TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the receipts from the software-related arrangements constituted royalty taxable in India or represented consideration for a copyrighted article and, therefore, business income not chargeable to tax in India; (ii) Whether interest under section 234B was leviable on the assessee.
Issue (i): Whether the receipts from the software-related arrangements constituted royalty taxable in India or represented consideration for a copyrighted article and, therefore, business income not chargeable to tax in India.
Analysis: The Tribunal followed its earlier decision on materially identical facts and applied the principle that what was transferred was only the right to use a copyrighted article, not any right in the copyright itself. On that basis, the payment was held to be purchase consideration for a copyrighted article and not royalty either under the Income-tax Act, 1961 or under the India-US DTAA. The Tribunal also noted that, in the absence of a permanent establishment, the resulting business income was not taxable in India.
Conclusion: The issue was decided in favour of the assessee and against the Revenue.
Issue (ii): Whether interest under section 234B was leviable on the assessee.
Analysis: The Tribunal applied the settled position that where the payer is obliged to deduct tax at source and the payment itself is not taxable as royalty, no advance tax liability can be fastened on the non-resident recipient for the relevant receipts. The issue was also treated as consequential to the finding that no taxable royalty income arose.
Conclusion: The issue was decided in favour of the assessee and against the Revenue.
Final Conclusion: The assessee's appeals were allowed because the receipts were held not to be royalty and the related levy of interest under section 234B did not survive.
Ratio Decidendi: A payment for the right to use a copyrighted article, without transfer of any right in the copyright, is not royalty and, in the absence of a permanent establishment, the resulting income is not taxable in India.
TaxTMI 
TaxTMI 
