“royalty income”

International TaxSection 9(1)(vi)Section 9(1)(vi)629 judgments

The decision most relied on for royalty income is Engineering Analysis Centre of Excellence (P) Ltd. v. CIT (432 ITR 471), cited in 914 judgments on BharatTax.

Leading authorities on royalty income

Engineering Analysis Centre of Excellence (P) Ltd. v. CIT

432 ITR 471 · 2021 · Supreme Court

914

citing judgments

Payments for the supply or use of computer software, where there is no transfer of copyright but only a right to use the copyrighted product, are generally considered business profits and not 'royalty' or 'fees for technical services' under the Income Tax Act, 1961 or relevant DTAAs. This principle also applies to transponder fees, which are not taxable as royalty.

CIT v. Samsung Electronics Ltd.

345 ITR 494 · 2012 · High Court

461

citing judgments

Payments by Indian residents to non-resident foreign software suppliers for software are considered royalty, constituting income deemed to accrue in India under section 9(1)(v), thereby requiring tax deduction at source under section 195.

Asia Satellite Telecommunications Co. Ltd. v. DIT

332 ITR 340 · 2011 · High Court

359

citing judgments

Payments for the use of equipment, such as satellite transponders, do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961, or under applicable tax treaties, especially when there is no transfer of the right to use a process or underlying technology.

DIT v. New Skies Satellite BV

382 ITR 114 · 2016 · High Court

325

citing judgments

An amendment to the Income Tax Act, such as the Finance Act, 2012 amendment to Section 9(1)(vi) defining royalty, does not automatically override or alter the definition of 'royalty' as provided in a Double Taxation Avoidance Agreement (DTAA) unless the DTAA itself is bilaterally amended. The definition of royalty in a DTAA remains unaffected by unilateral changes to domestic law.

DIT v. Nokia Networks OY

358 ITR 259 · 2013 · High Court

276

citing judgments

Payments for the supply of software along with telecom equipment are not in the nature of royalty if they are for the use of a copyrighted article, not the copyright itself. Such payments are not taxable in India in the absence of a Permanent Establishment (PE).

DIT v. Infrasoft Ltd.

39 Taxmann.com 88 · 2013 · High Court

269

citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

CIT v. Siemens Aktiongesellschaft

310 ITR 320 · 2009 · High Court

259

citing judgments

Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).

DIT v. Ericsson A.B

343 ITR 470 · 2012 · High Court

256

citing judgments

Payments for the use of copyrighted software or reimbursement of data processing costs do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act or Article 12(3) of a DTAA where there is no transfer of copyright or rendering of services that "make available" technical knowledge. This position was later upheld by the Supreme Court.

Judgments citing royalty income

M/S Regen Renewable Energy Generation Global Limited, Chennai vs. ACIT, International Taxation Circle - 2 (1), Chennai

The appeals stand allowed for statistical purposes

ITA 685/CHNY/2022[2015-2016]Status: DisposedITAT Chennai10 Jul 2024AY 2015-2016

Bench: Hon’Ble Shri Manoj Kumar Aggarwal, Am & Hon’Ble Shri Manu Kumar Giri, Jm 1. आयकरअपील सं./ Ita No.684/Chny/2022 (िनधा;रण वष; / Assessment Year: 2014-15) & 2. आयकरअपील सं./ Ita No.685/Chny/2022 (िनधा;रण वष; / Assessment Year: 2015-16) M/S Regen Renewable Energy Acit बनाम Generation Global Limited International Taxation New No.1, Pulla Avenue, / Vs. Circle-2(1), Chennai. Shenoy Nagar, Chennai-600 030. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aafcr-0685-N (अपीलाथ"/Appellant) : (" थ" / Respondent) अपीलाथ" कीओरसे/ Appellant By : Shri B. Ramakrishnan (Ca) – Ld.Ar " थ"कीओरसे/Respondent By : Mrs. Jyothi Lakshmi Nayak (Cit)-Ld. Dr सुनवाई की तारीख/Date Of Hearing : 03-06-2024 घोषणा की तारीख /Date Of Pronouncement : 10-07-2024 आदेश / O R D E R Manoj Kumar Aggarwal ()

For Appellant: Shri B. Ramakrishnan (CA) – Ld.ARFor Respondent: Mrs. Jyothi Lakshmi Nayak (CIT)-Ld. DR

