Introduction

In case of income associated with intellectual property, characterization of such income (for instance, (i) ‘business profits’ versus ‘royalties’, or (ii) ‘capital gains’ versus ‘royalties’) plays significant role in determination of a source state’s right to tax a foreign enterprise’s income. 

In that context, it is important to distinguish the income in respect of ‘rights in respect of property’ from the income in respect of ‘transfer or rights in property’. For that purpose, it would be helpful to take into account certain court decisions from Canada and India.