Supreme Court Criticises Income Tax Dept for filing SLP on Issues already Settled [Read Judgement]
We say so for the reason that filing of such frivolous cases will only add to the pendency of this Court and to docket explosion and lead to waste of judicial time, said the bench
The Supreme Court rebuked the Income Tax Department for repeatedly approaching the Court with Special Leave Petitions (SLPs) on issues that already stand settled by earlier judgments. The bench said that such SLPs will only lead to the docket explosion and waste of judicial time.
Justice B.V. Nagarathna and Justice R. Mahadevan said that “We fail to understand as to why the Department is continuously filing Special Leave Petitions such as the present one despite the orders passed earlier by this Court dismissing similar Special Leave Petitions following the decision of this Court in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Another.”
The Court was hearing an SLP filed by the Deputy Commissioner of Income Tax against Maxis International SDN BHD, where the Department sought to challenge a Karnataka High Court order.
The issue was with regards to the taxability of the royalty on interconnect service charges. The matter came up before the Karnataka High Court, where it dismissed the appeal filed by the department. The high court noted that tax is not deductible when payment is made to non- resident telecom operators.
The Supreme Court bench noted that the petition itself suffered from a “gross delay of 260 days”, yet even after condoning the delay in refiling, the Court found no merit to interfere.
The court, noting the cases of Deputy Director of Income Tax v. Vodafone Idea Ltd andEngineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (2022), dismissed the matter.
In the cited cases of Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Another, the apex court, in its detailed judgement ruled that software companies are no longer required to pay TDS when purchasing software from international providers.
In the Engineering Analysis Case, the Court decided that payment for using foreign software did not constitute a royalty payable in India with regard to the taxability of royalties paid to foreign businesses for the use of their software by Indian firms. The Court also excluded the individuals mentioned in Section 195 of the Income Tax Act by ruling that the sums paid by resident Indian end users and distributors to non-resident computer software manufacturers and suppliers are not royalty payments for the use of copyright in the software and do not result in any income taxable in India.
The above-mentioned is applicable to the present case and the apex bench has cited this case for dismissing the petition filed by the Income tax department.
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