INCOME TAX ACT, 1961

Section 9(1)(vi)

Income deemed to accrue or arise in India - Under section 9(1)(vi) - Amount received for grant of license for use of software, whether, tantamounts - Royalty or not.

Issue under consideration was whether amount received by assessee-foreign entity for grant of license for use of software, would be taxable as royalty in India. Held: In view of decision of Supreme Court in case of Engineering Analysis Centre of Excellence (P) Ltd. v. CIT & Anr. [Civil Appeal No(s). 8733-8734/2018] : 2021 TaxPub(DT) 1208 (SC), amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for resale/use of computer software through EULAs/distribution agreements, is not payment of royalty for use of copyright in the computer software, and the same does not give rise to any income taxable in India. Hence, in the instant case, software receipts received by assessee-foreign entity would not be taxable as royalty in India.

Followed:Engineering Analysis Centre of Excellence (P) Ltd. v. CIT & Anr. [Civil Appeal No(s). 8733-8734/2018] : 2021 TaxPub(DT) 1208 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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