Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 806 - AT - Income TaxTaxability of supply of software as royalty - business connection/PE in India - AO held that the assessee had an Agency PE in India - AO directed attribution of profits of 15% from the sale of equipment - AO held that the amount received by the assessee on account of software licensing as loyalty u/s 9(1)(vi) & (vii) of the Income Tax Act, 1961 and under the Article 12 of the treaty between India and USA - HELD THAT:- As decided in own case [2017 (4) TMI 1504 - DELHI HIGH COURT] consideration received by the Assessee for supply of product along with license of software to End user is not royalty under Article 12 of the Tax Treaty. Even where the software is separately licensed without supply of hardware to the end users (i.e. eight out of 63 customers), we are of the view that the terms of license agreement is similar to the facts of Infrasoft Ltd' [2013 (11) TMI 1382 - DELHI HIGH COURT]. Accordingly, we- hold' that there was no transfer of any right in respect of copyright by the Assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India as per adjudication on Ground - Decided in favour of assessee.
|