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2024 (6) TMI 1069 - HC - Income TaxIssues involved: The primary issue in this case was whether remittance made to foreign parties for the purchase of computer software by the assessee would be liable to tax in India as "royalty" under Section 9(1)(vi) of the Income Tax Act, 1961, or if it would be considered as business income of the recipient companies. Judgment Summary: 1. The appeal by the Revenue challenged the order of the Income Tax Appellate Tribunal dismissing a batch of appeals against the orders of the Commissioner of Income-Tax (Appeals) regarding the tax liability of remittances made for purchasing computer software. 2. The assessee contended that the remittance to foreign parties was not liable to be taxed as "royalty" under Section 9(1)(vi) of the Act. The Deputy Director of Income Tax rejected the application under Section 195(2), leading to appeals and subsequent proceedings. 3. The Tribunal, considering the Double Taxation Avoidance Agreement (DTAA) with Denmark and Finland, dismissed the Revenue's appeal based on a previous decision in a similar case involving Germany and France residents. 4. The Supreme Court's authoritative pronouncement in a related case established that payments for computer software involving copyright did not attract royalty tax, aligning with the Delhi High Court's view over the Karnataka High Court's stance. 5. The Supreme Court held that the distribution agreements did not create any interest or right in distributors/end users amounting to the use of copyright, thus not falling under Section 9(1)(vi) of the Act. 6. The High Court concurred with the Tribunal's decision, noting that the Assessing Officer's approach was against the correct legal position as endorsed by the Supreme Court. 7. As the facts and applicable DTAA were undisputed, the Appeals were dismissed without costs, as they did not raise any question of law. Separate Judgement: No separate judgment was delivered by the judges in this case.
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