TMI Blog2017 (4) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the view that the terms. of license agreement is similar to the facts of Infrasoft Ltd' [ 2013 (11) TMI 1382 - DELHI HIGH COURT] . Accordingly, we hold that there was no transfer of any right in respect of copyright by the Assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India - This Court having reiterated the legal position in Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Years ( AYs‟) 2008-09, 2004-05, 2010-11, 2003-04, 2009-10 and 2007-08 respectively. 4. While admitting these appeals on 16th January, 2017, this Court passed the following order: Admit. The following questions of law arise for consideration: (i) Did the ITAT fall into error in holding that the transaction in question, i.e., supply of customized software was not royalty under Article 12 (4) of the Indo-US Double Taxation Avoidance Agreement (DTAA) read with Section 9 (1) (vii) of the Income Tax Act, 1961, in the circumstances of the case. (ii) Did the ITAT fall into error in its interpretation of Section 234 (B) of the Income Tax Act, 1961, in the circumstances of the case. 5. Apart from the order as noted above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions did not imply that it was royalty payment. In such cases, the nomenclature (of license or some other fee) is indeterminate of the true nature. Nor is the circumstance that updates of the software are routinely given to the Assessee‟s customers. These facts do not detract from the nature of the transaction, which was supply of software, in the nature of articles or goods. This Court is also not persuaded with the submission that the payments, if not royalty, amounted to payments for the use of machinery or equipment. Such a submission was never advanced before any of the lower tax authorities; moreover, even in Ericson (supra), a similar provision existed in the DTAA between India and Sweden. 8. The ITAT has, in its impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end users (i.e. eight out of 63 customers), we are of the view that the terms. of license agreement is similar to the facts of Infrasoft Ltd' (supra). Accordingly, we- hold' that there was no transfer of any right in respect of copyright by the Assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India as per adjudication on Ground No.5. 9. With the ITAT ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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