Payments for sale of software taxable as ‘Royalty’ under Article 12 of the India-Japan tax treaty

Re Acclerys K K (AAR)-AAR held that payments received by a non-resident for sale of software to end users / customers, through an independent reseller is taxable as ‘Royalty’ under Article 12 of the India-Japan tax treaty (the tax treaty). The AAR relied on recent ruling in the case of Citrix Systems Asia Pacific Pty. Ltd (AAR/822 of 2009) and held that the amount paid by the reseller to the applicant towards updates and maintenance is treated as royalty and not business income. We had occasion to consider the ruling in Dassault, the ruling in P.No. 30 of 1999 in re.(AAR/821/2009) of this ...