2024 (1) TMI 367 - HC - Income Tax

Off-the-shelf software sale payments under India-Singapore DTAA Art. 12(3): not 'royalty' since no copyright transfer; appeal dismissed

Whether consideration from off-the-shelf software sales/supplies constituted 'royalty' under Art. 12(3) of the India-Singapore DTAA was the dominant ... Income taxable in India - consideration received qua off- the- shelf sale of the software being brought to tax - consideration received from various entities on account of sale/supply of software - royalty received within the meaning of Article 12(3) of the Indo-Singapore - DTAA - finding of fact returned by the statutory authority is that assessee had not transferred the copyright it had qua the subject software - HELD THAT:- Tribunal, with regard to the said issue, in our opinion, ruled correctly, in favour of respondent/assessee and concluded that the amount could not be treated as royalty within the meaning Article 12(3) of the India-Singapore Double Taxation Avoidance Agreement. Tribunal relied upon the judgment of the Supreme Court rendered in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT [2021 (3) TMI 138 - SUPREME COURT] Having regard to the findings of fact and the enunciation of law by the Supreme Court in the aforementioned judgment, according to us, the impugned order does not require interference - no substantial question of law arises for consideration. Issues involved:The appeal concerns Assessment Year (AY) 2009-10. The appellant/revenue seeks to challenge the order passed by the Income Tax Appellate Tribunal regarding the consideration received by the Assessee from various entities on account of sale/supply of software, questioning whether it qualifies as royalty under the Indo-Singapore Double Taxation Avoidance Agreement.Summary:The respondent/assessee underwent scrutiny-assessment, where the consideration received for the off-the-shelf sale of software was brought to tax, resulting in an addition of Rs. 1,14,09,24,658 by the Assessing Officer (AO) who considered it as royalty. However, the Tribunal ruled in favor of the respondent/assessee, stating that the amount cannot be treated as royalty as the copyright of the software was not transferred by the assessee. The Tribunal's decision was based on the Supreme Court judgment in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT 432 ITR 471, which was deemed appropriate. Therefore, the High Court found no substantial question of law to interfere with the Tribunal's order and closed the appeal, rendering the pending application infructuous.