The AO sought to assess business income earned by the Assessee on sale of software\/license as Royalty income u\/s 9(1)(vi) of the Act r.w. Article 12 of the India-USA DTAA. On appeal, the Tribunal held that the transaction was for sale of license\/software, where the end-user will have access to and make use of the licensed computer software product and not for parting with copyright the software. Therefore it is not a Royalty income as defined under Article 12 of the India-USA DTAA. Since it is not Royalty, the income is in the nature of business profits of the Assessee. For business profits of a non-resident entity to be taxable in India under Article 7 of the India-USA DTAA, it is necessary that such foreign enterprise must have a permanent establishment (\u201cPE\u201d) in India in terms of Article 5 of the said DTAA. The Tribunal noted the decision of the DRP which held that the Assessee does not have a PE in India and therefore held that provisions of Article 7 are not applicable in the case of Assessee and therefore the income earned on sale of license\/software is exempt from tax in India. (AY. 2009-10, 2014-15)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-Income from sale of software license-Not assessable as royalty-DTAA-DTAA-India-USA. [Art. 5, 7, 12]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-23034","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-5Zw","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23034","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=23034"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23034\/revisions"}],"predecessor-version":[{"id":23035,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23034\/revisions\/23035"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=23034"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=23034"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=23034"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}