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II. Direct Tax Case laws:
1. DIRECTOR OF INCOME TAX versus INFRASOFT LTD., ITA 1034/2009, Date of Order : 22.11.2013, High Court of Delhi.
a.
Non-exclusive & non-transferable license to use customized software
not taxable as “royalty” under Article 12 of India-USA DTAA.
b. In
order to qualify as a royalty payment under Article 12(3) of the
India-USA DTAA, it is necessary to establish that there is a transfer of
all or any rights (including the granting of any licence) in respect of
a copyright of a literary, artistic or scientific work.
c. There
is a clear distinction between royalty paid on transfer of copyright
rights and consideration for transfer of copyrighted articles. Right to
use a copyrighted article or product with the owner retaining his
copyright, is not the same thing as transferring or assigning rights in
relation to the copyright.
d. The
enjoyment of some or all the rights which the copyright owner has, is
necessary to invoke the royalty definition. Viewed from this angle, a
non-exclusive and non-transferable licence enabling the use of a
copyrighted product cannot be construed as an authority to enjoy any or
all of the enumerated rights ingrained in Article 12 of DTAA.
e. Where
the licensee has no right to deal with the product just as the owner
would be in a position to do, there is no transfer of any right in
respect of copyright by the assessee and it is a case of mere transfer
of a copyrighted article. The payment is for a copyrighted article and
represents the purchase price of an article and cannot be considered as
royalty either under the Income-tax Act or under the DTAA.
(Please click here to view the Judgment).
2. DATTANI AND CO versus INCOME TAX OFFICER, TAX APPEAL NO. 847 of 2013, Date of Order : 21.10.2013, High Court of Gujrat.
Whether ITAT duty-bound to deal with all judgements cited during hearing of appeal.
Held Yes
Whenever
any decision has been relied upon and/or cited by the assessee and/or
any party, the authority/tribunal is bound to consider and/or deal with
the same and opine whether in the facts and circumstances of the
particular case, the same will be applicable or not.
In the instant case, the Tribunal has failed to consider and/or deal
with the aforesaid decision cited and relied upon by the assessee. Under
the circumstances, all these appeals are required to be remanded to the
Tribunal to consider the addition made by the AO towards alleged bogus
purchases/sales and to take appropriate decision in accordance with law
and on merits and after considering the decision of this Court in the
case of CIT vs. President Industries 258 ITR 654.
(Please click here to view the Judgment)
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