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of <h1>Tribunal: Software sales not taxable as royalty under IT Act</h1> <h3>M/s. Dessault Systemes Solidworks Corporation Versus The Dy. Commissioner of Income-Tax (International Taxation) – 2 (1) (2), Mumbai</h3> M/s. Dessault Systemes Solidworks Corporation Versus The Dy. Commissioner of Income-Tax (International Taxation) – 2 (1) (2), Mumbai - TMI Issues Involved:Taxability of receipts from sale of software products as royalty under Explanation-2 to Section 9(i)(vi) of the IT Act.Detailed Analysis:Issue 1: Taxability of Receipts from Sale of Software Products as RoyaltyThe appeals were filed against the order of DRP-1, Mumbai for A.Y. 2013-14 regarding the taxability of receipts from the sale of software products as royalty under Explanation-2 to Section 9(i)(vi) of the IT Act. The Ld. AR presented previous Tribunal orders in favor of the assessee, stating that receipts from the sale of software products were not liable to tax as royalty. The department argued citing decisions of the Karnataka High Court in favor of revenue. The Tribunal analyzed various judgments, including the Supreme Court's principle favoring the assessee in case of ambiguity in taxing provisions. It was noted that the Hon'ble Delhi High Court had ruled in favor of the assessee in similar cases. Ultimately, the Tribunal upheld the grievance of the assessee, directing the Assessing Officer to delete the addition made on account of receipts for software sales, as they were not liable to tax in India.Conclusion:Considering the previous Tribunal orders and legal principles favoring the assessee in cases of ambiguity, the Tribunal ruled in favor of the assessee, holding that the receipts from the sale of software products were not taxable as royalty. The appeals of the assessee were allowed, and the addition made on account of receipts for software sales was directed to be deleted.
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