Income from Transfer of licensed software is not royalty

Transfer of licensed software was a transfer of copyrighted article and not the right in the copyright and, consequently, income from the transfer thereof was not royalty. The Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal) has held that the amount received by the taxpayer company for transfer of the right to use the licenced software was not for the use of copyright in the software but only the software as such (which was a copyrighted article) and, therefore, could not be taxed as royalty but as business income under Article 7 of the India-UK Tax Treaty (the tax treaty). The ...