Outright software purchases treated as business profits, eliminating withholding where the foreign seller lacks an Indian permanent establishment.

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....Outright software purchase consideration is described as business income rather than royalty where the transaction amounts to sale of a product. The note states that, because the Malaysian enterprise had no permanent establishment in India, such income was not taxable in India under Article 7 of the India-Malaysia DTAA and no withholding obligation arose under section 195. A separate payment for intellectual property rights is treated as subject to tax deduction at the applicable treaty rate. It further records that the payer was not treated as an assessee in default and that interest for non-deduction was not leviable.....