2010 (6) TMI 648

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....red in holding that the payment of Rs. 16,72,61,927 received by the assessee company was on account of sale of copyright article and does not amount to royalty within the meaning of article 12(3) of the DTAA between India and USA. 3. The facts which reveal from the records are that the assessee company is incorporated in USA and also a tax resident of USA. The assessee markets and sells Alcatel products to customers outside USA. The assessee has supplied software under the subscriber Data Note (SDN) network software agreement to Reliance Infocomm Ltd. (RIL) which is used for the purpose of telecommunication network of RIL. For the supply of the said software, the assessee company received the gross consideration of Rs. 16,72,61,927. The ....

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....e of the controversy is in respect of nature of the payment received by the assessee for providing software to RIL, whether the same is 'royalty' or it is consideration towards sale of the software. 5. The Assessing Officer relied on the assessment order for assessment year 2003-04, in which identical issue has been considered by the Assessing Officer and the claim of the assessee was rejected that it was business income and not royalty. When the issue reached before the Tribunal for the assessment year 2003-04 in appeal being ITA No. 2031/Mum/07, the Tribunal confirmed the order of the Id CIT(A) in which it was held that the amount received for allowing use of the software cannot be treated as 'royalty' either under I.T. Act or DTAA. Th....