S.9(1) (vii): Income deemed to accrue or arise in India - Fees for technical services –Royalty-Software licence-
Right to use said confidential information in form of computer programme software would itself constitute
royalty and attract tax.DTAA-India-Ireland – (Art 12)
Assessee granted a non-exclusive non-transferable software license without right of sub-licence. Licensee might make a reasonable number of copies of licensed software for backup and /or archival purposes only, even if it was not transfer of exclusive right in copyright, right to use confidential information embedded in software in terms of aforesaid license which makes it abundantly clear that there was transfer of certain rights which owner of copyright possessed in said computer software/programme in respect of copyright owned. Therefore in terms of DTAA consideration paid for use or right to use said confidential information in form of computer programme software would itself constitute royalty and attract tax.Court held that it is not necessary that there should be a transfer of exclusive right in copyright and where consideration paid was for rights in respect of copyright and for user of confidential information embedded in software/computer programme, it would fall within mischief of Explanation (2) of section 9(1) (vi) and there would be a liability to pay tax. In favour of revenue. (2001-02 to 2003-04)
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