TaxTMI 
TaxTMI 
2026 (7) TMI 543
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....19. 2. Ground no. 1 being general in nature, does not require adjudication. In ground nos. 2 to 5, the assessee has challenged the taxability of Rs. 134,40,95,509/- as income in the nature of royalty u/s. 9(1)(vi) of the Income Tax Act, 1961 ('the Act' for short) and Article 12(3) of India-Singapore Double Taxation Avoidance Agreement ('DTAA' for short). 3. Briefly, the facts relating to these issues are, the assessee is a non-resident corporate entity, incorporated in Singapore and a tax resident of Singapore. As stated, the assessee is engaged in the business of selling McAfee's limited license security software to Indian distributors both in physical form and through electronic medium. It is stated, the assessee had entered into di....
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....ated 02.03.2021). While deciding the issue raised by the assessee in appeal, ld. First appellate authority held that in terms with section 246A(1)(a) of the Act, an appeal against the intimation issued u/s. 143(1) of the Act can arise only where the assessee challenges an adjustment made therein. He observed, since, the CPC had accepted the income returned by the assessee without making any adjustment, the appeal is not maintainable. He observed, the assessee itself had offered the receipts as 'royalty income', which has been accepted by CPC without making variation. Therefore, the fresh issue raised by the assessee, regarding non-taxability of the receipts cannot be entertained. Accordingly, he dismissed the appeal in limine without examin....
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....g the issue raised by the assessee. In support of such contention, he relied upon the following decisions: a) Balmukund Acharya vs. Dy. CIT [2009] 176 Taxman 316 (Bom) b) Captain Stell India Ltd. vs. Dy. CIT [2024] 166 taxmann.com 351 (Kolkata-Trib.) c) Pr. CIT vs. Karnataka State Co-operative Federation Ltd. [2021] 128 taxmann.com 1 (Karnataka) 6. Proceeding further, ld. Counsel submitted, the assessee's claim that the software products sold by it were not in the nature of 'royalty' is further vindicated from the fact that in subsequent assessment years, following the ruling in case of Engineering Analysis Centre of Excellence Pvt. Ltd. (supra), the A.O. himself has completed assessments allowing assessee's cl....
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....ssessee did raise the issue of taxability of the receipts as royalty income under Article 12(3) of the Treaty. From the facts on record, it appears that through distribution agreements entered with certain Indian entities, the assessee had granted limited non-exclusive license to resale certain software products. It also appears that the ownership of the copy-right in the software products remained with the assessee and the Indian distributors had no right to exploit the copy-right in any manner such as to modify, copy or sub license the software. 9. Thus, prima face it appears that the assessee per se had sold copy-righted articles without transferring the copy-right therein. We have further noted that the return of income for the impug....
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.... to tax even though due to lack of clarity or ignorance of law, the assessee has offered the receipt as 'income'. It is the duty of the A.O. to bring the correct income to tax. In the facts of the present appeal, it is the claim of the assessee that the receipts offered to tax as royalty income are not in the nature of 'royalty'. Thus, if it is the case of the assessee that an item of receipt not at all taxable has been wrongly offered as income, such claim needs to be examined in proper perspective without rejecting it at the threshold, as, there cannot be any estoppel against law. More so, when the assessee is claiming the relief by virtue of ratio laid down by the Hon'ble Supreme Court, which is the law of the land. It is fairly well....
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....sments in case of the assessee have been completed u/s. 143(3) of the Act accepting assessee's claim that the receipts from sale of McAfee software products are not in the nature of royalty under Article 12(3) of India-Singapore DTAA. Thus, prima facie, it appears that the software products sold by the assessee to the Indian entities in the impugned assessment year may not be in the nature of royalty under Article 12(3) of the India-Singapore DTAA. However, fact remains that the assessee itself had offered the receipts as 'royalty income' in the return of income filed for the assessment year under dispute. It is also a fact on record that there was no scrutiny assessment and the return was simply processed u/s. 143(1)(a) of the Act by the C....