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TMI Blog2024 (6) TMI 1340X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant DTA. Taxability of amount received by the assessee towards maintenance services - CIT (A) had held the same is inextricably linked to the supply of software licence and when the software licence itself is not taxable as royalty , the provisions of Article 12(4)(a) of the India-US DTAA would not apply. CIT (A) had relied on various ITAT Orders to hold that when receipts are on account of maintenance which is inextricably linked to the supply of software licence and when the supply of the software itself is not taxable as royalty , the receipts cannot be termed as fees for included services . In view of aforesaid reasoning we see no reason to interfere with the order of the CIT (A) and we uphold the same. Appeal filed by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs. 30,11,18,601/- was classified under the head service and maintenance in relation to sale of software. The assessment was completed under section 143(3) r.w.s. 144C of the Act, vide order dated 05.02.2020. In the said Assessment Order, the sum of Rs. 59,47,45,151/- received by the assessee during the subject Assessment Year was held by the AO to be royalty within the meaning of Article 12 of India-US Tax Treaty and also as per the provisions of section 9(1)(vi) of the Act. Further, receipt of a sum of Rs. 30,11,18,601/- was held directly related to receipts towards sale of software licence, etc., which were already held to be royalty . Therefore, the said amount was taxed as fees for included services in terms of Article 12 of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. The CIT(A), after examining the end-users license agreement and the distribution agreement, had categorically held that assessee has not parted with the rights in the nature of copyright under the said agreement. It was further held by the CIT (A) that assessee had only permitted the end-users to use a copy righted article and there is no sale of copy right per se in the said article. The Hon ble Apex Court, after analyzing the provisions of Income Tax and the DTAA, the relevant endusers agreement, the distribution agreement, had categorically held that end-users are only purchasing copy righted article and payment for the same cannot tantamount to royalty under the DTAA. The relevant finding of the Hon ble Supreme Court reads as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 license 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 referable 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 exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs. 30,11,18,601/- received by the assessee towards maintenance services, the CIT (A) had held the same is inextricably linked to the supply of software licence and when the software licence itself is not taxable as royalty , the provisions of Article 12(4)(a) of the India-US DTAA would not apply. The relevant finding of the CIT (A) in this regard reads as follows: The next issue for consideration is that taxability of the amount of Rs. 30,11 18.601/-received by the appellant towards maintenance services. As per para 7 of the Software Licence Agreement. reproduced below. the maintenance services relate to the fixing of bugs and technical glitches. Technical support means assistance by telephone, web and e-mail with the installation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the software. cannot be taxed under the aforesaid provisions of the treaty. The decision of the Mumbai Tribunal in the case of Reliance General insurance Co Ltd. [2018] 97 taxmann.com, 350, which in turn relied on the decision of the Delhi Tribunal in Infrasoft Ltd. vs Asst. DIT (International Taxation) 12009] 28 SOT 179 and the Delhi ITAT decision in the case of Aspect Software Inc. vs ADIT Circle 1(1) International Taxation, New Delhi, have held that the provision of maintenance services was inextricably linked to the supply of software. Therefore, when the supply of software is itself not taxable as 'royalty'. the provisions of Article 12(4)(a) of the India-U.S.A. DTAA would not apply. Further, it was also held that the payment f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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