Section 115A(1)(b)Section 143(3)Section 144CSection 144C(5)Section 147Section 148Section 153Section 234B

beneficial owner' of the royalty received as per Article 12 of the Indo-Cyprus DTAA and consequently denying the treaty benefits, thereby taxing the Royalty Income of the appellant at 25% as per section 115A(1)(b) of the Act. 3. Without prejudice to the above, for that the Learned ... dues from them. 4. For that the Learned Assessing Officer, having treated the appellant as a conduit entity, ought to have taxed the royalty income at 10% as per Article 12 of India-Germany DTAA. 5. Without prejudice to the above, the Learned Assessing Officer, having held that the appellant

M/S Regen Renewable Energy Generation Global Limited, Chennai vs. ACIT, International Taxation Circle - 2 (1), Chennai

The appeals stand allowed for statistical purposes

ITA 684/CHNY/2022[2014-2015]Status: DisposedITAT Chennai10 Jul 2024AY 2014-2015

For Appellant: Shri B. Ramakrishnan (CA) – Ld.ARFor Respondent: Mrs. Jyothi Lakshmi Nayak (CIT)-Ld. DR

Section 115A(1)(b)Section 143(3)Section 144CSection 144C(5)Section 147Section 148Section 153Section 234B

Aapc Singapore Pte. Ltd., Singapore vs. ACIT Circle 1(1)(1) Intl. Taxation, New Delhi

In the result, this appeal of the assessee is partly allowed for statistical

ITA 3342/DEL/2023[2021-22]Status: DisposedITAT Delhi02 Jul 2024AY 2021-22

Bench: Shri Saktijit Dey & Shri Brajesh Kumar Singh

For Appellant: Sh. S.K Aggarwal, CAFor Respondent: Sh. Vijay B Vasanta, CIT(DR)

Section 234ASection 270A

programme to customers in India. The core issue arising in the appeal relates to taxability of an amount of Rs.33,11,70,181/- as royalty income both under the provisions of the Act as well as under Indian- Singapore Double Taxation Avoidance Agreement (DTAA). 3.1. The assessee filed its return ... declaring income of Rs.33,95,25,010. In the said return of income, assessee offered the amounts received towards franchise, license fee etc. as royalty income. Further, certain fees received towards training imparting training in relation to central reservation, integral property management system, information technology related services etc. were offered

Aapc Singapore Pte. Ltd., Singapore vs. ACIT, Circle-1(1)(1), Int. Taxation, New Delhi

In the result, this appeal of the assessee is partly allowed for statistical

ITA 1868/DEL/2023[2020-21]Status: DisposedITAT Delhi02 Jul 2024AY 2020-21

Bench: Shri Saktijit Dey & Shri Brajesh Kumar Singh

For Appellant: Sh. S.K Aggarwal, CAFor Respondent: Sh. Vijay B Vasanta, CIT(DR)

Section 234ASection 270A

Cricket Australia, Mumbai vs. ACIT Circle 1(2)(1) Intl. Taxation, New Delhi

ITA 3200/DEL/2023[2021-22]Status: DisposedITAT Delhi27 Jun 2024AY 2021-22

Bench: SHRI G.S. PANNU, HON'BLE (Vice President), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri Nitesh Joshi, AdvFor Respondent: Shri Vizay B. Vasanta, CIT-DR

Section 143(3)Section 234BSection 270ASection 9

granting rights for live transmission of programmes (i.e. cricket matches played in Australia under the sole control and auspices of the appellant) as royalty income. AO added an amount of Rs. 4,05,65,051/- on the basis of difference in the amounts reported by the appellant and amounts reported

Ge Subsidiary Inc, 63 (Successor in Interest of Monogram Licesing International Inc.), Mumbai vs. ACIT (It) RG. 3 (2)(2), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 5906/MUM/2018[2014-15]Status: DisposedITAT Mumbai26 Jun 2024AY 2014-15

Bench: Shri Amit Shukla & Shri Gagan Goyalge Subsidiary Inc, 63 (Successor In Interest Of Monogram Licensing International Inc.) C/O. Pwc House, Plot No. 18 A, Guru Nanak Station Road, Bandra, Mumbai- 400050 Pan: Aadcm6233F Appellant Vs. Acit (Intl Taxation) - 3(2) (2), Mumbai, Room No. 1615, Air India Building, Nariman Point, Mumbai- 400 021 Respondent

For Appellant: Shri Dhanesh Bafna, Shri PratikFor Respondent: Shri Abhishek Tharwal, Ld. DR

Section 143(3)Section 144C(13)Section 234BSection 92C(3)

registered in the USA and a part of the GE group. The Assessee filed its return of income on 22.01.2016. The assessee is earning Royalty income for the use of Trade name of Rs. 18, 16, 64,724/- from its group entities in India. 3. The case of the assessee ... preferred the present appeal before us. 4. During the course of the hearing before us, it was submitted that the assessee has earned royalty Income for the use of trade name for the year under consideration from its group entities in India. The Assessee had benchmarked the said international transactions

