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| The Tax Publishers2021 TaxPub(DT) 3750 (Bang-Trib) INCOME TAX ACT, 1961
Section 90
Amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturer/suppliers, as consideration for the resale/use of the computer software through EULA's distribution agreements, didnot create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. Therefore, payment was not in the nature of royalty for use of copyright in computer software, and didnot give rise to any income taxable in India.
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Double taxation relief - Agreement between India and Israel - Royalty under article 12(3) - Assessee received payment for sale of software to the Indian customers
Assessee, Israel based company, was engaged in the business of developing, manufacturing, marketing and selling communication products. Assessee granted licence to Indian customers for use of computer software and received payment for sale of software to the Indian customers, which was not declared as income taxable in India. AO treated the same as royalty and charged tax both under the IT Act and DTAA. Held: Amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturer/suppliers, as consideration for the resale/use of the computer software through EULA's distribution agreements, didnot create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. Therefore, payment was not in the nature of royalty for use of copyright in computer software, and didnot give rise to any income taxable in India.
Applied:Engineering Analysis Centre For Excellence Private Limited v. CIT & Anr. AIR 2021 SC 124 : (2021) 432 ITR 471 (SC) : 2021 TaxPub(DT) 1208 (SC).
REFERRED :
FAVOUR : In assesse's favour.
A.Y. : 2012-13 & 2014-15
IN THE ITAT, BANGALORE BENCH
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