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TMI Blog2021 (8) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to royalty income. In our opinion, the argument of the ld. AR is totally misconceived. The last date in the balance sheet of 31st March is the date of preparation of balance sheet and not for quantifying the foreign exchange rate. In this case, the assessee actually received this amount and that date itself should be considered to determine the value of the amount of tax deducted at source on royalty and not the last date of balance sheet. Being so, we are not in agreement with the contention of the ld. AR. Accordingly, the order of the CIT(Appeals) is confirmed. These grounds are dismissed. - IT(IT)A No. 288/Bang/2018 - - - Dated:- 9-8-2021 - Shri N.V. Vasudevan, Vice President And Shri Chandra Poojari, Accountant Member For the Appellant : Shri Aliasgar Rampurawala, CA For the Respondent : Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against the order of CIT(Appeals)-12, Bengaluru dated 30.11.2017 for the assessment year 2013-14. 2. The assessee has raised the following grounds of appeal:- The grounds mentioned herein taken by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational Taxation, Circle 1(2), Bangalore under section 127 of the Act. The Appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 4. At the time of hearing, the additional grounds were not pressed and the same are dismissed as such. 5. Ground No.1 is general in nature and requires no adjudication. 6. Ground No.2 is with regard to taxation of income from sale of commercial off-the-shelf software. The assessee has not offered income in this regard for the following reasons:- i. The intellectual property rights of the software rests with the assessee and is never transferred to customers in India. ii. The income would be considered as Royalty only is user is permitted commercial exploitation of the copy right in the software iii. What is given to the customer is only to use the copy righted article and not the copy right. iv. The customers don't have any authority to reproduce the software in any material form. 7. The AO relying on the judgments of the Hon ble High Court of Karnat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a licence in terms of Section 30 of the Copyright Act, which transfers an interest in all or any of the rights contained in Sections 14(a) and 14(b) of the Copyright Act, but is a licence which imposes restrictions or conditions for the use of computer software. Thus, it cannot be said that any of the EULAs that we are concerned with are referred to Section 30 of the Copyright Act, inasmuch as Section 30 of the Copyright Act speaks of granting an interest in any of the rights mentioned in Sections 14(a) and 14(b) of the Copyright Act. The EULAs in all the appeals before us do not grant any such right or interest, least of all, a right or interest to reproduce the computer software. In point of fact, such reproduction is expressly interdicted, and it is also expressly stated that no vestige of copyright is at all transferred, either to the distributor or to the end-user. A simple illustration to explain the aforesaid position will suffice. If an English publisher sells 2000 copies of a particular book to an Indian distributor, who then resells the same at a profit, no copyright in the aforesaid book is transferred to the Indian distributor, either by way of licence or otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 paragraph-4 of this judgment. 170. The appeals from the impugned judgments of the High Court of Karnataka are allowed, and the aforesaid judgments are set aside. The ruling of the AAR in Citrix Systems (AAR) (supra) is set aside. The appeals from the impugned judgments of the High Court of Delhi are dismissed. 9. According to the ld. DR, the consideration received by the assessee from Indian customers in respect of licence granted for use of computer software is not at all examined by the AO by considering the relevant agreement of licence which has to be looked into in the light of judgment of the Hon ble Supreme Court in the case of Engineering Analysis Centre For Excellence Private Limited v. CIT, 432 ITR 271 (SC). 10. We have heard both the parties and perused the material on record. In this case, the ld. AR placed reliance on the above judgment of the Supreme Court. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the I.T. Rules and applied the FE rate prevailing on the date of remittance. b. Rule 115 of the I.T. Rules prescribes that the income received in foreign currency has to be converted into Indian currency by adopting the TT buying rate prevailing on the specified date. This procedure is laid down in respect of income chargeable to tax on salaries, interest, income from house property, business or profession, other sources, dividends and capital gains. c. Since the income of the assessee don't fall under any of the above categories of income, the assessee has adopted the FE rate as on the last day of the previous year. This has resulted in reducing the aforesaid income and therefore same be accepted. 15. The AO was of the view that it is undisputed that the assessee has received the sums from Indian customers in USD at the rate prevailing on the date of remittance. When the assessee has enjoyed that benefit there is no rationale in adopting year end rate. Rule 115 has visualized certain situations and for the nature of incomes dealt therein, permits adopting of rate different than the rate of actual receipt. Such a benefit is not available for the FTS. Even on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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