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2011 (11) TMI 132 - AT - Income TaxSale of Software - Business profit or Royalty - Article 5 of the India - USA treaty - assessee sold software product to NIPL - Neither NIPL nor its end users were permitted to copy the same and exploit such products for commercial purposes. The customers were bound to use such software only for their own business purpose. They did not have any right to make any further copies of the product. The end users were not entitled to copy or sell or otherwise transfer the software acquired from NIPL. - Held that:- where consideration is only for the use of a copyrighted product and divorced from the right to copy the same, it, by no stretch of Imagination, can be construed as royalty for the obvious reason that the right to copy, which is sine qua non of copyright, is lacking. - Thus it takes the character of business profits. - since assessee does not have a permanent establishment in India and thus its business profit cannot be taxed in India. - Decided in favor of assessee.
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