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2014 (5) TMI 48 - AT - Income Tax
Taxability of Royalty under the Act - Royalty received treated as business income u/s 5(2) and 19(1)(i) of the Act – DTAA between India and USA - Whether the amount is taxable under the Indian Income Tax Act in India if not as royalty, but as business income – Held that:- The amount received by the assessee cannot be considered as royalty as was done by the Assessing Officer while invoking the Article 12(2) of the DT for taxing the amounts – the decision in assessee’s own case for the previous assessment year has been followed, the assessee does not have any permanent establishment in India - Since the Indian company who obtained the rights is acting independently, Agency PE provisions are not applicable to the assessee company - incomes arising to a Non-Resident cannot be taxed as business income in India, without a PE - As the assessee does not have any permanent establishment in India, the incomes arising outside Indian Territories cannot be brought to tax - income arising to the assessee cannot be taxed as royalty within the meaning of Income Tax Act or DTAA and it also cannot be taxed in the hands of the assessee as ‘business income’ as assessee does not have any Permanent Establishment in India – Decided in favour of Assessee.