2013 (1) TMI 1053 - HC - Income Tax

License Fees for Software 'OPUS' Deemed Royalty Under Income Tax Act and India-Germany DTAA, Retrospective Amendment Upheld.

The Bombay HC ruled that the license fees received for the transfer of user rights of the software 'OPUS' to Indian companies qualify as 'royalty' under ... Summary order. Admission granted and the following substantial questions of law are framed for consideration: (a) whether the license fees for transfer of user rights in software 'OPUS' constituted 'royalty' under Explanation 2 to Section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the India-Germany DTAA; and (b) whether the Tribunal's decision should be vacated in view of Explanation 4 to Section 9(1)(vi) (Finance Act, 2012) clarifying the definition of royalty for software with retrospective effect from 1 June 1976. The Bombay High Court heard a case regarding the tax treatment of license fees received for transfer of user rights of software 'OPUS' to Indian Companies. The court considered whether the fees constituted 'royalty' under the Income Tax Act and the India-Germany DTAA. The decision also involved the retrospective effect of an amendment clarifying the definition of royalty for software rights.