Software Licensing Income Not Taxable as Royalty Under India-USA DTAA, ITAT Rules; Only Minimal Income Tied to Technical Services.

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....The case revolves around the taxation of income earned by the assessee from licensing software to Indian customers under the India-USA Double Taxation Avoidance Agreement (DTAA). The key points are: The assessee provided the right to use computer software licenses through End User License Agreements (EULAs) or reseller agreements to Indian customers. It contended that such income was not taxable u/s 9(1)(vii) of the Income Tax Act or Article 12 (Royalty) of the India-USA DTAA. The ITAT held that the assessee's reliance on the Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. was well-founded. The transaction fell under the second category of software sale, granting non-exclusive restrictive licenses, which would .........