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TMI Blog2022 (2) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... ements are entered into solely for the sale of software products and not in any way entail transfer of patent, copy right or any other intellectual property right. The quarrel is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon ble Supreme Court in a land mark judgment in the case of Engineering Analysis Center of Excellence Pvt Ltd.[ 2021 (3) TMI 138 - SUPREME COURT] . Thus we are of the considered view that no right in copy right is being transferred and accordingly, consideration received by the assessee cannot be brought to tax as per India USA DTAA. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... le in India as the same does not constitute royalty/fees for technical services [FTS] under India - USA DTAA. 7. Return was selected for scrutiny assessment and accordingly, statutory notices were issued and served upon the assessee. The Assessing Officer was of the firm belief that income from sale of software licensing to Indian distributions/resellers is taxable as 'Royalty' under Article 12 of the India - USA DTAA and so also the income from ancillary services. 8. Objections were raised before the DRP and the DRP, vide order dated 28.06.2017 upheld the additions proposed by the Assessing Officer. Accordingly, final assessment order was framed. 9. Article 12 of the India - USA DTAA deals with "Taxability of Royalty Payment", the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces ("MTSS") to customers within the specified territory. Reseller/ Distributor cannot make copies of the products for resale and cannot alter the product package that it receives from the assessee in any way. All the rights, including all intellectual property rights in the products, updates and other localizations or translations are owned by the assessee and no ownership rights have been transferred to Reseller/Distributor. 11. It is further provided that the Reseller/ Distributor cannot make any representation or warranties to resellers or customers on assessee's behalf and trade with products that are not made by the assessee. It is also provided that the Reseller/ Distributor cannot reproduce the software products or modify and creat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yright. The provisions contained in the Income-tax Act (section 9(l)(vi), along with Explanations 2 and 4 thereof), which deal with royalty, not being beneficial to the assessees, have no application in the facts of these cases. "Our answer to the question posed before us, is that the amounts paid by resident Indian end-users/distributors to nonresident computer s. manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the pay of royalty for the use of copyright in the computer software, and that same does not give rise to any income taxable in India, as a result of the persons referred to in section 195 of the Income-tax Act were not liable to deduct any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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