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Tax Publishers Qliktech International AB v. DCIT [ITA No. 1185/Del/2019, dt. 20-10-2020] : 2020 TaxPub(DT) 4401 (Del-Trib) Sale of Copyrighted article v. Copyrighted under DTAA *Facts:* Assessee a Swedish entity had entered into an agreement with its Indian subsidiary Qliktech India Pvt. Ltd. to sell its shrink wrapped software onward to end users. It was the departmental allegation that the same was royalty taxable under section 9(1)(vi) read with Indo-Sweden DTAA which was upheld by the first appellate authorities. On higher appeal the plea of the assessee was as under -- 1. It was limited rights of the software which was sold as a copyrighted article and hence it would not fall into the definition of royalty under the Income Tax Act as well as under the DTAA. 2. Since it was sale of a copyrighted article in the absence of a PE no income can be taxed in India. 3. The income tax definition of royalty under the act cannot be extended into the DTAA unilaterlally. Held in favour of the assessee that the sale of the copyrighted article was not royalty under the Income Tax Act nor under the DTAA. The amendments of the Income Tax Act made unilaterally without amending DTAA cannot be read into DTAA provisions. *Applied:* Datemine International Ltd. v. ADIT (2016) 48 ITR 229 (Del-Trib) : 2016 TaxPub(DT) 1375 (Del-Trib) *Relied on:* DCIT v. Infrasoft Ltd. (2014) 264 CTR 329 (Del) : 2014 TaxPub(DT) 0079 (Del-HC) and DIT v. M/s. Nokia Networks (2013) 358 ITR 259 (Del) : 2012 TaxPub(DT) 3208 (Del-HC) *Dissented:* CIT v. Samsung Electronics Ltd. (2011) 345 ITR 494 (Karn) : 2011 TaxPub(DT) 2175 (Karn-HC) and CIT v. Lucent Technologies vide ITA No. 168/2004 -- Karnataka High Court *Read into:* DIT v. New Skies Satellite BV by the Hon'ble Delhi High Court in ITA 473/2012 : 2016 TaxPub(DT) 1115 (Del-HC)

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Qliktech International AB v. DCIT [ITA No. 1185/Del/2019, dt. 20-10-2020] : 2020 TaxPub(DT) 4401 (Del-Trib)

Sale of Copyrighted article v. Copyrighted under DTAA

Facts:

Assessee a Swedish entity had entered into an agreement with its Indian subsidiary Qliktech India Pvt. Ltd. to sell its shrink wrapped software onward to end users. It was the departmental allegation that the same was royalty taxable under section 9(1)(vi) read with Indo-Sweden DTAA which was upheld by the first appellate authorities. On higher appeal the plea of the assessee was as under --

1. It was limited rights of the software which was sold as a copyrighted article and hence it would not fall into the definition of royalty under the Income Tax Act as well as under the DTAA.

2. Since it was sale of a copyrighted article in the absence of a PE no income can be taxed in India.

3. The income tax definition of royalty under the act cannot be extended into the DTAA unilaterlally.

Held in favour of the assessee that the sale of the copyrighted article was not royalty under the Income Tax Act nor under the DTAA.

The amendments of the Income Tax Act made unilaterally without amending DTAA cannot be read into DTAA provisions.

Applied: Datemine International Ltd. v. ADIT (2016) 48 ITR 229 (Del-Trib) : 2016 TaxPub(DT) 1375 (Del-Trib)

Relied on: DCIT v. Infrasoft Ltd. (2014) 264 CTR 329 (Del) : 2014 TaxPub(DT) 0079 (Del-HC) and DIT v. M/s. Nokia Networks (2013) 358 ITR 259 (Del) : 2012 TaxPub(DT) 3208 (Del-HC)

Dissented: CIT v. Samsung Electronics Ltd. (2011) 345 ITR 494 (Karn) : 2011 TaxPub(DT) 2175 (Karn-HC) and CIT v. Lucent Technologies vide ITA No. 168/2004 -- Karnataka High Court

Read into: DIT v. New Skies Satellite BV by the Hon'ble Delhi High Court in ITA 473/2012 : 2016 TaxPub(DT) 1115 (Del-HC)