2023 (5) TMI 492 - SCH - Income Tax

Income deemed to accrue or arise in India - licensing of software products of Microsoft in the Territory of India by the Respondent was not taxable in India as Royalty under Section 9(1)(vi) read with Article 12 of the Indo US DTAA - it was held by the High Court that this is not Royalty liable to be taxed in India under the provisions of the Income Tax Act, 1961 and DTAA - HELD THAT - The issue raised by the Revenue in the present special leave petition is covered against them in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VERSUS THE COMMISSIONER OF INCOME TAX ANR. 2021 (3) TMI 138 - SUPREME COURT where it was held that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/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, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. SLP dismissed.

Summary

The Supreme Court dismissed the special leave petitions as the issue raised by the Revenue is covered by a previous judgment. The Revenue has filed a Review Petition which is pending, and they reserve the right to revive the petitions if the Review Petition is allowed.