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Recently, the Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Huawei Technologies Co. Ltd. (the taxpayer) dealt with the taxability of income from supply of telecommunications network equipment along with the software embedded in it. The Tribunal held that the taxpayer had a Permanent Establishment (PE) in India under the India-China tax treaty. Further the income from supply of software cannot be treated as royalty since software was supplied in an embedded form along with the hardware under a common contract. Therefore, the income from supply of telecommunications network equipment including software was taxable as business income arising from the taxpayer’s PE in India.