Off-the-shelf software payments are not royalty under the treaty where no copyright is transferred.

Consideration received for sale or supply of off-the-shelf software was held not to constitute royalty under Article 12(3) of the Indo-Singapore Double Taxation Avoidance Agreement where no copyright in the software was transferred. The Tribunal's factual finding that the assessee had not transferred copyright, read with the Supreme Court ruling in Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT, led to the conclusion that such receipts could not be taxed as royalty. On that basis, the issue was decided in favour of the assessee and against the Revenue, and no substantial question of law arose.

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Issues: Whether consideration received from sale or supply of off-the-shelf software was royalty within the meaning of Article 12(3) of the Indo-Singapore Double Taxation Avoidance Agreement.

Analysis: The Tribunal found that the assessee had not transferred copyright in the software. In view of that factual finding and the law laid down by the Supreme Court in Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT, the amount received for sale or supply of software could not be characterised as royalty under Article 12(3) of the treaty.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Final Conclusion: No substantial question of law arose and the appeal was closed.

Ratio Decidendi: Consideration for sale or supply of off-the-shelf software is not royalty under the treaty where no copyright in the software is transferred.

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