TaxTMI 
TaxTMI 
2010 (5) TMI 666
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....) read with section 147 of the IT Act, 1961. 2. The assessee-company, M/s. Velankani Mauritius Ltd., is a company registered in Mauritius. The other company M/s. Bydesigns Inc is a company registered in USA. The assessees do not have a Permanent Establishment in India as per Article 5 of A between India and Mauritius and article 12 (sic) of DTAA between India and USA. 3. The assessees are basically involved in the supply of the software purchased from the manufacturers to the clients.located in India. During the previous year relevant to the assessment year under appeal, the assessees had supplied off-the-shelf shrink-wrapped software to Infosys Technologies Ltd., (ITL) in India. The assessee did not find any reason to declare any income ....
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....pose of assessments in the hands of the assessees. It is the case of the assessees that the remittances did not fall under the purview of 'Royalty' as defined under section 9(1)(vi) of the IT Act, 1961/relevant DTAA. 7. We heard Shri Arvind Sonde, the learned Advocate appearing for the assessees and Smt. Preeti Garg, the learned Commissioner of Income-tax, appearing for the Revenue, in great detail. 8. In fact, on a similar issue, the High Court of Karnataka had an occasion to decide over the question of applicability of section 195 in the case of CIT (International Taxation) v. Samsung Electronics Co. Ltd. [2010] 320 ITR 209 ,on which decision, the Revenue has placed great reliance. In fact, the decision of the Tribunal was reverse....
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....rs passed by the first appellate authorities, so far as it relates to confirming the demand raised on all these respondents-assessees in terms of the provisions of section 201 of the Act for the failure of the respondents-assessees to comply with the requirement of section 195(1) of the Act." 9. Therefore, it is to be seen that the issue raised in these cases has to be considered outside the limited scope of the judgement delivered by the jurisdictional High Court in the case of Samsung Electronics Co. Ltd. (supra). 10. A very similar issue in similar circumstances was considered by Larger Bench of the ITAT, Delhi Bench 'A' (Special Bench) in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269. After considering the nature of similar s....
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.... was for a copyrighted article, then it only represented the purchase price of the article and, therefore, could not be considered as 'Royalty', either under the, IT Act or under the DTAA. 11. In the light of the rule declared by the Larger Bench as stated above in the case of Motorola Inc. (supra), we have to see in the present case that a case of royalty does not arise because the payments were made for the sale of copyrighted articles. 12. The very same principle has been upheld by the Authority for Advance Rulings in the case of Airports Authority of India, where they have held that the earnings of contract is only purchase of certain copyrighted software on outright basis and when there is no PE in India, royalty income does not aris....