SC Dismissed Review Petition Against Ruling That Sum Paid Towards Sale of Computer Software Not Taxable as Royalty

Case Details: CIT v. GE India Technology Centre (P.) Ltd - [2024] 161 taxmann.com 707 (SC)

Judiciary and Counsel Details

• • B.R. Gavai, B.V. Nagarathna & Pankaj Mithal, JJ.

Facts of the Case

The Supreme Court, in the case of Engineering Analysis Centre of Excellence Pvt. Ltd., held that the license for use of a product under an EULA cannot be construed as a license spoken of in section 30 of the Copyright Act, as such EULA only imposes restrictive conditions upon the end-user and does not part with any interest relatable to any rights mentioned in section 14(a) and 14(b) of the Copyright Act.

Thus, amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for resale/use of computer software through EULAs/distribution agreements, is not payment of royalty for the use of copyright in computer software, and the same does not give rise to any income taxable in India.

Revenue filed a review petition contending that the Court overlooked the provisions of the Income-tax Act and the Copyright Act.

Supreme Court Held

The Supreme Court held that there was an inordinate delay of 515 days in filing the review petitions, which had not been satisfactorily explained. Accordingly, the revenue review petition was to be dismissed on the grounds of delay as well as on merits.

Note: The instant review petition arising from the order passed by the Supreme Court in the Engineering Analysis Centre of Excellence (P.) Ltd . v. Commissioner of Income-tax [2021] 125 taxmann.com 42 (SC)