Dismissing the appeal of the revenue the Court held that supply of software was embedded in supply of telecom equipment resulting in sale of copyrighted article, said transaction was to be treated in nature of supply of articles or goods and thus, payment made towards supply of software was not taxable in India as royalty. (AY. 2013-14)
CIT(IT) v. ZTE Corporation (2021) 130 taxmann.com 128 (Delhi) (HC) Editorial : SLP of revenue dismissed, CIT(IT) v. ZTE Corporation (2021) 282 Taxman 304 (SC)/ Review petition is dismissed, CIT (IT) v. ZTE Corporation (2024) 296 Taxman 571 (SC)
S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-Sale of telecom equipment’s i.e. mobile handsets-Supply of articles or goods-Not taxable as royalty-DTAA-India-China. [S. 9(1)(i), Art, 12]