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2020 (12) TMI 403 - HC - Income TaxIncome accrued in India - receipts of the assessee from sale of software - taxable as royalty under the India -UK DTAA or not? - Whether ITAT was right in holding that explanation 4 to section 9(1)(vi) of the I.T. Act, 1961, would not apply to India - UK DTAA ? - HELD THAT:- ITAT has decided the appeals in favour of the Respondent-Assessee on the basis of the decision of this Court in the case of Principal CIT Vs. M. Tech India Pvt. Ltd. [2016 (1) TMI 812 - DELHI HIGH COURT] wherein the Court relied upon the earlier decisions on the same issue including the judgment of this Court in Director of Income Tax v. Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] and inter alia held that payment made by the reseller for the purchase of software for sale in Indian market could not be considered as royalty. ITAT also dealt with the contention of the Appellant- Revenue regarding Explanation 4 to Section 9 (1)(vi) of the Act for interpreting the terms used in Article 13 of the DTAA and observed in para 6 of the impugned order that “In view of Section 90(2) of the Income Tax Act, the assessee opts for Double Taxation Avoidance Agreement between India and UK to override the provisions of the Act as there is no corresponding amendment to the definition of the term ‘royalty’ in Article 13(3) of the aforesaid DTAA as carried out in the definition of royalty u/s 9 (1)(6) of the Act.” The learned ITAT then rejected the contention of the Appellant-Revenue by relying upon the judgment of this Court in Director of Income Tax v. New Skies Satellite BV & Ors. [2016 (2) TMI 415 - DELHI HIGH COURT] which deals with the question of retrospective effect of the amendment - No substantial question of law.
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