Case Law Details
Aspect Software Inc Vs DCIT (ITAT Delhi)
Consideration received by the Assessee for supply of product along with license of software to End user is not royalty under Article 12 of the Tax Treaty. Even where the software is separately licensed without supply of hardware to the end users (i.e. eight out of 63 customers), we are of the view that the terms of license agreement is similar to the facts of Infrasoft Ltd (Supra). Accordingly, we hold that there was no transfer of any right in respect of copyright by the assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/ PE in India.
FULL TEXT OF THE ITAT JUDGEMENT
The above two appeals by the assessee are preferred against two separate orders framed u/s 143(3) r.w.s 144C of the Income-tax Act, 1961 [hereinafter referred to as ‘The Act’] dated 31.10.2017 and 30.10.2018 pertaining to assessment years 2014-15 and 2015-16. Since both these appeals pertain to same assessee involving common issues and were heard together, we are disposing them off by this common order for the sake of convenience and brevity.
2. We have heard the facts of Assessment Year 2014-15. Having heard the rival contentions, we have carefully perused the orders of the authorities below and all the decisions relied upon by the ld. counsel for the assessee.
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