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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 3^RD DAY OF AUGUST, 2021

PRESENT

THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA

AND

THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY

ITA NO.724/2019

BETWEEN

WIPRO LIMITED,

76P AND 80P, DODDAKANNELLI

SARJAPUR ROAD,

BENGALURU 560 035

REPRESENTED HEREIN BY ITS

SENIOR MANAGER 3 CORPORATE TAX,

MR.ACHAL DASS

PAN AAACW03874

... APPELLANT

(BY SRI S GANESH, SENIOR ADVOCATE

FOR SRI SANDEEP HUILGOL, ADVOCATE)

AND:

THE ADDITIONAL COMMISSIONER OF

INCOME-TAX,

RANGE 12, BANGALORE,

BMTC COMPLEX, 6^TH BLOCK,

KORAMANGALA,

BENGALURU 560 095.

&. RESPONDENT

(BY SRI K V ARAVIND, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260A OF THE INCOME

TAX ACT PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS

OF LAW, ALLOW THE APPEAL AND SET ASIDE TO THE EXTENT

QUESTIONED HEREIN, THE IMPUGNED ORDER DATED 21.6.2019

PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH

BENGALURU IN ITA NOS.1215-1220/BANG/2014 AND ITA NOS. 18-

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23/BANG/2017 FOR THE ASSESSMENT YEAR 2007-2008 TO 2012-

2013 (ANNEXURE-G) AND ETC.

THIS ITA COMING ON FOR ORDERS AND HAVING BEEN

HEARD AND RESERVED FOR JUDGMENT ON 23.7.2021, THIS DAY,

SATISH CHANDRA SHARMA, J., PRONOUNCED THE FOLLOWING:

JUDGMENT

The present income-tax appeal filed under Section 260A of

the Income Tax Act, 1961, is arising out of the order passed by

the Income Tax Appellate Tribunal, 'B' Bench, Bengaluru, dated

21.6.2019 in ITA.Nos.1215-1220/Bang/2014 and ITA Nos.18-

23/Bang/2017

(M/s

Wipro

Limited

v.

The

Additional

Commissioner of Income Tax) for the assessment year 2007-

2008 to 2012-2013.

2.

The facts of the case reveal that the appellant-

company is a company incorporated under the provisions of the

Companies Act, 1956. The company imports licenced software

and the software is a copyright article. The vendor company is a

company situated outside India. The software is directly

supplied by the foreign vendors to the end users in India under

exclusive licences, which are downloaded technically.

3.

The software licences which are imported by the

company are sold in the marketplace as goods and the

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consideration is being paid to the non-resident vendors, who do

not have a permanent establishment in India. The contention of

the company is that there is no income chargeable to tax

requiring deduction of tax at source. The contention of the

learned Senior counsel for the appellant is that the Income Tax

Appellate Tribunal has erred in law and in facts in holding that

the payments made by the assessee were in the nature of

'royalty payments' as defined under Explanation II to Section

9(1)(vi) of the Income Tax Act, 1961.

4.

Being aggrieved by the order passed by the Income

Tax Appellate Tribunal, the present appeal has been preferred by

the assessee, the appeal was admitted and four substantial

questions of law were framed in the present appeal.

5.

Learned Senior Counsel appearing for the appellant

has fairly stated before this Court that he is not pressing

substantial questions of law No.1, 2 and 4 and he is confining his

arguments only in respect of substantial question of law No.3.

6.

Substantial question of law No.3 reads as under;

"3.

Whether tribunal was correct in confirming the

common order passed by first respondent deeming that

appellant is to be treated as an assessee in default under

Section 201(1) of the IT Act by holding that payments made

by the assessee were in the nature of "royalty payments"

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as defined under Explanation 2 to Section 9(1)(vi) of the IT

Act and under the applicable Double Taxation Avoidance

Agreement (DTAAs) and thereby giving raise to an income at

the hands of bailee (payee) chargeable to tax in India and

necessitating deduction of tax by the appellant/assessee

under Section 195 of the IT Act?"

7.

Sri Ganesh, learned Senior Counsel for the appellant

has argued before this Court that the issue involved in the

present c