The applicant approached this Authority with the present application seeking an Advance Ruling on a plea that all the agreements relating to this transaction were negotiated and concluded outside India. It takes the stand, that the loan having been guaranteed by EKN, the interest paid under the transaction is not liable to charge to tax in India under the Income-tax Act in view of Article 11.3 of the Double Taxation Avoidance Convention between India and Sweden. While allowing the application under section 245R(2) of the Act, this Authority framed the following questions for the ruling:
We had occasion to consider the ruling in Dassault, the ruling in P.No.30 of 1999 in re.(AAR/821/2009) of this Authority, the other relevant rulings and the ruling in Millenium, in our recent ruling in Citrix Systems Asia Pacific Pty. Ltd. (AAR/822 of 2009). Therein we have held that there cannot be a user of software over which exists a copyright without a use of the copyright therein. The payment for such use can only be royalty. We have also held that what is paid by a seller on behalf of the customer and what is paid by the customer direct, both partake the character of royalty. In the light of that Ruling, it does not appear to be necessary to further reason out the issue. We adopt the reasons given by us in the Citrix Ruling to find that what is paid by the reseller to the applicant and what is paid for updates and maintenance are royalty and not business income.
The Budget 2012-13 will be announced on March 16, 2012 by the Finance Minister Pranab Mukherjee. There are a lot of expectations from Budget as the economy of the country is not yet stable and after effects of recession can still be felt. The European Union economic crisis is also having a negative effect on the Indian economy
