TIOL Legal Bureau

Licensing: Microsoft liable for income tax

TIOL has come to know that in a path-breaking judicial decision, the Commissioner of Income Tax (Appeals) handling international taxation cases in Delhi has held that the Gracemac Corporation, a 100% subsidiary of Microsoft which had in 1999 granted proprietary and ownership right in license and in intellectual property of Microsoft software and hardware products, is liable to pay income tax on its gross royalty income earned out of licensing of software to Indian customers.