANTS (BY SRI. E.I. SANMATHI, ADV.) AND: M/S. ALTAIR ENGINEERING INC 1820, EAST BIG BEAVER ROAD TROY MI 99999 UNITED STATES PLAN AAICA 7762Q. …RESPONDENT (BY SRI. K.K. CHYTHANYA, SR. ADV. FOR SRI TATA KRISHNA, ADV.) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 07.02.2023 PASSED IN IT(IT)A NO. 844/BANG/2022, FOR THE ASSESSMENT YEAR 2019-20, PRAYING TO DECIDE THE 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 07.02.2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 IT(IT)A NO. 844/BANG/2022 FOR A.Y 2019-20 (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 K. V. ARAVIND) This appeal under Section 260-A of the Income Tax Act, 1961 by the Revenue challenging the order in IT(IT)A.No.844/Bang/2022 dated 07.02.2023 passed by the Income Tax Appellate Tribunal ‘B’ Bench, Bengaluru (for short, ‘Tribunal’) for the assessment year 2019-20. 2. The Revenue has raised 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 setting aside the additions made in assessment order by relying the judgment of Hon'ble Apex Court in case of Engineering Analysis Centre of Excellence Pvt Ltd Vs. CIT (reported in 432 ITR page 471) - 3 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 without appreciating that in the case of assessee are not similar and even when Review Petition filed by Revenue is pending for adjudication before Supreme Court in case Engineering Analysis Centre of Excellence? 2. Whether on the facts and in the circumstances of the case, the Tribunal’s order can be said as perverse in nature in disregarding the findings rendered by assessing officer that the provisions of the DTAA between India-UK with regard to Royalty are to be interpreted in harmony with the Section 9 of the Act? 3. Whether on the facts and in the circumstances of the case, the Tribunal’s order is perverse in nature in holding nature of services rendered cannot be said as Fee for Technical Services ignoring that the conditions set out definition clause of in Explanation 2 to Section 9(1)(vii) of the Act and the Double Taxation Avoidance Agreement as well are fully satisfied in present case? - 4 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 4. Whether on the facts and in the circumstances of the case, the Tribunal’s order is perverse in nature in ignoring the various clauses of the Agreement which signified that the overseas entity through the employees rendered technical, managerial and consultancy services, thus satisfying FTS as per the provisions of the Act and also under DTAA?” 3. Facts in brief are that the respondent-assessee is a foreign company was in receipt of income from sale of software. The Assessing Officer treated the income on sale of software as ‘Royalty’. The draft assessment order passed by the Assessing Officer was disputed before the Dispute Resolution Panel (for short, ‘DRP’). The DRP held that the receipt is taxable under the head ‘Royalty’. The Assessing Officer by final assessment order dated 22.07.2022 held that the income from sale of software is taxable as ‘Royalty’. 4. The Tribunal on appeal by the assessee, after analyzing the terms of the agreement and applying the - 5 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 principles of law as laid down by the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (2021) 125 TAXMANN.COM 42 (SC) held that the receipt from sale of software is not taxable as ‘Royalty’. Hence, the Revenue is in appeal challenging the order of the Tribunal. 5. Learned counsel Sri.E.I.Sanmathi, appearing for the Appellants/Revenue submits that the facts in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra) and in the present case are not identical and the law laid down by the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra) is not applicable to the facts of the present appeal. It is further submitted that the Revenue has preferred the Review Petition in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra). 6. On the other hand, Sri.K.K.Chythanya learned senior counsel appearing on behalf of learned counsel - 6 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 Sri.Tata Krishna, for the assessee submits that the Tribunal after analyzing the terms of the agreement in terms of the law laid down by the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra) has held that the receipt from transfer of license is not taxable as ‘Royalty’. It is further submitted that the substantial questions of law raised for consideration are covered by the judgment of the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra). 7. Heard learned counsel appearing for the parties and perused the substantial questions of law and the findings recorded by the Tribunal. 8. A careful perusal of the order of the Tribunal, it is clear that the Tribunal has analyzed the terms of the agreement and held that in view of the judgment of the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra) the - 7 - HC-KAR NC: 2025:KHC:31120-DB ITA No. 708 of 2023 amount in question regarding sale of software is not taxable as ‘Royalty’. 9. This Court is of the view that the issue raised in the appeal is covered by the judgment of the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra). The revenue has not demonstrated any difference in facts or in law. Hence, no substantial questions of law would arise for consideration. Accordingly, appeal stands dismissed. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE NC CT:bms List No.: 1 Sl No.: 23