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TMI Blog2022 (5) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... ted vs. Commissioner of Income Tax and Anr. [ 2021 (3) TMI 138 - SUPREME COURT] held that the payment received by EYGSL (UK) for providing access to computer software to its member firms of EY Network located in India, that is, EYGBS (India), does not amount to royalty liable to be taxed in India under the provisions of the Income Tax Act, 1961 and the India-UK DTAA.- Decided in favour of assessee. - ITA 940/2019, ITA 942/2019 and ITA 943/2019 - - - Dated:- 19-5-2022 - HON BLE MR. JUSTICE MANMOHAN AND HON BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA Appellant Through: Mr. Kunal Sharma, Advocate. Mr. Ruchir Bhatia and Ms. Mansie Jain, Advocates. Respondent Through: Mr. Nageswar Rao and Ms. Deepika Agarwal, Advocates. J U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -resident suppliers or manufacturers and then reselling the same to resident Indian endusers. iii) The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non-resident seller, resells the same to 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. xxxx xxxx xxxx 97. The AAR then reasoned that the fact that a licence had been granted would be sufficient to conclude that there was a transfer of copyright, and that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that when computer software is licensed for use under an EULA, what is also licensed is the right to use the copyright embedded therein, is wholly incorrect. The licence for the use of a product under an EULA cannot be construed as the licence spoken of in section 30 of the Copyright Act, as such EULA only imposes restrictive conditions upon the end-user and does not part with any interest relatable to any rights mentioned in sections 14(a) and 14(b) of the Copyright Act. xxxx xxxx xxxx 101. Also, any ruling on the more expansive language contained in the explanations to section 9(1)(vi) of the Income Tax Act would have to be ignored if it is wider and less beneficial to the assessee than the definition contained in the DTAA, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i are dismissed. 5. Further, this Court on similar facts has allowed writ petitions filed by the similarly placed assessee in EY Global Services Limited vs. Assistant Commissioner of Income Tax Anr., W.P.(C) 11957/2016 and EYGBS (India) Private Limited vs. Joint Commissioner of Income Tax Ors., W.P.(C) 12003/2016. The relevant portion of the said judgment is reproduced hereinbelow:- 13. A reading of the above judgment would clearly show that for the payment received by EYGSL (UK) from EYGBS (India) to be taxed as royalty , it is essential to show a transfer of copyright in the software to do any of the acts mentioned in Section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the licencee, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confines itself only to the four categories mentioned in paragraph 4, also cannot be accepted. Though the Supreme Court was on facts considering the four categories of cases that arose in the appeals before it, it has laid down the law for general application. The law, as laid down by the Supreme Court, when applied to facts of the present case, squarely covers the same in favour of the petitioners. 17. The submission made by the learned counsel for the revenue relying upon the amendment to Section 9(1)(vi) of the Income Tax Act, 1961 has also been specifically considered and rejected by the Supreme Court. 18. In view of the above, the Impugned Rulings dated 10.08.2016 passed by the learned AAR are set aside and it is held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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