Treaty between India and Israel – Indian decision that payment for supply of software is not royalty

The Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 26 August 2011 in the case of TII Team Telecom International Private Limited (ITA No. 3939/Mum/2010) where it held that the payment received for supply of software could not be treated as "royalty" under the India - Israel Income and Capital Tax Treaty (1996) (the Treaty) as it was neither for the use of a "copyright" nor of a "process".

(a) Facts. TII Team Telecom International Private Limited (the T…