The Supreme Court has ruled that Vodafone India is not obligated to deduct income tax TDS ( tax Deduction at Source ) on payments made to the non-resident telecom operators. The bench also condoned the delay of 222 days in favour of the department.
The bench of Justices B.V. Nagarathna and Nongmeikapam Kotiswar Singh, referencing the ruling in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr., directed adherence to the judgement from that case.
In the Engineering Analysis Centre of Excellence Private Limited case, the apex court ruled that amounts paid by resident Indian end-users or distributors to non-resident computer software manufacturers or suppliers, as consideration for the resale or use of the software through EULAs or distribution agreements, do not constitute royalty payments for the use of copyright in the software. Consequently, such payments do not give rise to taxable income in India, and the persons referred to in section 195 of the Income Tax Act are not required to deduct TDS under this section.
In this Special Leave Petition ( SLP ) filed by the Income tax department, the Supreme Court stated that “During the course of submissions, we realised that this petition is covered by the judgment of this Court in Engineering Analysis Centre of Excellence Private Limited vs. Commissioner of Income Tax and Anr. reported in (2022) 3 SCC 321, which has been followed in other cases also. When this fact was brought to the notice of the learned senior counsel appearing for the petitioners, it was pointed out that in similar matters, this Court has issued notice.”
The matter was dismissed by the Supreme Court on merits following the aforesaid judgment/order.
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