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2016 (7) TMI 1135 - AT - Income Tax
Taxability of sale of software as “Royalty” - consideration received on sale of computer software programme i.e. C D Rom as business income OR “Royalty Income” - P.E. in India - Held that:- DIT vs M/s Nokia Networks, reported in (2012 (9) TMI 409 - DELHI HIGH COURT) concluded that, when assessee supplies the software which is incorporated on CD, it has applied only a tangible property and payment made for acquiring such a property cannot be regarded as payment by way of royalty.
We uphold the order of the CIT(A) that the payment received by the assessee for sums does not amount to “royalty” within the meaning of Article 12(4) of Indo-Netherland DTAA and accordingly, the same is not taxable in India. Since, admittedly, the assessee has no PE in India; therefore, same cannot be taxed as business income under Article 7. - Decided in favour of assessee