INCOME TAX ACT, 1961

Section 9(1)(vi)

Income deemed to accrue or arise in India - Chargeability - Income from sale of off-the-shelf software, whether is to be treated as royalty -

Issue was as to whether payment received by the assessee-company from sale of off-the-shelf software would constitute royalty within the meaning of Article 12(3) of the DTAA and as per the provisions of section 9(1)(vi). Held: It was found that in instant case neither lower authorities nor Tribunal in earlier assessment year (2016-17) examined the relevant agreements entered into by the assessee with the concerned parties, generate these receipts which relate to sale of shrink wrapped and off-the-shelf software. Even before this Tribunal, no such document was produced by the assessee. Issue was remitted to the file of AO for deciding the comparability of these transactions in the light of the judgment of Apex Court in case of Engineering Analysis Centre of Excellence P. Ltd. v. CIT.

Followed:Engineering Analysis Centre of Excellence Private Ltd. v. CIT & Anr. [Civil Appeal Nos. 8733-8734/2018, vide order dt. 2-3-2021] : 2021 TaxPub(DT) 1208 (SC)

REFERRED : Dell Softwar International Ltd. v. Income Tax Officer [ITA No. 1002/2017 dt. 30-3-2021], CIT v. Samsung Electronics Co. Ltd. & Ors. 2011 TaxPub(DT) 2175 (Karn-HC) and Quest Software International Ltd. v. Dy. CIT [IT(IT)A No. 2531/Bang/2019, dt. 27-7-2021]

FAVOUR : Matter remanded

A.Y. :

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