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2021 (9) TMI 462
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....ased company, which did not file its return of income for the year under consideration. On verification of certain details on the tax portal, the Assessing Officer (AO) observed that the assessee earned income from sale of Software Licenses and income from Support, Maintenance and Training services rendered in relation to such software licenses sold either directly or indirectly through third parties in India during the previous year relevant to the assessment year under consideration, for which no return of income was filed. He initiated re-assessment proceedings by means of a notice u/s 148 of the Act. On being show caused as to why income from sale of software was not offered for taxation, the assessee submitted that it was not the owner....
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....alty. The assessee has raised two issues in this appeal, viz., non-taxability of the amount and wrong initiation of reassessment. 4. Firstly, we take up the issue on merits. It can be seen from the draft order that there is no dispute about the nature of receipts which the assessee earned from sale of software licenses and income from support, maintenance and training services rendered in relation to such software licenses sold. The AO has also accepted that the assessee earned the income in question on sale of software etc. The DRP, too, recorded the nature of receipt as sale of software and related services in connection with the sale of software. Thus, the only point which arises for our consideration is as to whether the revenue earn....
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.... the backdrop of similar expression as used in Article 12(3) of the DTAA, it has been held that ownership of copyright in a work is different from the ownership of the physical material in which the copyrighted work may happen to be embodied. Parting with copyright entails parting with the right to do any of the acts mentioned in section 14 of the Copyright Act. Where the core of a transaction is to authorize the end-user to have access to and make use of the "licensed" computer software product over which the licensee has no exclusive rights, no copyright is parted with. Adverting to the facts of the extant case, it is seen that the receipts of Rs. 48.01 crore are on account of sale of Software/license and rendition of services in connecti....
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....non that the foreign enterprise must have a Permanent Establishment (PE) in India in terms of Article 5 of the DTAA. In the absence of a PE, the taxability under Article 7 does not trigger. Reverting to the facts of the extant case, we find that it is not the case of the authorities below that the assessee has any permanent establishment in India. In that view of the matter, the income ceases to be taxable in India. The issue is thus decided in the assessee's favour. 9. Notwithstanding our view on the non-chargeability of the amount received by the assessee as 'Royalty', we also proceed to dispose of the assessee's ground on initiation of re-assessment, which the ld. AR pressed for adjudication. Before embarking upon this issue, it would....
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....has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961." 10. A bare perusal of the reasons deciphers that the assessee sold software to Wipro Ltd., an Indian company. The AO opined that the consideration received from sale of software license is in the nature of 'Royalty'. For reaching this opinion, he relied solely on the judgment of Hon'ble Karnataka High Court in Samsung Electronics Co. Ltd. (supra) in which it has been held that the consideration received on sale of software license amounts to 'Royalty'. This judgment of the Hon'ble Karnataka High Court, along with a batch of others, came up for consideration before the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. L....