Monday, November 15, 2010


The Delhi Income-Tax Appellate Tribunal (ITAT) has held that payments received by Microsoft
Corporation from end user (in India) through distributors for sale of Microsoft software, are taxable as royalty. This would also be applicable for all the payments made before January 1, 1999, the ITAT has said. From January 1, 1999, the business model was changed and Microsoft granted exclusive licence to Grace mac Corporation of the US to manufacture the Microsoft software and distribute it in terms of the licence agreement. Even under the changed business model, the ITAT has now held that
payments for the software licensing should be treated as royalty for tax purposes. The Judgement
has also not fully accepted the supremacy of DTAT over Indian Tax Law.


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