Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (7) TMI 1592 - AT - Income TaxRoyalty receipt - determining the nature of payments for services provided by the assessee as royalty within the meaning of section 9(1)(vi) - Whether the grant of user rights in the software and the payments made in lieu thereof partake the character of royalty or no? - HELD THAT:- It is an undisputed fact that the software supplied by the assessee to the Indian companies was not customized software but were purchased off-the-shelf. The agreement for supply of software with CIL and CSSIL (Indian companies) merely provides the right to use off-the-shelf program and no copyright in these off-theshelf software was granted to CIL and CSSIL. The assessee itself had no right to modify the softwares purchased from third parties. The primary contentions of the assessee is that what is provided to the Indian affiliates i.e. CIL and CSSIL is the mere rights in the copyrighted software and not the rights of use of copyright. We observe that the Co-ordinate Bench of Tribunal in the case of John Deere India Pvt. Ltd. Vs. DDIT [2019 (3) TMI 458 - ITAT PUNE] has in a very elaborate manner explained the difference between the “copyright‟ and “copyrighted article‟ and whether the consideration received on sale of right to use of copyrighted article would amount to payment of royalty. DTAA between India and USA such payments made to USA based company does not fall within the purview of royalty as defined in Article 12. It is a well settled law that where the provisions of DTAA are beneficial to the assessee, the same will prevail over the provisions of the Act. Thus we find merit in the contentions of the assessee. The receipts in the hands of assessee are not in the nature of royalty and hence, are not taxable in India. - Decided in favour of assessee.
|