Royalty characterization of software-linked supplies rejected as binding precedent in Engineering Analysis controlled the dispute.

Income from supply of CAS and middleware products to Indian customers was treated as not constituting royalty under Section 9(1)(vi) of the Income-tax Act and Article 12(3) of the India-Swiss DTAA, because the issue was already covered by the Supreme Court's ruling in Engineering Analysis. The pendency of a review petition did not affect the binding force of that decision in the absence of any stay. The Court therefore held that the revenue's challenge stood concluded, no substantial question of law arose, and the assessee succeeded.

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Issues: Whether the income from supply of CAS and middleware products to Indian customers constituted royalty under Section 9(1)(vi) of the Income-tax Act, 1961 and Article 12(3) of the India-Swiss DTAA, and whether the appeal survived in view of the Supreme Court decision in Engineering Analysis.

Analysis: The questions raised were already covered by the Supreme Court decision in Engineering Analysis, and the pendency of a review petition did not dilute its binding force in the absence of any stay. On that basis, the Court held that the impugned issue stood concluded against the revenue's challenge and no substantial question of law arose.

Conclusion: The issue was decided in favour of the assessee, and the revenue's appeal failed.

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