INCOME TAX ACT, 1961

Section 9(1)(vi)

Income deemed to accrue in India - Payment of royalty made to foreign company - -

Assessee-company was engaged in development, manufacture and export of software and imported software products from foreign companies and made payment to them without deduction of tax at source. Assessee submitted that since the imported software products were readily available in market, payment made to the foreign companies could not be treated as royalty as per provisions of section 9(1)(iv). High Court answered the question formulated against the assessee relying on the decision in CIT & Anr. v. Samsung Electronics Co. Ltd. (2010) 320 ITR 209 (Karn) : 2010 TaxPub(DT) 0832 (Karn-HC). Held: It was not in dispute that the said decision was considered in the subsequent decision in G.E. India Technology Centre Pvt. Ltd. v. CIT and Anr. . ((2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC)) and the court held that the question of payment of royalty ought to be determined by High Court on merits and for that reason, it relegated the parties before High Court. Accordingly, judgment was set aside and relegate the parties before High Court by restoring the concerned appeal to its original number, to be decided expeditiously on its own merits and in accordance with law

REFERRED : GE India Technology Centre Pvt. Ltd. v. CIT &Anr. (2010) 327 ITR 456 (SC) : 2010 TaxPub(DT) 2241 (SC) CIT &Anr. v. Software&Silicon System [ITA 163 of 2007, dt. 18-11-2009] CIT v. Samsung Electronics Co. Ltd. (2010) 320 ITR 209 (Karn) : 2010 TaxPub(DT) 0832 (Karn-HC)

FAVOUR : Matter remanded

A.Y. :

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