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2016 (12) TMI 1353 - ITAT MUMBAIRe-characterisation of income received from licensing of software as ‘Royalty’ - DTAA between India and Netherlands - disregarding the claim of the assessee that the aforesaid income was in the nature of business income - existence of PE in India - Held that:- No corresponding amendment has been made in the provisions of the DTAA. Under these circumstances, the assessee would be entitled to the provisions, which are more beneficial to the assessee out of the provisions of Indian Income-tax Act and DTAA between India and the Netherlands, in view of provisions contained in section 90(2) of the Act. We have already held that as per the provisions of India Netherlands DTAA, the amount received by the assessee on account of sale of software would not fall within the definition of ‘Royalty’ as provided in Article 12(4) of the DTAA. Under these circumstances, it will not be legally permissible for us to refer to the provisions of the Act to decide the taxability of this amount in the hands of the assessee in India. Thus, in our considered view, based upon the facts and circumstances of the case and legal position as discussed above, the impugned amount received by the assessee is in the nature of business profits assessable under Article 7 of India Netherlands DTAA and would not be taxable as ‘Royalty’ under Article 12 of the DTAA. Thus, this ground is decided in favour of the assessee.
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