Income Tax Appellate Tribunal Bangalore Ge India Technology Centre Pvt. Ltd.,, ... vs Addl.C.I.T., Bangalore on 17 November, 2017 ITA 595/Bang/2016 Page 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI. LALIT KUMAR, JUDICIAL, JUDICIAL MEMBER I.T.A No.595/Bang/2016 (Assessment Year : 201011) GE India Industrial P. Ltd, (as successor in interest to GE India Technology Centre P. Ltd, Now amalgamated), 401, 402, 4th floor, Aggarwal Millenium Tower, E1, 2, 3, Netaji Subash Place, Wazirpur, NEW DELHI 110 034 .. Appellant PAN : AAACG4901D v. Addl. Commissioner of Incometax, Range11, Bengaluru .. Respondent Assessee by : Shri. Rohit Gara, Advocate Revenue by : Smt. Vandana Sagar, CIT Heard on : 01.11.2017 Pronounced on : 17.11.2017 ORDER PER LALIT KUMAR, JUDICIAL MEMBER: The present appeal is filed by the assessee, against the order of the CIT (A) 3, Bengaluru, dt.13.01.2016, for the assessment year 201011,on the grounds of appeal extracted hereunder : ITA 595/Bang/2016 Page 2 02. The brief facts are, the assessee is a captive service provider and is engaged in the business of providing engineering analysis and ITA 595/Bang/2016 Page 3 related software development services / export of customised electronic data. During the relevant assessment year the assessee filed its return of income declaring total income of Rs.76.13.59,776/. The AO disallowed Rs.16,21,82,523/ u/s.40(a)(i) of the Act, on the ground that the assessee was liable to deduct tax at source on payments made to nonresident vendors, for the purchase of software. Aggrieved by the disallowance by the AO, the assessee filed an appeal before the CIT (A). 03. The CIT (A), in his order confirmed the disallowance made by the AO, on the ground that the issue was considered by the Hon'ble jurisdictional High Court in the assessee's own case reported in 320 ITR 209, wherein the Hon'ble High Court held that tax was required to be withheld on payments for purchase of software. Further aggrieved the assessee is in appeal before us on the grounds mentioned herein above. 04. It was submitted by the ld. AR of the assessee that learned CIT (A) has followed the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. as reported in 245 CTR 481. He submitted that by a later judgment of Hon'ble Karnataka High Court rendered in the case of WIPRO Ltd. vs. DCIT as reported in 382 ITR 179, similar issue was decided in favour of the assessee by following the earlier judgment of the same High ITA 595/Bang/2016 Page 4 Court rendered in the case of the same assessee in ITA 507 of 2002 ITA No. 1388/Bang/2013 on 25.08.2010 and it was held that no disallowance can be made u/s 40 (a) (i) of I. T. Act in respect of software imported which is in the nature of Royalty u/s 9 (1) (vi) of I. T. Act. He submitted a copy of both these judgments of Hon'ble Karnataka High Court. At this juncture, a query was raised by the bench as to whether the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) was brought to the notice of Hon'ble Karnataka High Court in the later case decided on 25.03.2015 because the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) is dated 15.10.2011. In reply, learned AR of the assessee submitted that the earlier judgment in the case of Wipro Ltd. (Supra) dated 25.08.2010 was also not brought to the notice of Hon'ble Karnataka High Court in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) decided on 15.10.2011 and therefore, the first judgment dated 25.08.2010 should be followed and this judgment is in favour of the assessee. In reply, learned DR of the revenue supported the order of CIT (A) and submitted that both the judgments in the case of Wipro Ltd. (Supra) are in the context of section 40 (a) (i) whereas the judgment of Hon'ble Karnataka High Court rendered in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) is in context of section 195 and in the present case also, the dispute is in context of section 195 and therefore, this judgment ITA ITA 595/Bang/2016 Page 5 No. 1388/Bang/2013 rendered in the case of CIT vs. Samsung Electronics Co. Ltd. (Supra) should be followed. 05. The Ld. DR supported the orders of the lower authorities. 06. We have heard t