Standard software sale is business income, not royalty, where no copyright rights are transferred and precedent applies.

Receipts from sale of standard software were held not to constitute royalty because no copyright rights were transferred; the Tribunal applied its earlier orders in the assessee's own case and found no change in the factual matrix. It also relied on the jurisdictional High Court's dismissal of the Revenue's appeals, which confirmed that no substantial question of law arose. On that basis, the software sale proceeds were assessable as business income under Article 7 of the Indo-Finland DTAA, and the addition treating them as royalty was deleted.

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Issues: Whether the consideration received by the assessee from sale of standard software was taxable as royalty under section 9(1)(vi) of the Income-tax Act, 1961 and Article 12 of the Indo-Finland Double Taxation Avoidance Agreement, or as business income under Article 7 of the treaty.

Analysis: The Tribunal noted that the dispute was covered by its earlier orders in the assessee's own case for preceding assessment years, which had held that sale of software was of standard software and not a transfer of copyright rights amounting to royalty. It also relied on the jurisdictional High Court's dismissal of the Revenue's appeals, where the High Court accepted that the Tribunal had followed binding precedent and that no substantial question of law arose. On the facts found, there was no change in the assessee's business model or factual matrix for the year under consideration, so the earlier view continued to apply.

Conclusion: The receipts from sale of software were not royalty but business income assessable under Article 7 of the Indo-Finland Double Taxation Avoidance Agreement; the Revenue's appeal failed.

Final Conclusion: The addition treating the sale of standard software as royalty was deleted and the Revenue's challenge was rejected.

Ratio Decidendi: Sale of standard software, where no copyright rights are transferred and the issue is covered by binding precedent on identical facts, is assessable as business income under the treaty and not as royalty.

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