Software receipts treated as sale of copyrighted article, not royalty or fees for technical services under the treaty.

Receipts from software product sales under licence and reseller arrangements were treated as consideration for a copyrighted article, not a transfer of copyright, so they were not taxable as royalty under the India-Singapore DTAA. Support-services receipts also did not qualify as fees for technical services because no technical knowledge, skill, know-how or process was made available to enable independent use by the Indian recipient. The addition was deleted in favour of the assessee.

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Issues: Whether the amounts received from sale of software products and provision of software-related support services were taxable in India as royalty or fees for technical services under the Income-tax Act, 1961 and the India-Singapore DTAA.

Analysis: The software transaction was examined on the basis of the licence and reseller arrangements, and the receipts were found to arise from sale of a copyrighted article rather than transfer of copyright. On that footing, the consideration could not be taxed as royalty under the treaty. For the support-services receipts, the record did not show that any technical knowledge, skill, know-how or process had been made available to the Indian recipients so as to enable independent use without the assessee's assistance. The treaty condition for fees for technical services was therefore not satisfied.

Conclusion: The receipts were not taxable as royalty or as fees for technical services, and the addition was deleted in favour of the assessee.

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