Software Royalty: View in favour of assessee should be followed

DDIT vs. M/s. Solid Works Corporation (ITAT Mumbai)

The assessee sold “shrink-wrap application software” called “Solidworks 2003″ to customers in India and claimed that the same was “business profits” and not assessable to tax as it did not a PE in India. The AO held that the income was assessable to tax as “royalty” u/s 9(1)(vi)/ Article 12(3) though the Tribunal (for an earlier year) reversed it on the ground that the product was a “copyrighted article” and not “copyright“. Before the Tribunal, the department claimed that the earlier view should not be followed in view of Samsung Electronics 203 Taxman 477(Kar) while the assessee relied on Ericsson AB 204 Taxman 192 (Del). HELD by the Tribunal: