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TMI Blog2021 (7) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... hwar Rao, Advocate. For the Respondent : Ms. Neera Malhotra,CIT. DR. ORDER PER BEENA PILLAI, JUDICIAL MEMBER: Present appeals have been filed by assessee against the final assessment order is dated 27/10/2017 and 10/07/2018 passed by Ld.DCIT (International Taxation) Circle-1 (1), Bangalore. It has been submitted that the only issue raised by assessee in both these appeals relate to treating the receipts of assessee s on account of sale of software to the Indian customers, as royalty. 2. It was submitted that during the relevant years under consideration assessee was also engaged in sale of tangible hardware is like routers, switches, optical network, storage area networking and home networking hardware. Assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id down by the jurisdictional High Court, and the other decisions that was relied on by the Ld.AO. Hon ble Supreme Court in paragraph 27,47,52,168 169 observed as under: 24. The Apex Court in the aforesaid case has held in paragraphs 27, 47, 52, 168 169 as under: 27. The machinery provision contained in Section 195 of the Income Tax Act is inextricably linked with the charging provision contained in Section 9 read with Section 4 o the Income Tax Act, as a result of which, a person resident in India, responsible for paying a sum of money, chargeable under the provisions of [the] Act , to a non- resident, shall at the time of credit of such amount to the account of the payee in any mode, deduct tax at source at the rate in force w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Copyright Act, inasmuch as Section 30 of the Copyright Act speaks of granting ar1 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, !east 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 41 of this Judgment, it is clear that there is no obligation on the persons mentioned in S.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 o the use of or right to use any copyright. The provisions contained in the Income Tax Act (S. 9(1) (vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the asessees, have no application in the facts of these cases. 169. Our answer to the question posed before us, is that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers, as c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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