Ritika Pvt Ltd, Gurgaon vs. ACIT Vcentral Circle-4, New Delhi

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 430/DEL/2021[2013-14]Status: DisposedITAT Delhi19 Jun 2024AY 2013-14

Bench: Shri Pradip Kumar Kedia & Shri Sudhir Kumarassessment Year 2013-14

For Respondent: Ms. Beenu, Sr.DR

Section 143(3)Section 28Section 43B

core of the controversy. The incidental question that arises is whether the AO was justified in assessing the receipts on sale of software as ‘Royalty Income’ in the factual matrix merely because the assessee has offered such income as taxable income in its ITR. Similar question extends to receipts from ... cannot be countenanced. In our view, the assessee cannot be prevented from raising a claim that receipts from sale of software wrongly offered as royalty income and not chargeable to Indian Taxation merely because such income was wrongly offered in the ROI and which was not revised. The factual matrix

Ey Global Services Ltd, London Uk vs. ACIT, Circle-1(2)(2) (International Taxation), New Delhi

In the result, both the appeals filed by the assessee are allowed

ITA 7706/DEL/2019[2010-11]Status: DisposedITAT Delhi13 Jun 2024AY 2010-11

Bench: Shri G.S. Pannu & Shri Kul Bharat

Section 143(2)Section 144CSection 158A

interest of CWAN Connectivity Charges. The Assessing Officer computed the income of the assessee as under: Particulars Amount (in Rs.) Returned Income Nil Add: Royalty income as held by the Hon’ble AAR 11,26,56,701 (taxable @ 10% - as per the provisions of IT Act, being more beneficial than

Temenos Headquarters Sa, Switzerland vs. Deputy Commissioner of Income Tax, International Taxation 2(2), Chennai

In the result, appeals filed by the assessee for assessment years 2016-17, 2020-21 & 2021-22 are allowed and stay applications filed by the assessee for assessment years

ITA 1575/CHNY/2023[2021-22]Status: DisposedITAT Chennai12 Jun 2024AY 2021-22

Bench: Shri Mahavir Singh, Hon’Ble & Shri S. R. Ragunatha, Hon’Bleआयकर अपीलसं./Ita Nos.: 1573, 1574 & 1575/Chny/2023 िनधा"रणवष" / Assessment Years: 2016-17, 2020-21 & 2021-22 & S.A. Nos. 20, 21/Chny/2024 [In Ita Nos. 1574 & 1575/Chny/2023] िनधा"रण वष" / Assessment Years : 2020-21, 2021-22 Temenos Headquarters Sa, Deputy Commissioner Of No.2, Rue De Lecole De V. Income Tax, Chimie, International Taxation -2(2), 1205 Geneva, Chennai. Switzerland- 1205. [Pan:Aadct-7868-H] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओरसे/Appellant By : Shri. R. Sivaraman, Advocate ""यथ" क" ओरसे/Respondent By : Shri. V. Nandakumar, Cit सुनवाई क" तारीख/Date Of Hearing : 24.04.2024 घोषणा क" तारीख/Date Of Pronouncement : 12.06.2024

For Appellant: Shri. R. Sivaraman, AdvocateFor Respondent: Shri. V. Nandakumar, CIT

Section 143(2)Section 143(3)

expenses which is not liable to be offered to tax. This explanation raises two questions:  Whether payment received for sale of software is royalty income?  Whether a reimbursement received for providing software can be treated as an income? Taxability as per the Income Tax Act 2. Relevant portion ... discussion above, the re-imbursement amounting to Rs.6,43,85,648/- received by the assessee from its Indian sister concerns is treated as Royalty Income and taxed as such.” Aggrieved by the impugned order of the Assessing Officer, the assessee preferred an appeal before

Temenos Headquarters Sa, Switzerland vs. Deputy Commissioner of Income Tax, International Taxation 2(2), Chennai

In the result, appeals filed by the assessee for assessment years 2016-17, 2020-21 & 2021-22 are allowed and stay applications filed by the assessee for assessment years

ITA 1574/CHNY/2023[2020-21]Status: DisposedITAT Chennai12 Jun 2024AY 2020-21

For Appellant: Shri. R. Sivaraman, AdvocateFor Respondent: Shri. V. Nandakumar, CIT

Section 143(2)Section 143(3)

Temenos Headquarters Sa, Switzerland vs. Deputy Commissioner of Income Tax, International Taxation 2(2), Chennai

