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TMI Blog2021 (3) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 (3) TMI 138 - SUPREME COURT ] has noted that the end user can only use the computer programme by installing it in the computer hardware and cannot reproduce the same for sale or transfer and the licence granted vide the End-User License Agreements is not a license in terms of section 30 of the Indian Copyright Act, 1957 (CA) but is a licence which imposes restrictions or conditions for the use of the computer software. Hon ble Apex Court has held that the provisions of the Act [section 9(1)(vi), along with Explanations 2 and 4 thereof), are not more beneficial to the assessee and hence, the same have no application. Thus we hold that amounts paid by the assessee to the non-resident computer software manufacturers / suppliers as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee in default for non-deduction of tax at source u/s 195 of the I.T.Act. The assessee filed detailed response to the above said show cause notice. However, proceedings were completed by the Assessing Officer u/s 201(1) and 201(1A) of the I.T.Act by treating the assessee as an assessee in default. The view taken by the Assessing Officer was confirmed by the CIT(A). 4. Aggrieved by the orders of the CIT(A) for the assessment years 2010-2011, 2011-2012 and 2012-2013, the assessee has preferred these appeals before the Tribunal. The learned Counsel for the assessee has submitted that the issue in question is covered in favour of the assessee by the judgment of the Hon ble Apex Court in the case of Engineering Analysis Centre of Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son who is a resident in India. 5. As per Explanation 2 to section 9(1)(vi) of Act, the term 'royalties' means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains ) for i. ii. iii. iv. iva .... v. the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films; or vi. 6. Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is a copyrighted article and not a copyright itself. Hence, consideration paid is not taxable as royalty under the provisions of the Act 10. The Appellant submits that the software purchased are only a copyrighted article and there is no transfer of copyright and in such case the same cannot be treated as royalty under the tax treaties with the respective countries (that is Singapore, USA, Philadelphia, Ireland, Atlanta and Australia). 11. Further the Appellant wishes to submit that if transfer of software does not amount to transfer of copyright, annual maintenance services/license renewal etc. would not be taxable as fees for technical services under treaties of country of residence of payee (Singapore, USA and Australia) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gains'; - Transfer of 'all or any rights' expressly includes the granting of licence in respect thereof; and - Such transfer must be 'in respect of any copyright of any literary work. Accordingly, the Apex Court has held that the provisions of the Act [section 9(1)(vi), along with Explanations 2 and 4 thereof}, are not being more beneficial to the assessees, the same have no application. 5. The learned Departmental Representative submitted that the matter needs to be restored to the A.O. for examination whether non-resident owner continues to have proprietary rights in the software and use of software by the Indian company is limited and there is no transfer of copyright. 6. We have heard riva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead 'capital gains'; - Transfer of 'all or any rights' expressly includes the granting of licence in respect thereof; and - Such transfer must be 'in respect of any copyright of any literary work. Accordingly, the Hon ble Apex Court has held that the provisions of the Act [section 9(1)(vi), along with Explanations 2 and 4 thereof), are not more beneficial to the assessees and hence, the same have no application. The conclusion of the Hon ble Apex Court at pages 225 and 226 reads as follow:- 168. Given the definition of royalties contained in Article 12 of the DTAAs mentioned in paragraph 41 of this judgment, it is clear that there is no obligation on the persons mentioned in section 195 of the Income Tax Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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