Thursday, 4 October 2012

S.9: Income deemed to accrue or arise in India-Deduction at source-Non-resident- Software- Payment made by assessee to non-resident for purchase of software would constitute “royalty” under section 9 hence liable to deduct tax at source.


The Tribunal held that the assessee is  not liable to deduct  tax at  source in respect of payments made for purchase of  software as the same cannot be  treated as income liable to tax in  India  as royalty  or  scientific  work under section 9 of the Act  read with Double Taxation Avoidance Agreements and treaties. On appeal by revenue the Court following the Judgment in CIT v. Samsung Electronics Co Ltd (2011) 203 Taxman 477 (Karn.)(High Court and  in view of retrospective amendment in section 9  Explanation 4 and explanation from 1-6-1976, decided the issue in favour of revenue. The Court held that the assessee is liable to deduct tax at source. (A.Y.2001-02)  

CIT v. P .S .I .Data System Ltd ( 2012) 208 Taxman 452 (Karn.)(High Court)

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