Law:

Section:

Section 9 of the Income-tax Act, 1961 read with article 12 of DTAA between India and Ireland - Income - Deemed to accrue or arise in India (Royalties) - Whether computer programme and computer data base fall within ambit of literary work in article 12(3)(a) vide definition of 'computer programme' in section 2(o) of Copyright Act, 1957 - Held, yes - Whether when a copyrighted article is permitted or licensed to be used for a fee, permission involves not only physical or electronic manifestation of a programme, but also use of or right to use copyright embedded therein and, thus, it cannot be contended that payment received is only in respect of copyrighted article and no rights are granted to end users - Held, yes - Whether in terms of DTAA, consideration paid for use or right to use confidential information in form of computer programme software itself constitutes royalty - Held, yes - Applicant, an Ireland based company, is engaged in providing Skillsoft products, namely, course content and especially designed software to understand content - It appointed an Indian company as its reseller - As per agreement, Indian company buys products from applicant and licences it to Indian end users to access and use said products - Software contains simulation exercise for understanding content and it is not available in public domain - Whether software and computer database created by applicant are included within ambit of 'Literary work' and, thus, payment for said work constitutes royalty under article 12 - Held, yes [Paras 25 - 28] [In favour of revenue] FACTS The applicant, an Ireland based company, is engaged in the business of providing SkillSoft products. A SkillSoft product consists of two components. The first is course content and the second is the software through which the course is delivered to the end customer. The applicant has entered into a reseller agreement with SkillSoft India. SkillSoft India buys the SkillSoft products from applicant and sells the same to Indian users. Under the reseller agreement SkillSoft India is a distributor and has the right to license, market, promote, demonstrate and distribute SkillSoft products by providing online access…