Royalty characterisation of software licensing receipts remanded for fresh adjudication under binding precedent.

Receipts from licensing of software-related manufacturing and distribution rights were disputed as royalty under the Income-tax Act and the India-US tax treaty. The Tribunal noted that an identical characterisation issue in the assessee's earlier years had already been sent back for fresh consideration in line with the jurisdictional High Court ruling in Infrasoft, and followed the same approach here. The matter was therefore remanded to the Assessing Officer for de novo adjudication in accordance with law and the earlier order, with the appeal treated as allowed for statistical purposes.

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Issues: Whether the payments received from licensing of manufacturing and distribution rights were taxable as royalty under the Income-tax Act and the India-US tax treaty, or whether the matter should be set aside for fresh adjudication.

Analysis: The dispute was confined to the characterisation of the receipts from licensing of software-related rights. The Tribunal noted that an identical issue in the assessee's own earlier years had already been decided by following the jurisdictional High Court decision in Infrasoft, and that the coordinate bench had restored the matter to the Assessing Officer for fresh consideration in accordance with that decision. Following the same course, the Tribunal again set aside the issue to the Assessing Officer for de novo adjudication in accordance with law and the earlier order.

Conclusion: The issue was remanded to the Assessing Officer for fresh decision, and the assessee's appeal was allowed for statistical purposes.

Ratio Decidendi: Where an identical royalty characterization issue has already been remanded in the assessee's own case, the same course may be followed and the matter sent back for fresh adjudication in line with the binding jurisdictional precedent.

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