{"id":14682,"date":"2016-07-14T14:34:44","date_gmt":"2016-07-14T09:04:44","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=14682"},"modified":"2016-07-14T14:51:41","modified_gmt":"2016-07-14T09:21:41","slug":"cit-vs-halliburton-export-inc-delhi-high-court-s-91vi-though-in-infrasoft-220-taxman-273-del-the-impact-of-the-amendment-to-s-91vi-on-the-question-whether-consideration-received-for-sale","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/cit-vs-halliburton-export-inc-delhi-high-court-s-91vi-though-in-infrasoft-220-taxman-273-del-the-impact-of-the-amendment-to-s-91vi-on-the-question-whether-consideration-received-for-sale\/","title":{"rendered":"CIT vs. Halliburton Export Inc (Delhi High Court)"},"content":{"rendered":"

The Court had to consider whether the consideration received by the Assessee on sale of pre-packaged software was \u201croyalty\u201d or \u201cfee for technical services\u201d and was, therefore, not taxable as business income. HELD by the High Court dismissing the Department\u2019s appeal:<\/p>\n

(i) It is not in dispute that Article 12 (3) of the Double Taxation Avoidance Agreement (“DTAA”) between India and the United States of America (USA) is relevant for deciding the above issue.<\/p>\n

(ii) The short question considered by the Court in Director of Income Tax v. Infrasoft Limited<\/a> (2014) 220 Taxman 273 (Del) was whether the term \u201croyalty\u201d covered by Article 12 (3) of the DTAA would apply in the context of sale of pre-packaged copyrighted software. The Court stated that it has not examined the effect of the subsequent amendment to Section 9 (1) (vi) of the Act and also whether the amount received for use of software would be royalty in terms thereof for the reason that the Assessee is covered by the DTAA, the provisions of which are more beneficial.<\/p>\n

(iii) Section 90 (3) of the Act makes it clear in the context of an agreement (‘treaty’) for avoidance of double taxation, that it is only when the provisions of the Act are more beneficial to the Assessee the Act will prevail over the treaty. Conversely, where the provision of the treaty is more beneficial to the Assessee, the treaty would prevail over the Act. This legal position has been reiterated in Director of Income Tax v. Infrasoft Limited (supra) which was followed in dismissing the Revenue’s appeal in the Assessee\u201fs own case for AY 2008-09 i.e. ITA No. 477 of 2014.<\/p>\n

(iv) The Court is not persuaded to re-examine the above issue which stands answered against the Revenue by the aforementioned order.<\/p>\n","protected":false},"excerpt":{"rendered":"

The short question considered by the Court in Director of Income Tax v. Infrasoft Limited<\/a> (2014) 220 Taxman 273 (Del) was whether the term \u201croyalty\u201d covered by Article 12 (3) of the DTAA would apply in the context of sale of pre-packaged copyrighted software. The Court stated that it has not examined the effect of the subsequent amendment to Section 9 (1) (vi) of the Act and also whether the amount received for use of software would be royalty in terms thereof for the reason that the Assessee is covered by the DTAA, the provisions of which are more beneficial<\/p>\n

Read more ›<\/a><\/div>\n

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