Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 708 - ITAT MUMBAIIncome accrued in India - Royalties and Fees for Technical Services - payment received by the Appellant towards sale of ‘off-the shelf’ software - assessee is a tax resident of Finland - India-Finland DTAA - HELD THAT:- As decided in own case [2020 (7) TMI 99 - ITAT MUMBAI]the payments received by the assessee towards distribution of sub-releases and main releases were also for a right to provide a copyrighted article i.e software updates, which was akin to the amounts received for distribution of the specialized off-the-shelf software products, and not for any right to use the copyright embedded in the said copyrighted article (i.e software products), therefore, the same too in our considered view cannot be construed as “royalty” income, and would be the “business income” of the assessee. On a similar footing, we find, that as per the distributors agreements, it was the responsibility of the distributors to resolve the end user customers queries. In case, the distributors would require assistance on issues as regards functionalities, trouble shooting and verifying error situations, the assessee would provide the same. The aforesaid queries would be resolved via e-mails or telephone calls by the employees of the assessee based in Finland. In our considered view, as the payments received by the assessee from rendering of the maintenance and support services does not fall within the scope and gamut of the definition of “royalty” in Article 12 of the India-Finland tax treaty, therefore, the payments received by the assessee for providing such support services cannot be held as “royalty” in the hands of the assessee. Amount received by the assessee from its distributors for sale of specialized software and maintenance and support services (including upgrades) cannot be held as being in the nature of “royalty” as per Article 12 of the India-Finland tax treaty. - Decided in favour of assessee.
|