The Tax Publishers2019 TaxPub(DT) 8404 (Del-Trib)

INCOME TAX ACT, 1961

Section 9(1)(vi) Section 90

There was no transfer of any right in respect of copyright by the assessee and it was a case of mere transfer of copyrighted article and Indian party was not allowed to exploit computer software commercially. The payment was for copyrighted article and represented purchase price of article and, therefore, could not be considered as royalty either under IT Act or under DTAA. Amount received by assessee was normal business income of assessee on account of sale of copy righted products (licences) and was not taxable in India in the absence of PE.

Double taxation relief - Agreement between India and USA - Royalty under article 12(3) - Payment received by non-resident assessee on account of sale of copyrighted software to Indian party

Assessee, based at USA, engaged into development of Project Management Software (PMS) products sold some copyrighted software licences to Indian companies. AO treated consideration received by assessee as 'royalty' and therefore, liable for TDS. Held: There was no transfer of any right in respect of copyright by the assessee and it was a case of mere transfer of copyrighted article and Indian party was not allowed to exploit computer software commercially. The payment was for copyrighted article and represented purchase price of article and, therefore, could not be considered as royalty either under IT Act or under DTAA. Amount received by assessee was normal business income of assessee on account of sale of copy righted products (licences) and was not taxable in India in the absence of PE.

Followed:ADIT (IT) Mumbai v. First Advantage Private Limited (2017) 77 taxmann.com 195 (Mum) : 2017 TaxPub(DT) 0191 (Mum-Trib), Asstt. CIT v. Landmarks Graphics Corporation (2017) 87 Taxmann.com 311 (Del-Trib) : 2017 TaxPub(DT) 5098 (Del-Trib), Black Duck Software Inc v. Dy. CIT (2017) 86 Taxmann.com 62 (Del-Trib) : 2017 TaxPub(DT) 4509 (Del-Trib), Aspect Software Inc v. ADIT (2015) 61 Taxmann.com 36 (Del-Trib.) : 2015 TaxPub(DT) 2422 (Del-Trib), Director of Income Tax v. Infra Soft Limited (2014) 220 Taxman 273 (Del) : 2014 TaxPub(DT) 79 (Del-HC), Pr. CIT v. M Tech India Private Limited (2016) 381 ITR 31 (Del HC) : 2016 TaxPub(DT) 828 (Del-HC) and CIT v. Vinzas Solutions India Private Limited (2017) 77 Taxmann.com 279 (Mad-HC) : (2017) 392 ITR 155 (Mad) : 2017 TaxPub(DT) 299 (Mad-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08

IN THE ITAT, DELHI BENCH

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