Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram
Income Tax - Highlights / Catch Notes

Home Highlights November 2024 Year 2024 This

The assessee company made payments for IT service charges to a ...


Software usage fees not taxable as royalty, no TDS required.

Case Laws     Income Tax

November 8, 2024

The assessee company made payments for IT service charges to a foreign entity without deducting tax at source (TDS) u/s 195. The Assessing Officer treated these expenses as fees for technical services/royalty and disallowed them u/s 40(a)(ia) for non-deduction of TDS. However, the Coordinate Bench of the Tribunal, in the assessee's own case for the assessment year 2012-13, had already decided the issue in favor of the assessee. It held that the payments for software usage did not constitute "use of, or the right to use, any copyright of software" under Article 12(3) of the applicable tax treaty. Consequently, Article 12(4)(a) was not attracted, making the payments immune from taxation in India under the beneficial treaty provisions compared to the domestic law. Therefore, there was no requirement for the assessee to deduct TDS, and the disallowance u/s 40(a)(i) was incorrect. The Tribunal decided the issue against the Revenue.

View Source

 


 

You may also like:

  1. Indo Denmark DTAA - Taxability of software as Royalty or FTS - cost recovered from the various agents towards usage of software are directly connected with the shipping...

  2. TDS disallowance u/s 40(a)(i) for non-deduction on overseas payments towards patent fees, reimbursement of official fees and professional fees, treating such payments as...

  3. TDS u/s 195 - payments by resident Indian end-user to non-resident computer software manufacturers/suppliers - payment for software licenses not royalty under Article 12...

  4. TDS u/s 195 - Withholding Tax - Purchases for copyrighted articles - Royalty - The amounts paid by resident Indian end-users/distributors to non-resident computer...

  5. TDS u/s 195 - Royalty - the amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as consideration for the...

  6. Accrual of income in India - Royalty / FTS - the software maintenance fees, consulting charges and training fees which are incidental to software license fee, assumes...

  7. TDS u/s 195 - import of software or supply of software - payment made by the assessee to non-resident companies would amount to royalty, liable to TDS - AT

  8. TDS u/s 195 - payments made to non-resident - The amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as...

  9. The case involved determining tax liability on royalty receipts for software license expenses. The Assessing Officer (AO) considered the receipts taxable as royalty u/s...

  10. Royalty income payments made by the assessee for obtaining computer software were not liable to be taxed in India as royalty u/s 9(1)(6). The amounts paid by resident...

  11. Taxable Income in India or not - Royalty receipt - PE in India or not? - amount received towards Marketing Contribution, Priority Club receipts, Reservation...

  12. Accrual of income in India - Taxability of SAP License Charges as Royalty - the receipt of software licence fees by the assessee, from its Indian subsidiary, is...

  13. TDS u/s 195 not deducted on payment to Everest Global Inc. for software training services as source of income located outside India and payment made for services outside...

  14. TDS u/s 195 - amounts paid by the assessee to the non-resident computer software manufacturers / suppliers as consideration for the resale / use of computer software, is...

  15. Income deemed to accrue or arise in India - FTS/FIS - receipts pertaining to supply of software (including AMC services) - The tribunal confirmed that software licensing...

 

Quick Updates:Latest Updates