9911796707
TMI Blog2021 (4) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9 (1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases. The amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(vi) of the I.T. Act and the assessee was obliged to deduct TDS as per provisions of Sec. 195 since payments were made to nonresident? (iii) Whether the finding of the Tribunal was proper in holding that the assessee acquired only right to use a copy right software and not copy right in a software especially when the clauses int eh agreement clearly show that it would fall within the definition of royalty? 3.The appellant has raised the following questions of law in TCA. No.443 of 2017:- (i) Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting the addition made on account of royalty income which was taxable as per provision of section 9(1)(vi) of the I.T. Act? (iii) Is not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident Indian distributors or end-users. iv) The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment by foreign, non-resident suppliers to resident Indian distributors or end users. 7. An appeal was made from the order of the ITAT to the High Court of Karnataka by the Revenue. The Division Bench of the High Court of Karnataka heard a batch of appeals and framed nine questions, of which question nos. 8 and 9 are important and are set out as follows: 8. Whether the Tribunal was correct in holding that since the assessee had purchased only a right to use the copyright i.e. the software and not the entire copyright itself, the payment cannot be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessees, have no application in the facts of these cases. 173 . Our answer to the question posed before us, is that the amounts paid by resident Indian endusers/ distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer to this question will apply to all four categories of cases enumerated by us in para ..... X X X X Extracts X X X X X X X X Extracts X X X X
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