TaxTMI 
TaxTMI 
2026 (2) TMI 1040
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....yalty" u/s 9(1)(vi) of the Act, which is taxable u/s 115A of the Act. Here also the assessee had claimed such receipts to be non-taxable in India in the absence of PE in terms of Articles 5 & 7 of the Indo Swiss DTAA. 1.1 Aggrieved with this action, the assessee approached the Ld. CIT(A) where he could succeed in full, with all the additions deleted. The relevant portions from the CIT(Appeals) order deserves to be extracted as under: - "5.1.1 Vide these grounds of appeal, the appellant has contended that on the facts and circumstances of the case, the AO has erred in not appreciating that the provisions of the Double Taxation Avoidance Agreement override the provisions of the income Tax Act, 1961. The appellant has that the AO has erred in law in characterizing the revenue received on account of IP Charges received from Halliburton Offshore Services Inc. amounting to Rs. 77,66,43,479/- as royalty under section 9(1)(vi) of the Act taxable u/s 115A of the Act, as opposed to the claim of the appellant that such receipts are in nature of royalty receipt in terms of Article 12 of Indo-Swiss DTAA. .................. 5.1.3 I have carefully gone through the fa....
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....either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1 of this Article. 3. In this Agreement, the term "Indian tax" means tax imposed by India, being tax to which this Agreement applies, the term "Swiss tax" means tax imposed in Switzerland, being tax to which this Agreement applies; and the term "tax" means Indian tax or Swiss tax, as the context requires, but the taxes in the preceding paragraphs of this Article do not include any penalty or interest imposed under the law in force in either Contracting State relating to the taxes to which this Agreement applies. 4. The competent authorities of the Contracting States shall notify to each other any significant changes which have been made in their relevant respective taxation laws." It is thus evident from Article 2(1)(a) that the 10% rate is inclusive of the surcharge. Further, Article 2(2) clarifies the position in respect of education cess as the same was introduced after the Indo-Swiss treaty. As per Article 2(2), the Agreement shall also apply to any identical or substantially similar taxes which are imposed b....
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....well Reporter, As per appellant's submissions, the two contracts are non-exclusive, non-transferable, perpetual, irrevocable, royalty free, unlimited, worldwide, license to use the Software solely for Reliance's own internal business purpose (the "License") and the License granted shall not include the right to sublicense, resell (whether by duplication or otherwise) or otherwise transfer the Software under any circumstances, except as expressly permitted. 2. Contract number 7950005/LCP: This contract was signed between the appellant and Oil India Limited wherein, the scope of work awarded to the appellant was for supply of software/license for up gradation of existing landmark Software. 3. Contract number PO-NDPPL-MUM-P-1516-76: NorscotDrilling and Production Pvt. Ltd entered into a contract with the appellant wherein, the scope of work awarded to the appellant was for Provision of SK tabular advance package(EDM is a prerequisite includes Well Cat Prod. Drill, Tube Casing and Multax). As per the submissions of the appellant, EDM software provides a single platform for detailed operations and engineering workflows that can manage the broadest range of well dat....
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....ation for the resale/use of the computer software through distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India. 5.2.6 In view of the above discussion and following the ratio of decision of the Apex Court as discussed above, it is held that revenue received by the appellant from sale of computer software is business profit and the same is not taxable in India as the appellant does not have a PE in India. Hence, the addition of Rs. 7,09,34,733/- made by the AO is deleted. Grounds of appeal raised are allowed in favor of the appellant." 1.2 Aggrieved with this order of Ld. CIT(A) the Revenue has approached the ITAT with the following grounds: - "1. Whether on the facts and in the circumstances of the case, the GIT (A) has erred in law by not considering the fact that the tax includes surcharge and has wrongly interpreted the Articles of DTAA and Income-tax Act by holding that 10% rate is inclusive of surcharge while computing income under Article 12 of the DTAA. 2. Whether on the facts and in the circumstances of the case, the CIT (A) h....