Receipts from the sale of software with support services is not Royalty Income, clarifies ITAT

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Last updated: 16 July 2021
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The Income Tax Appellate Tribunal (ITAT) has clarified that receipts from the sale of software, when accompanied by support services, are not to be treated as royalty income. This decision follows a Supreme Court ruling, which was also applied in the assessee's own case by the Karnataka High Court. The ITAT's order addresses the tax treatment of such transactions, overturning the Assessing Officer's initial classification.

Court :
ITAT Bangalore

Brief :
Present appeals have been filed by assessee against the final assessment order is dated 27/10/2017 and 10/07/2018 passed by Ld.DCIT (International Taxation) Circle-1 (1), Bangalore. It has been submitted that the only issue raised by assessee in both these appeals relate to treating the receipts of assessee’s on account of sale of software to the Indian customers, as royalty.

Citation :
IT(IT)A No.2542/Bang/2018

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