CA Final DT Case Laws May 17 Series - Residential Status

Chapter: Residential Status & Scope of Total Income

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CIT v. Alcatel Lucent Canada (2015-Delhi HC)

Issue: Can consideration for supply of Software embedded in hardware tantamount to royalty u/s 9(1)(vi) ?

Facts: Foreign Co.engaged in manufacture and trade for GSM systems, supplied hardware & software to various entities in India. AO contended that the consideration for supply of software embedded in hardware is royalty u/s 9(1)(vi). Appellate authorities denied AO contention.

Decision: View taken by AO was not tenable. Where payment is made for hardware in which software is embedded and software did not have independent functional existence, no amount could be attributed as ‘royalty’ for software in terms of sec 9(1)(vi).

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