What is Royalty Income under the Income Tax Act?

Last updated: 13 July 2021

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Quick Summary

This tribunal ruling addresses how royalty income is treated under the Income Tax Act. The case involves an assessee who declared 'NIL' income, while the Assessing Officer calculated it to be over 18 crore rupees. The appeals were heard together due to identical underlying facts, focusing on the assessment years 2013-14 and 2014-15.

Court :
ITAT Delhi

Brief :
These two appeals by the assessee are preferred against the two separate orders of the Assessing Officer dated 14.12.2016 and 25.05.2017 framed u/s 143(3) r.w.s 144C(13) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] for Assessment Years 2013-14 and 2014-15 respectively.

Citation :
ITA No. 5814/DEL/2017

THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘D’ BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]

BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA No. 630/DEL/2017 [Assessment Year: 2013-14]
ITA No. 5814/DEL/2017 [Assessment Year: 2014-15]

GE Intelligent Platforms Asia
Pacific Pte Ltd, 6th Floor,
7A, Standard Chartered Building
DLF Cyber City, Phase – III
Gurgaon, Haryana
PAN: AAECG 6481 G
[Appellant]

Vs.

The A.C.I.T
Circle – 1(3)1,
New Delhi
[Respondent]

Date of Hearing : 01.07.2021
Date of Pronouncement : 01.07.2021

Assessee by : Shri Sachit Jolly, Adv
Revenue by : Dr. Prabha Kant, CIT-DR

ORDER

PER N.K. BILLAIYA, ACCOUNTANT MEMBER,

These two appeals by the assessee are preferred against the two separate orders of the Assessing Officer dated 14.12.2016 and 25.05.2017 framed u/s 143(3) r.w.s 144C(13) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] for Assessment Years 2013-14 and 2014-15 respectively.

2. Since the underlying facts in the issues are identical in both the appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity.

3. For the sake of our convenience, we are adjudicating on the facts of ITA No. 630/DEL/2017 on the agreement that the underlying facts in ITA NO. 5814/DEL/2017 are mutatis mutandis same.

4. Grievances raised by the assessee in ITA No. 630/DEL/2017 read as under:

“1. That the assessing officer (“AO”) and Dispute Resolution Panel (“DRP”) erred on facts and in law in computing the income of the Appellant for the relevant assessment year at Rs. 18,15,86,344/- as against ‘NIL’ income returned by the Appellant.

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FAQ :

The main issue concerns the computation of royalty income under the Income Tax Act, specifically a discrepancy between the income declared by the assessee and the income assessed by the tax authorities.

The appeals cover the assessment years 2013-14 and 2014-15.

The two appeals were heard together because the underlying facts and issues were identical in both cases.

The assessee declared 'NIL' income for the relevant assessment years.

The assessed income by the tax authorities was Rs. 18,15,86,344/-.