In the result, appeals filed by the assessee for assessment years 2016-17, 2020-21 & 2021-22 are allowed and stay applications filed by the assessee for assessment years

ITA 1573/CHNY/2023[2016-17]Status: DisposedITAT Chennai12 Jun 2024AY 2016-17

For Appellant: Shri. R. Sivaraman, AdvocateFor Respondent: Shri. V. Nandakumar, CIT

Section 143(2)Section 143(3)

Jaipur Jewellery Show, Jaipur vs. ACIT-DCIT Circle (Exemp.), Jaipur

In the result, the appeal of the assesee is allowed for statistical purposes

ITA 164/JPR/2024[2012-13]Status: DisposedITAT Jaipur10 Jun 2024AY 2012-13

Bench: Hon’ble SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Rajeev Sogani, CAFor Respondent: Shri Rajesh Kumar Meena, Addl. CIT-DR

Section 11Section 12ASection 143(3)Section 250Section 264

facts to direct the Assessing Officer to grant tax credit of Rs. 1,62,26,344/- & 1,05,43,697/- (in respect of royalty income) not claimed in the original return of income nor claimed through revised return of income in contradiction to Apex Court decision in the case

Johnson & Johnson Pte Ltd, Mumbai vs. Commissioner of Income Tax (Appeals)-57 Income Tax Departmetnt, Mumbai

ITA 364/MUM/2024[2018-19]Status: DisposedITAT Mumbai04 Jun 2024AY 2018-19

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Rajan VoraFor Respondent: Shri Anil Sant

Section 143(3)Section 144C(3)Section 250Section 253

IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL

Kony Inc, United States of America vs. Deputy Commissioner of Income-Tax, Chennai

In the result, appeal filed by the assessee is allowed

ITA 1572/CHNY/2023[AY 2021-22]Status: DisposedITAT Chennai30 May 2024

Bench: Shri Mahavir Singh, Hon’Ble & Shri S. R. Ragunatha, Hon’Bleआयकर अपील सं./Ita No.: 1572/Chny/2023 िनधा"रण वष" / Assessment Year: 2021-22 Kony Inc., Deputy Commissioner Of 5301, Southwest Parkway, V. Income Tax, Suite 250, International Taxation -1(2), Austin, Texas, Chennai. Usa - 5301 [Pan: Aaeck-4771-D] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri. R. Sivaraman, Advocate : Shri. D. Hema Bhupal, Jcit ""यथ" क" ओर से/Respondent By सुनवाई क" तारीख/Date Of Hearing : 24.04.2024 घोषणा क" तारीख/Date Of Pronouncement : 30.05.2024

For Appellant: Shri. R. Sivaraman, Advocate

Section 143(2)Section 143(3)Section 144C

nature of royalty under the treaty provisions. That being the case, the receipt from annual maintenance charges being not ancillary or subsidiary to any royalty income cannot be brought to tax under Article 12(4)(a) of the tax treaty. Therefore, it has to be seen, whether it can come

Gartner Ireland Limited, Mumbai vs. Deputy Comm. of Income Tax-2(3)(2), Mumbai

In the result, the appeal filed by the assessee is partly allo

ITA 2460/MUM/2022[2019-20]Status: DisposedITAT Mumbai30 May 2024AY 2019-20

Bench: Shri Om Prakash Kant () & Ms. Kavitha Rajagopal () Assessment Year: 2019-2020 Gartner Ireland Ltd., Dcit-2(3)(2), 3Rd Floor, Two Park Place, 17Th Floor, 1711, Air India Hatch Street, Dublin 2, Vs. Building, Nariman Point, Ireland D02 Np94. Mumbai-400021. Pan No. Aaccg 2919 B Appellant Respondent Assessee By : Mr. Farooq Irani Revenue By : Mr. A.K. Ambastha, Sr. Dr : Date Of Hearing 12/04/2024 : Date Of Pronouncement 30/05/2024

For Appellant: Mr. Farooq IraniFor Respondent: Mr. A.K. Ambastha, Sr. DR

Section 234DSection 9(1)(vi)

under: Gartner Ireland Ltd. 2 Ground No. 1: Ground No. 1: - Erroneous treatment of Business Income as "Royalty" Erroneous treatment of Business Income as "Royalty" Income 1.1 On the facts and circumstances of the case and in law, the Learned 1.1 On the facts and circumstances of the case ... revenue generated from wherein he proposed that the revenue generated from subscription was in the nature of scription was in the nature of ‘royalty’ income in the hands of income in the hands of the assessee as against claim of the assessee that same was in the assessee as against

