Case Law Details
Elektrobit Automotive GmbH AM Vs Deputy DIT (ITAT Delhi)
It was held that license agreement as entered by the assessee itself points out the word royalty. Moreover, considering the facts of case, that license terms obliges the licensee to furnish to assessee monthly statement of supplied products to customers using his software and consequent raising of invoice on that basis, signifies the commercial exploitation of the licensed software and licensee fee for the same shall be treated as “royalty”. Therefore, the appeal was held against the assessee and favour of revenue.
FULL TEXT OF THE ITAT JUDGMENT
This is an Appeal by the Assessee, agitating its assessment under section 143(3) r/w s. 144C of the Income Tax Act, 1961 (‘the Act’ hereinafter) for Assessment Year (AY) 2009-10 vide order dated 21.11.2012.
2. The assessee is a company incorporated in and a tax resident of Germany. It is engaged in supplying software products, software consultation programming services and software solutions, particularly in the field of ‘embedded systems’ for the automotive industry. The principal issue arising in the instant case is whether the receipt earned by it from grant of user rights in software by the name of ‘EB Guide Studio’ from Robert Bosch Engineering & Business Solutions Ltd. (‘Robert Bosch India’ for short, at Rs.131.01 lacs) and Tata Consultancy Services Ltd. (TCSL) (Rs.36.08 lacs) for the relevant year qualify as ‘Royalty’, as contended by the Revenue, or as ‘business income’, as claimed by the assessee. The assessee-company, a foreign company, with no business presence/permanent establishment (PE) in India, its’ business income is not taxable in India under the Indo-German Double Tax Avoidance Agreement (DTAA), while the ‘royalty income’ would attract tax at the rate of 10% under Article 12 thereof.
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