Software licence payments, double-addition verification, and section 234B interest on non-resident income were examined by the Tribunal.

Payment for supply of software with a licence to use it for business purposes was treated as consideration for a copyrighted article, not a transfer of copyright, so it was not royalty under domestic law or the DTAA. The duplicate-addition issue turned on whether there were two separate payments or one payment with different descriptions, and the matter was remanded to the Assessing Officer for verification. Interest under section 234B was held not exigible on the facts, where the non-resident's income was subject to tax deduction at source.

---

---

Issues: (i) Whether the amount received for supply of software with a right to use it for business purposes constituted royalty. (ii) Whether the addition of the same amount twice was and could be sustained without verification. (iii) Whether interest under section 234B of the Income-tax Act, 1961 was payable in the case of a non-resident whose income was subject to tax deduction at source.

Issue (i): Whether the amount received for supply of software with a right to use it for business purposes constituted royalty.

Analysis: The payment was for a copyrighted article and not for transfer of any copyright. The licence permitted use of the software for business purposes, but did not transfer copyright in the software. In the absence of any contrary view and in light of the authorities relied upon, the receipt could not be treated as royalty either under domestic law or under the DTAA.

Conclusion: The amount did not constitute royalty and the Revenue's objection failed.

Issue (ii): Whether the addition of the same amount twice was and could be sustained without verification.

Analysis: The record suggested two entries of the same amount with different descriptions, but the factual position as to whether there were two separate payments or only one payment had not been properly verified. The matter therefore required factual reconsideration by the Assessing Officer.

Conclusion: The issue was restored to the Assessing Officer for verification and fresh decision.

Issue (iii): Whether interest under section 234B of the Income-tax Act, 1961 was payable in the case of a non-resident whose income was subject to tax deduction at source.

Analysis: The deletion of interest was supported by the existing Tribunal view, and no contrary precedent was shown. On that footing, the order of the first appellate authority was found to be free from infirmity.

Conclusion: Interest under section 234B was not exigible on the facts of the case.

Final Conclusion: The Revenue succeeded only to the limited extent of securing a remand on the double-addition issue, while the substantive tax treatment of the software receipts and the deletion of interest under section 234B were upheld.

Ratio Decidendi: A payment for use of software as a copyrighted article, without transfer of copyright, is not royalty; and interest under section 234B is not leviable where the non-resident's income is already subject to tax deduction at source on the facts accepted in the case.

---