- 1 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF AUGUST, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE DR. JUSTICE K.MANMADHA RAO INCOME TAX APPEAL NO. 668 OF 2023 BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX-1, (INTERNATIONAL TAXATION) KORMANGALA, BENGALURU. 2. THE DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE 1(2), KORMANGALA BANGALORE. …APPELLANTS (BY SRI. E I SANMATHI, ADV.) AND: M/S. IBM SINGAPORE PVT. LTD., NO.12, SUBRAMANYA ARCADE, BANNERGATTA MAIN ROAD BANGALORE-560029 PAN NO. AACCI2917B. …RESPONDENT (BY SRI MS. MANASA ANANTHAN, ADV. FOR MS. TANMAYEE RAJKUMAR, ADV.) THIS APPEAL IS FILED UNDER SECTION 260A OF THE INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 03.05.2023 PASSED IN IT(IT)A NO.177/BANG/2023, FOR THE ASSESSMENT YEAR 2015- 16 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH ORDER QUESTIONS OF LAW AS MAY BE FORMULATED Digitally signed by NANJUNDACHARI Location: High Court of Karnataka - 2 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 BY THE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 03.05.2023 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BANGALORE, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE’S CASE, IN APPEAL PROCEEDINGS IN IT(IT) A NO.177/BANG/2023 FOR A.Y. 2015-16 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. 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 DR. JUSTICE K.MANMADHA RAO ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE S.G.PANDIT) The above appeal by the Revenue filed under Section 260A of the Income Tax Act, 1961 is directed against order dated 08.05.2023 in ITA.No.177/Bang/2023 for the assessment year 2015-16 (Annexure-A) passed by the Income Tax Appellate Tribunal ‘C’ Bench, Bengaluru, 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 - 3 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 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 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 I 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 - 4 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 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 copy right 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. The Assessing Officer had treated the payment received by the respondent/assessee for the sale of software as Royalty. The respondent/assessee was before the Tribunal and the Tribunal followed the order passed in ITA.Nos.1311 to 1313/BANG/2018 for the assessment - 5 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 years 2009-10, 2010-11 and 2012-13 of the respondent/assessee, wherein it was ordered to delete the addition made as Royalty. It is also submitted that the issue involved in the above appeal is covered by the decision of the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VS. COMMISSIONER OF INCOME-TAX AND ANOTHER (2021) 432 ITR 471. 3. The order passed by the Tribunal in ITA.Nos.1311 to 1313/2018 was the subject matter of ITA.No.681/2023 and connected appeals. This Court by judgment dated 12.08.2025, by following the judgment in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra) held that the questions raised for consideration are no longer res integra and stands covered by the decision of the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra). - 6 - HC-KAR CNR: KAHC010576482023 NC: 2026:KHC:41463-DB ITA No. 668 of 2023 4. In the light of the above, we are of the considered view that in the present appeal also, the questions raised would no more survive for consideration. By following the decision of the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED (supra) and the judgment dated 12.08.2025 in ITA.No.681/2023 and connected appeals, the present appeal also stands dismissed. Sd/- (S.G.PANDIT) JUDGE Sd/- (DR.K.MANMADHA RAO) JUDGE NC CT:bms