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TMI Blog2024 (7) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... -resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give 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. Decided against revenue. - G. S. KULKARNI SOMASEKHAR SUNDARESAN, JJ. For the Appellant : Mr. Suresh Kumar. For the Respondent : Mr. Madhur Agarwal, Mr. Ashwin Dave, Mr. Amit Mathur, Mr. Ketan Dave and Mr. P. C. Tripathi i/b. A. S. Dayal Associates. P.C. 1. We have heard learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue assails an order dated 14th July, 2017 passed by Income Tax Appellate Tribunal ( Tribunal ), whereby a batch of appeals filed by the Revenue against the orders passed by the Commissioner of Income-Tax (Appeals) (for short CIT(A)) stand dismissed. The primary issue which had arisen for consideration of the Tribunal was as to whether the remittance made by the assessee to foreign parties on account of purchase of certain computer software, required for the business of the assessee, would be liable to tax in India as royalty under the provisions of Section 9 (1) (vi) of the Income Tax Act, 1961 ( the Act ) or would it be a business income of the recipient companies. 4. In its application as filed under Section 195 (2) of the Act the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Mum/ 2010 had held that in such cases similar remittances made to the residents of Germany and France, were held to be not liable for deduction of tax at source. The Tribunal, following the decision of its co-ordinate Bench, in assessee s own case, dismissed the appeal filed by the Revenue by the impugned order. 8. At the outset, Learned Counsel for the parties would fairly state that the question of law as raised in the present appeals, is no more res integra in view of the authoritative pronouncement of the Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income Tax [2021] 125 taxmann.com 42 (SC). In the said case the Assessing Officer, applying Article 12(3) of the DTAA entered between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the view taken by the High Court of Karnataka. The Supreme Court examined the issues as arising from the decisions of both the High Courts in the case of Engineering Analysis Centre of Excellence (P.) Ltd (supra). The Supreme Court in its decision rendered in the said case upheld the view taken by the Delhi High Court in interpreting such transactions in the context of Section 9 (1) (vi) of the Act. The Supreme Court held that considering the provisions of DTAA, there was no obligation on the persons mentioned in Section 195 (1) of the Act to deduct tax at source as the distribution agreements, in the facts of the case did not create any interest or right in such distributors/ end users, which amounted to the use or right to use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. (emphasis supplied) 11. It is not in dispute that transactions in the present case are similar to what had fell for consideration of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd (supra). Also there is no dispute that there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or obtaining computer software are liable to be taxed in India as royalties under the provisions of Section 9 (1) (vi) of the Income Tax Act, 1961, would stand answered in view of the decision of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income Tax [2021] 125 taxmann.com 42 (SC). 3. .. 4. In the light of the above discussion, all these appeals do not give rise to the question of law as raised by the Revenue. 5. The appeals are accordingly dismissed. No costs. 6. As the question of law would stand covered by such orders, we dismiss these appeals filed by the revenue in terms of our orders passed on Income Tax Appeal No. 1655 of 2018 and on the other batch of appeals. 7. Ordered accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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