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| The Tax Publishers2020 TaxPub(DT) 2760 (Mum-Trib) INCOME TAX ACT, 1961
Section 90
Non-resident assessee only granted the right to distribute software products and not any right to reproduce or make copies of software product, therefore, in the absence of vesting of any right of commercial exploitation of Intellectual property contained in copyrighted article (i.e. software products) with transferee, amounts received by assessee from its distributors was clearly in the nature of sales revenue and could not be held as 'royalty' in its hands in terms of article 12 of the India-Finland DTAA.
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Double taxation relief - Agreement between India and Finland - Royalty under article 12 - Payments received from distributors for sale of software to end users in India--No transfer of copyright
Assessee based at Finland entered into software distribution agreements with resellers in India who bought off the shelf software from assessee and in turn sold the same to customers in India. AO taxed entire receipts from sale of software as royalty income. Held: Assessee had only granted the right to distribute software products and not any right to reproduce or make copies of software product, therefore, in the absence of vesting of any right of commercial exploitation of Intellectual property contained in copyrighted article (i.e. software products) with transferee, amounts received by assessee from its distributors was clearly in the nature of sales revenue and could not be held as 'royalty' in its hands in terms of article 12 of the India-Finland DTAA.
Followed:DIT v. Infrasoft Ltd. (2014) 264 CTR 329 (Del) : 2014 TAxPub(DT) 79 (Del-HC) and DDIT v. Reliance Communications Ltd. (2018) 52CCH 292 (Mum) : 2018 TaxPub(DT) 1048 (Mum-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, MUMBAI BENCH
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