Revenue appealed against a Tribunal order denying royalty taxation on the assessee's software payments for AY 2021-22; the court dismissed the appeal as covered by its own earlier decision in the assessee's case relying on the Engineering Analysis Centre ruling.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
NC: 2025:KHC:39639-DB ITA No. 135 of 2024
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF OCTOBER, 2025
PRESENT
THE HON'BLE MR. JUSTICE B M SHYAM PRASAD
AND
THE HON'BLE MR. JUSTICE T.M.NADAF INCOME TAX APPEAL NO. 135 OF 2024
BETWEEN:
BANGALORE
Digitally signed by MADHUSHREE H Location: High Court of Karnataka
INTERNATIONAL TAXATION, BMTC COMPLEX, KORAMANGALA BANGALORE
…APPELLANTS
(BY SRI. E. I. SANMATHI, ADVOCATE)
AND:
M/S ALTAIR ENGINEERING INC 1820, EAST BIG BEAVER ROAD, TROY M1 999999 UNITED STATES, PAN AAICA 7762Q
HC-KAR
REP BY ITS DIRECTOR
…RESPONDENT
(BY SRI. K.K.CHYTHANYA, SENIOR ADVOCATE FOR
SRI. TATA KRISHNA., ADVOCATE)
THIS ITA/INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 4-12-2023 PASSED IN IT (IT)A NO.734/BANG/2023 FOR THE ASSESSMENT YEAR 2021-22 PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAYBE FORMULATED BY THE HONBLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 4/12/2023 PASSED BY THE INCOME TAX APPELLATE TRI8BUNAL, C BENCH, BANGALORE AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEES CASE, IN APPEAL PROCEEDINGS IN IT(IT)A NO.734/BANG/2023 FOR A.Y.2021-22 (ANNEXURE-A).
THIS APPEAL, COMING ON FOR ADMISSION FINAL HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
HC-KAR
CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD and HON'BLE MR. JUSTICE T.M.NADAF
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE B M SHYAM PRASAD)
The Revenue is aggrieved by the order dated 04.12.2023 in IT(IT)A No.734/Bang/2023 by the Income Tax Appellate Tribunal "C" Bench, Bengaluru [for short, ' the Tribunal' ], and the Tribunal's order is relevant to the Assessment Year 2021-22. The Revenue proposes substantial question on whether royalty could be charged in the facts and circumstances of this case, but Mr. K. K. Chythanya, the learned Senior counsel for the assessee - the respondent, places on record a copy of the order dated 12.08.2025 by a Co-ordinate Bench of this Court in Income Tax Appeal No.708/2023 to support the assessee's case that this question is no longer res integra as it is answered in its favour by the Coordinate Bench for the Assessment Year 2019-20.
HC-KAR
Mr. E. I. Sanmathi, the learned Senior Standing
Counsel for the Revenue, is heard and the records perused. It remains indisputable that a Co-ordinate Bench of this Court in the assessee's own case for the relevant Assessment Year 2019-20 in the afore appeal has upheld the assessee's case against the liability to pay royalty.
The Coordinate Bench's order in its material part reads as under:
"8. A careful perusal of the order of the Tribunal, it is clear that the Tribunal has analyzed the terms of the agreement and held that in view of the judgment of the Hon'ble Apex Court in the case of ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra) the amount in question regarding sale of software is not taxable as 'Royalty'.
9. This Court is of the view that the issue raised in the appeal is covered by the judgment of the Hon'ble Apex Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD., (supra). The revenue
HC-KAR
has not demonstrated any difference in facts or in law. Hence, no substantial questions of law would arise for consideration. Accordingly, appeal stands dismissed."
In the light of the afore, the appeal is dismissed.
Sd/(B M SHYAM PRASAD) JUDGE
Sd/(T.M.NADAF) JUDGE
RB
1 issue framed by the court
Whether payments for software by the assessee could be taxed as royalty for Assessment Year 2021-22.
Colour shows how this judgement treated each authority
Engineering Analysis Centre of Excellence (P) Ltd.Relied on
ENGINEERING ANALYSIS CENTRE OF EXCELLENCE (P) LTD.
Income Tax Appeal No.708/2023 (order dated 12.08.2025, Co-ordinate Bench)Followed¶33
1 provisions across 1 enactments
PR Commissioner of Income Tax (International Taxation), Koramangala, Bangalore
The Income Tax Officer, International Taxation, BMTC Complex, Koramangala, Bangalore
M/s Altair Engineering Inc., United States
B M Shyam Prasad
T.M.Nadaf
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
