Karnataka High Court · Judgments and reasoned final orders
Principal Commissioner of Income Tax & Anr. v. Allegis Services India Pvt. Ltd.
I.T.A. No. 12/2020 ·
Software purchase disallowance: admitted questions answered for Allegis by following its earlier coordinate Bench decision.
1. FACTS OF THE CASE
Revenue challenged the Tribunal order of 5 April 2019 in ITA 2199/Bang/2018 for AY 2012-13, affirming relief granted by CIT(A) on 27 April 2018. The questions admitted on 12 October 2020 concerned a return filed on 30 November 2012 after Samsung Electronics and disallowance of Rs.19,50,43,544 for shrink-wrapped software purchases from non-residents without TDS. Question 2 cites sections 40(a)(ia) and 9(1)(vi).
2. DISCUSSION BY THE COURT
Allegis invoked Engineering Analysis, (2021) 125 taxmann.com 42 (SC), and its own coordinate Bench decision in ITA 40/2019, described in the source as dated 17 April 2021. Revenue referred to Supreme Court review petitions, accepted coverage of question 1, but said question 2 depended on individual facts. The Court nevertheless treated the appeal as covered by the earlier Allegis decision.
3. JUDICIAL DECISION
The appeal was disposed of following the coordinate Bench decision in Allegis. Both substantial questions were answered in favour of the assessee and against Revenue.
4. OUTCOME
The assessee retained its relief against the challenged disallowance. The Court neither remanded the second question nor reserved an express liberty to review in its operative paragraph.
5. Expert Comments
AKHB editorial analysis, distinct from the Court’s findings.
The actual reasoning is the application of an earlier Allegis decision
Although Engineering Analysis was cited, the operative paragraph expressly relies on the coordinate Bench judgment in the same taxpayer’s case. This is a precedent-based disposition, not a fresh examination of licence terms. Its useful proposition is that the admitted questions were resolved for this assessee on that basis; the source does not justify a blanket rule for every software purchase.
Source: PDF p.3 · PDF p.4 · PDF p.5
Revenue’s qualified concession must remain qualified
Revenue accepted that question 1 was covered but maintained that question 2 was fact-specific. The note should not convert that position into a concession on every issue. Equally, the final paragraph answers the substantial questions for the assessee without a remand. A practical reading must preserve both the qualified argument and the broader operative result.
Do not import a reservation or silently repair the statutory citation
The mention of pending review petitions is an argument recorded at the hearing, not an express condition attached to relief. Unlike an order granting conditional review liberty, this disposition contains no such clause. Separately, the reference to section 40(a)(ia) alongside non-resident payments is the question’s own wording; consulting the underlying record is necessary before substituting another disallowance provision.
Source and verification
Complete 5-page supplied source; all pages read.
Original PDF: 5 pages · SHA-256: cccbe994dbd386314f46c45af8e8041b7b57bf730e9e5bd322c1d65efb47b29e
All 5 original pages read and visually inspected; all five panels audited.
Question 2 expressly identifies section 40(a)(ia), despite describing payments to non-residents. That source wording is retained, not silently replaced with a different provision. No current-law equivalence is asserted.
Subsequent treatment has not been independently verified.
AI disclosure and professional disclaimer
AI-assisted source review. Independent human approval is not represented.
General research only. Expert Comments are editorial analysis, not the Court’s holding. No current-law clearance is claimed.