Withholding Tax Rates

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Deepak Goel

Deepak Goel (Querist)
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31 May 2011 I want to know withholding tax rate between India and Ireland

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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31 May 2011 PLEASE STATE THE NATURE OF INCOME FOR WHICH WHT IS REQD

Deepak Goel

Deepak Goel (Querist)
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01 June 2011 We are importing Software Liences from Ireland including maintenance charges for newal and sold to our customers in India like Reliance Ind, Bennett Comelman etc

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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01 June 2011 1.THIS IS A CONTENTIOUS ISSUE
1.THE ITAT HAS SO FAR HELD THAT a computer software when put into a media and sold, it becomes goods like any other audio cassette or painting on canvass or book. The amount paid by the assessee towards purchase of software cannot be treated as payment of royalty taxable in India under article 12 of DTAA between India and Singapore. Therefore, the assessee, was not liable to deduct tax at source.
U CAN REFER TO Sonata Information Technology Ltd. v. Addl. CIT (2007) 14 (II) ITCL 242 (Bang ‘A’-Trib): (2006) 103 ITD 324 (Bang ‘A’-Trib),Kansai Nerolac Paints Ltd. v. Addl. DIT (IT) (2010) 43 DTR (Mum-Trib) 385 ,Velankani Mauritius Ltd. & Ors. v. Dy. DIT (2010) 34 (II) ITCL 508 (Bang ‘B’ Trib)
2.The Tribunal in Velankani Mauritius case (supra) decided not to follow the decision in the case of CIT & Ors. v. Samsung Electronics Co. Ltd. & Ors. (2010) 32 (I) ITCL 169 (Karn-HC)
3.The Karnataka High Court in CIT v. Sumsung Electronics Co. Ltd. & Ors. (2010) 32 (I) ITCL 169 (Karn-HC) : (2010) 320 ITR 209 (Karn) : (2009) 185 Taxman 313 (Karn), and in CIT (International Taxation) v. Sonata Information Technology Ltd. (2010) 34 (I) ITCL 341 (Karn-HC) : (2010) 192 Taxman 80 (Karn) has considered the issue. The High Court has held that the payment made for purchase of copyrighted software constitutes royalty.
4.The Supreme Court in GE India Technology Centre (P) Ltd. v. CIT (2010) 35 (I) ITCL 263 (SC) : (2010) 193 Taxman 234 (SC), has set aside the judgment of the Karnataka High Court in Sonata case (supra) and Sumsung case (supra). However, on the question whether the payment for acquisition of computer software constitutes royalty, the Apex Court remitted the matter to the High Court.
5.SO THE JUDICIAL OPINION IS NOT CLEAR IN THIS REGARD
ON THE SAFER SIDE U CAN DEDUCT TAX AT A RATE APPLICABLE IN CASE OF ROYALTIES WHICH AS PER INDIA-IRELAND DTAA IS 10 PER CENT

CA MANOJ GUPTA
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