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2015 (11) TMI 1529 - AT - Income TaxAddition to royalty - non deduction of tds - DTAA between India and USA - Held that:- The orders passed by AO in 2007-08 and 2008-09 have been placed wherein the AO accepted the contentions of ESI India that such payments cannot be treated as royalty and deleted the disallowance for non-deduction of tax at source under section 40(a)(i) of the Act. The assessee “ESI US” sold the software to “ESI India” and in the assessment of “ESI India”, it is the payments are treated as towards the purchase of software and not as payment towards Royalty. The principle needs to be applied consistently. In our view, in the hands of the Indian company, when it is not treated as Royalty, then, the same consideration should also be extended to the same transaction in the case of “AE” i.e. “ESI US”. In the present case, income towards sale of software to the Indian “AE” cannot be treated as “Royalty”. Hence, the addition made by the AO towards Royalty is deleted. - Decided in favour of assessee
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