The Income Tax Appellate Tribunal (ITAT) in Delhi recently held that payments by a resident to a non-resident, for import of shrink-wrapped software, are taxable as royalty income in the hands of the non-resident.
Ruling in (1) Gracemac Corporation (2) Microsoft Corporation, (3) Microsoft Regional Sales Corporation v Assistant Director of Income-Tax, International Tax Division, New Delhi the tribunal held that as there are copyright restrictions on such software, earnings from it cannot be treated as business income.
While Gracemac – a US-based subsidiary of Microsoft – owns exclusive rights to manufacture and distribute Microsoft products, Microsoft Regional Service Corporation (MRSC) distributes Microsoft’s products in India. They are connected through Singapore-based Microsoft Operations (MO), which has a non-exclusive licence to manufacture and distribute the products.
You must be a
subscribersubscribersubscribersubscriber
to read this content, please
subscribesubscribesubscribesubscribe
today.
For group subscribers, please click here to access.
Interested in group subscription? Please contact us.
你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章,欢迎成为我们的订阅会员成为我们的订阅会员。
The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@vsnl.com. Readers should not act on the basis of this information without seeking professional legal advice.