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2023 (3) TMI 910 - AT - Income TaxIncome deemed to accrue or arise in India - amount received by the assessee towards sale of software - royalty receipts under Article 12 of the India – USA Double Taxation Avoidance Agreement (DTAA) - HELD THAT:- Materials on record clearly demonstrate that the assessee has sold copyrighted articles and has not transferred use or right to use of any copyright. Though, creation of software might have involved certain formula or process, but what the customers in India have purchased is the software and not the process. Thus, in sum and substance, the assessee has sold copyrighted articles and not the copyright in the software. The ratio laid down by the Hon’ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] would squarely apply to assessee’s case. The amount received by the assessee from sale of software is not in the nature of royalty under Article 12(3) of India –USA DTAA. Accordingly, we direct the Assessing Officer to delete the addition. Grounds are allowed.
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