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2015 (10) TMI 2853 - AT - Income TaxAccrual of income in India - treating receipt from sale of software product as royalty and subjecting it to tax - PE in India or not? - assessee an American Company is engaged in the business of providing information solution - as argued such income has not been offered to tax on the reasoning that as the assessee is not having a P.E. in India such income being in the nature of business income is not taxable under the provisions of India USA DTAA HELD THAT:- On a perusal of the material on record, it is seen that identical dispute came up for consideration before the co-ordinate bench of the Tribunal in assessee’s own case for the assessment year 2007-08[2011 (11) TMI 887 - ITAT MUMBAI] wherein after considering the terms of both the agreements as well as other relevant facts came to conclude that the receipts from sale of computer software products is not royalty but business income. in the assessment year 2007-08 also, the Departmental Authorities treated the receipt from sale of software product as royalty solely relying upon the nomenclature of the product given in the invoice as “intellectual” value which is also the case in the impugned assessment year. Tribunal, taking into consideration such fact has given a categorical finding that the amount received by the assessee towards sale of software products cannot be treated as royalty and thereby accepted assessee’s claim of business income. As there is no material difference in the facts considered by the Tribunal in assessment year 2007–08 and the impugned assessment year, we accept assessee’s claim that the amount received from sale of software product cannot be considered as royalty but is the business income of the assessee, hence, as per the provisions of India–USA treaty it is not taxable in absence of a P.E - Assessee appeal allowed.
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