Mentor Graphics (Ireland) Ltd. v. ACIT (IT) (2023) 199 ITD 147 (Delhi) (Trib.)

S. 9(1)(vi) : Income deemed to accrue or arise in India-Computer software-Royalty-Income from sale of software to its distributor in India-Not in the nature of royalty-Not taxable in India-DTAA-India-Ireland.[S. 9(1)(vii), Art. 12]

Assessee, an Ireland based company, received certain amount towards sale of software from its Indian distributors. The Assessing Officer held  that receipts on account of sale of software is  to be taxed as income from royalty as per article 12 of DTAA between India and Ireland. The  assessee received consideration for transfer of a copyrighted product and not for transfer of copyrights in computer software programme, amount received by assessee was not in nature of ‘royalty’ as defined under article 12 of India-Ireland DTAA. Addition is deleted.  therefore, impugned order passed by Assessing Officer was to be deleted. (AY.2015-16)