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MANMOHAN, MANMEET PRITAM SINGH ARORA
Commissioner Of Income Tax (international Taxation)-2 – Appellant
Versus
Nagravision S. A. – Respondent
JUDGMENT
Manmohan, J. (Oral) - Present income tax appeal has been filed challenging the order dated 31st January, 2022 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 140/Del./2021 for the Assessment Year 2017-18. The relevant portion of the impugned order is reproduced hereinbelow:-
'4.2 It was also claimed by the Appellant that issues raised in grounds no 3 and 4, are squarely covered by the order of the Hon'ble Tribunal in Appellant's own case i.e. ITA No.9130/Del/2019 AY 2016-17 decided on 06-07-2020 and recent Judgement of the Hon'ble Apex Court in Engineering Analysis Centre for Excellence Private Limited Vs Commissioner of Income Tax & Another - AIR 2021 SC 124/432 ITR 471(SC).
4.3 The Ld. DR did not refute the claim of the Appellant.
4.4 We have given thoughtful consideration to the submissions of the Appellant and perused the order and judgment as referred above by the Appellant and observed that the issues under consideration as raised vide grounds no. 3 and 4 in this appeal, are identically the same, as have been decided by the Hon'ble Tribunal in Appellant's own case i.e. ITA No.9130/Del/2019 for the previous AY 2016-17 decided on 06-07-2020 and even covered
The main legal point established in the judgment is the application of the Supreme Court judgment in determining the classification of income under the 'royalty' definition.
Income from the supply of CAS and middleware products does not constitute 'royalty' under the Income Tax Act or the India-Swiss DTAA, as reaffirmed by the Supreme Court.
The principle of judicial discipline mandates that the High Court is bound to follow the judgment and order of the apex Court till it is set aside.
Courts may dismiss appeals if the proposed questions are already covered by previous judgments, and no substantial question of law arises.
The High Court upheld the ITAT's ruling that software receipts are not taxable as royalty under the India-UK DTAA, following binding Supreme Court precedent.
Taxation of software sales classified as copyrighted articles is not subject to royalty under DTAA; remand for reassessment aligns with established legal precedents.
The court ruled that remand orders by the ITAT for reassessing royalty issues were appropriate and subsequent adjudications made the appeal infructuous.
The classification of income as 'royalty' under the India-Netherlands DTAA remains subject to the precedent set in a related judgment, unaffected by pending appeals.
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