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2023 (11) TMI 1186 - AT - Income TaxIncome taxable in India - sale of off the shelf software considered treated as royalty - HELD THAT:-This issue is no more res integra as the quarrel has been settled by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt Ltd. [2021 (3) TMI 138 - SUPREME COURT] held that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software. Revenue from sale of off the shelf software to two new companies which were not there in the earlier - Since the ld. counsel for the assessee has fairly conceded that the revenue from these two companies are not covered by the agreement and the agreements are also not available, therefore, these companies may be taxed in the hands of the assessee as royalty - we direct the AO to consider revenue from these two companies as royalty and tax as per the relevant provisions of the Act. Receipts for use of telecom bandwidth facility - considered as royalty and /Fees for technical services - India-Singapore DTAA - HELD THAT:- As decided in Planetcast International Pvt Ltd [2023 (8) TMI 30 - ITAT DELHI] no corresponding amendment in line with the amendment brought to section 9(1)(vi) of the Act has been made to Article 12(3) of India-Singapore DTAA. Therefore, in absence of any such amendment widening the scope of expression ‘royalty’ under the treaty provisions, the amendment made to section 9(1)(vi) of the Act cannot be automatically brought or imported to Article 12(3) of India- Singapore DTAA, as the treaty provisions have to be construed strictly in accordance with the language used in the provision. Thus, we hold that the receipts from internet bandwidth charges cannot be treated as royalty income under Article 12(3) of India-Singapore DTAA. Accordingly, we direct the Assessing Officer to delete the addition. Receipts from providing information technology related support services- considered as royalty and/fees for technical services - India Singapore DTAA requires that services should be such that enable the person acquiring the services to apply the technology contained therein - claim of the assessee is that the services do not result in transmitting technical knowledge - HELD THAT:- We find that under identical situation, this Tribunal in the case of Planetcast International Pte Ltd [2023 (8) TMI 30 - ITAT DELHI] had held that while running the services, the assessee has not made available any technical knowledge, experience, skill in terms of Article 12(4)(b) of the DTAA and as such, receipts in question were not FTS liable to tax in India. Thus we are of the considered view that payments received from Mphasis Ltd were not covered by Article 12(4) of the India Singapore DTAA. This addition is, accordingly, directed to be deleted.
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