Software supply receipts treated as business income, not royalty, where only a copyrighted article was transferred.

Receipts from supply of software were treated as consideration for a copyrighted article, not a transfer of copyright, because the issue had already been covered by the assessee's earlier year decisions and the jurisdictional High Court's ruling. On that basis, the consideration was not characterised as royalty under the India-US tax treaty or section 9(1)(vi) of the Income-tax Act, but as business receipts. The software supply payments were therefore not taxable as royalty.

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Issues: Whether the receipts from supply of software were taxable as royalty under the India-US tax treaty and section 9(1)(vi) of the Income-tax Act, 1961.

Analysis: The issue was covered by the assessee's own earlier year decisions and by the jurisdictional High Court, which had held that supply of software amounted to transfer of a copyrighted article and not transfer of copyright. The consideration for such supply was therefore not royalty under Article 12 of the tax treaty, but business receipts.

Conclusion: The receipts from supply of software were not taxable as royalty, and the issue was decided in favour of the assessee.

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