Owens Corning, Mumbai vs. The Deputy Commissione of Income Tax _(International Taxation)-Circle-3(2)(2), Mumbai

In the result, the appeal of the assessee is allowed

ITA 4627/MUM/2023[2021-22]Status: DisposedITAT Mumbai27 May 2024AY 2021-22

Bench: Smt Kavitha Rajagopal, Jm & Ms Padmavathy S, Am

For Appellant: Shri Sandeep Bhalla a/w MsFor Respondent: 21.05.2024

Section 9(1)(vi)

Tribunal in the earlier years on an identical issue, we hold that the lease rental income earned by the assessee cannot be treated as royalty income, both under provisions of DTAA and Income Tax Act. Accordingly we direct the Assessing Officer to delete the assessment of Rs. 10.31 crores made ... hands of the assessee as royalty income.” 6. During the course of hearing the ld. AR submitted the copy of lease agreement under which the impugned payments are made. From the perusal of the said agreement, we notice that the lease payments made during the year are identical

Telstra Singapore Pte Ltd, Singapore vs. Deputy Commissioner of Income Tax, Circle (3)(1)(1), International Taxation, New Delhi, India

In the result, the appeal is partly allowed

ITA 3318/DEL/2023[2021-22]Status: DisposedITAT Delhi17 May 2024AY 2021-22

Bench: Shri Saktijit Dey, Vice- & Shri Brajesh Kumar Singhassessment Year: 2021-22

Section 143(3)Section 144C(13)Section 9(1)(vi)

Article 12(3) of India – Singapore DTAA. Accordingly, he proposed the addition of receipts towards Bandwidth charges as royalty income while framing the draft assessment order. The assessee contested the aforesaid addition by raising objections before learned DRP. Relying upon its past directions in assessee’s case in earlier assessment ... assessee’s case in earlier assessment years. The short issue arising for consideration in these grounds is whether the Bandwidth charges are taxable as royalty income. 7. We find, this is a recurring issue between the assessee and the Revenue from past assessment years. While deciding the issue

Dy. Commissioner of Income Tax Circle-1(1), Pune vs. Enterprisedb Software India Private Limited, Pune

ITA 989/PUN/2023[2017-18]Status: DisposedITAT Pune16 May 2024AY 2017-18

Bench: Hon’Ble Shri G. D. Padmahshali & Hon’Ble Shri Vinay Bhamoreआयकर अपील सं. / Ita No. 989/Pun/2023 & Co No. 008/Pun/2024 निर्धारण वर्ा / Assessment Year : 2017-18 Dy. Commissioner Of Income Tax, Central Circle-1(1), Pune . . . . . . . अपीलार्थी / Appellant

For Appellant: Mr Rajendra Agiwal [‘Ld. AR’]For Respondent: Ms Sonal Sonkavde [‘Ld. DR’]

Section 1Section 143(2)Section 143(3)Section 195Section 195(1)Section 246A(1)Section 250Section 253(2)Section 40

culminated adjudicating only ground number 2 in favour of assessee by deleting the disallowance holding that, ‘As per the provisions of the Tax Treaty, Royalty income shall be taxed in the hands of the non-resident taxpayer in India on actual receipt of the same from the resident taxpayer

General Electric International Inc., Gurgaon vs. DCIT, International Taxation Circle 2(3)(2), Mumbai

ITA 3498/MUM/2023[2016-17]Status: DisposedITAT Mumbai16 May 2024AY 2016-17

Bench: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Shri Dhanesh BafnaFor Respondent: Shri Veerbhandra Mahajan

Section 142(1)Section 143(3)Section 144C(3)Section 250Section 271(1)(c)

gross basis, as per Article 12 of Double Taxation Avoidance Agreement (DTAA) between India and USA [for short „DTAA‟] and (c) Royalty income of INR 1,61,09,078/- at the rate of 10%, on gross basis, as per the provisions of the Act 3.1. The case of the Appellant

Home Credit International A.S., Czech Republic vs. Assistant. Deputy Commissioner of Income Tax, International Taxation, Gurgaon

In the result, appeal is partly allowed, as indicated above

ITA 2068/DEL/2023[2020-2021]Status: DisposedITAT Delhi10 May 2024AY 2020-2021

Bench: Shri Saktijit Dey, Vice- & Shri Pradip Kumar Kediaassessment Year: 2020-21

Section 143(3)Section 144C(13)Section 9(1)(vi)

receipts in dispute should not be treated as royalty/FTS, as, such receipts are ancillary to enjoyment of such services, for which, royalty income has been received. In response to the show- cause notice, assessee had furnished a detailed reply submitting that the amount received towards licence fee cannot be treated