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TMI BlogRoyalty or Business Income? High Court Clarifies Taxation of Remittances against Software PurchaseX X X X Extracts X X X X X X X X Extracts X X X X ..... ian company to foreign parties for the purchase of computer software required for its business operations. The crux of the matter lies in determining whether such remittances would be taxable in India as royalty u/s 9(1)(vi) of the Income Tax Act, 1961 (the Act), or would constitute business income of the recipient foreign companies. Arguments Presented The assessee (Indian company) contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia and these countries. The Tribunal also noted that in the assessee's own case, a coordinate Bench had previously held that similar remittances made to residents of Germany and France were not liable for deduction of tax at source. Following the decision of the coordinate Bench, the Tribunal dismissed the Revenue's appeal, holding that the remittances made by the assessee for software pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the distributors/end users amounting to the use or right to use any copyright. Consequently, the provisions of Section 9(1)(vi) of the Act, along with Explanations 2 and 4 (dealing with royalty), were not applicable. The High Court, in the present case, acknowledged that the transactions were similar to those considered by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's decision in Engineering Analysis Centre of Excellence (P.) Ltd., ruled that the remittances made by an Indian company to foreign parties for purchasing computer software required for its business operations would not be taxable in India as royalty u/s 9(1)(vi) of the Income Tax Act, 1961 . The distribution agreements/EULAs did not create any interest or right amounting to the use or right t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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