Royalty versus business profits under tax treaty resolved by prior ruling; receipts not taxable without a permanent establishment.

Consideration receivable under the agreements was treated as taxable only if it constituted royalty; the Court held the issue was already covered by its earlier decision involving the same assessee for an earlier assessment year. Applying that prior ruling, it accepted that the present reference was governed on identical facts and legal question, so the receipts fell within the Double Taxation Avoidance Agreement as industrial or commercial profits and were not taxable in India in the absence of a permanent establishment. The referred question was answered in favour of the assessee and against the Revenue.

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Issues: Whether the consideration receivable under the agreements constituted royalty chargeable to tax in India, or was covered by the Double Taxation Avoidance Agreement as industrial or commercial profits not taxable in the absence of a permanent establishment in India.

Analysis: The Reference was decided by following the earlier decision involving the same assessee on the same question for an earlier assessment year. The Court accepted that the issue stood covered by that decision and that the answer to the referred question would govern the present Reference in identical terms.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

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