Tribunal held that though the income from supply of computer software has been brought within the ambit of ‘royalty’ by insertion of Explanation 4 to section 9(1)(vi) by Finance Act, 2012 w.e.f. 1stJune, 1976, when a software is embedded in hardware and there is one composite price, the entire amount remains as business income and a part of the same cannot be considered as royalty. (AY. 2002-03 to 2006-07)
Bentley Nevada LLC v. Jt. DIT (IT) (2018) 164 DTR 1 / 192 TTJ 651(Delhi)(Trib.)
S. 9(1)(vi) : Income deemed to accrue or arise in India – Royalty or business profits – Income from supply of software embedded in hardware – Income relatable to supply of software cannot be treated as royalty income.[S.9(1)(i)]