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2011 (10) TMI 20 - AAR - Income TaxTDS on payment - Capital receipt versus revenue receipt - nature of the payment made or to be made by Satyam to the applicant under Settlement - . Regularisation of unauthorized usages of software IPRs by Satyam and its affiliates till the date of settlement - Indemnification of damages suffered by Upaid on account of, misrepresentation by Satyam and its employees in relation to IPRs that are the subject matter of the settlement agreement and; - Continued usage of patents after the date of settlement, including usage of future patent rights. - Held that:- The answer is that (subject to taxability of a portion as royalty) the compensation of the $ 70 million paid by Satyam to the applicant would be capital receipt in the hands of the applicant - the amount less that portion attributable to royalty, cannot be treated as income under any of the specified heads under the Income-tax Act. - Other than the part of the compensation attributable to royalty, the balance cannot be considered to be income accruing or arising in India to the applicant. - In the light of the decision rendered by Supreme Court of New York holding that Satyam is entitled to deduct the tax payable on the compensation to be paid, the ruling on this question is that the parties will be governed by that decision subject to any appeal they may have against the decision in the appropriate court. Interest from escrow account - The amount deposited in the Escrow account by Satyam has earned interest. The interest is earned in India. - Held that:- his interest portion is taxable in India as that is income arising in India.
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