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TMI Blog2018 (2) TMI 2126X X X X Extracts X X X X X X X X Extracts X X X X ..... T DELHI] and Faizan Shoes (P) Ltd. [ 2014 (8) TMI 170 - MADRAS HIGH COURT] , which has been accepted by the Department and no SLP has been filed. Thus no infirmity in the order of CIT(A) for deleting the disallowance made on account of payment made to foreign parties without deduction of tax at source - Decided against revenue. Nothing was brought on record by learned DR to persuade us to deviate from the findings and conclusion recorded by CIT(A). Accordingly, we do not find any reason to interfere in the order of CIT(A) for deleting the disallowance made by the AO. Decided against revenue. - SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM For the Revenue : Shri V. Vidhyadhar For the Assessee : Shri Shekhar Gupta ORDER PER R.C.SHARMA (A.M): These are the appeals filed by the Revenue against the order of CIT(A)-6, Mumbai dated 28/10/2015 for A.Y.2012-13 in the matter of order passed u/s.143(3) of the IT Act. 2. Grievance of revenue in both the years pertains to CIT(A) s action holding that no TDS was deducted on payment made to foreign parties. 3. We have considered rival contentions and carefully gone through the orders of the authorities below and found from record that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Id.AR also support the case of the appellant. Since the facts of the present appeal are similar, respectfully following the above decisions, addition is deleted and the ground is allowed. 5. By the impugned order, CIT(A) deleted the disallowance made u/s.40(a)(ia) by observing as under:- I have carefully considered the facts of the case and the submissions of the appellant. I have also gone through the provisions of section 9(l)(vi) , relevant sections of the Copyright Act and the decisions relied on by the Id. AR. I have also gone through the Content License Agreements entered into by the appellant with M/s Columbus Travel Media Ltd. and Zagat Survey LLC. The assessee is a private limited company engaged in the business of export of software application and games from its premises located at SEEPZ, Mumbai, India. M/s Columbus Travel Media Ltd, is a company registered in U.K. and it writes travel guides and the assessee company has partnered with WTG, also known as Columbus, to display WTG travel guides to the airlines. It is submitted that there are approximately 70 cities of WTG data that is used in assessee's application namely Cityscope/Travelport. It includes information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y rights (including the granting of any license) in respect of copyright of a literary, artistic or scientific work, as held in DIT v. Ericcson A B 343 ITR 470 (Del.) and followed in CIT v. Alcatel Lucent Canada 372 ITR 476 (Del.) Examination of the Content Agreements of the appellant with Columbus Travel Media Ltd. and Zagat Survey LLC reveal that the assessee has obtained non exclusive, non transferable licenses from both parties. The assessee cannot edit, modify, use copy, transmit, display or redistribute the Works in any way except as permitted by the licensor. It cannot remove or modify any copyright or trademark notice from the Works or any copies of the Works made under the license or retain copies of the Works after termination of the license. The assessee also does not have any right in the Intellectual Property Rights (IPR). It is thus clear that the assessee has no right as envisaged u/s 14 of the Copyright Act, 1957 to duplicate the software or to issue copies of the software in public or to give copies of software on rent or even to reverse engineer, decompile or modify the software. The conditions in the agreement makes it clear that no part of the copyright is given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Trib.) 171 (Bang.), the Tribunal found that the purchase was off-the-shelf shrink wrapped software by the US company. The transaction was governed by DTAA between India and USA. It was held that the same could not be an instance of royalty. It, inter alia, relied upon the decision in Tata Consultancy Services v. State of AP 271 ITR 401(SC) for inference that it was a purchase of goods and followed the decision of the Special Bench in Motorola Inc. v. DCIT 95 ITD 269 (Del.) (SB). 6.6 The ITAT, Mumbai in cases of DDIT (IT) v. Reliance Infocom Ltd., 43 SOT 506(Mum) has dealt with the issue as to whether consideration paid to a US resident for licensing of computer software would be in nature of royalty . After considering various clauses of agreement, Indian Copyright Act and other decisions including Special Bench decision in Motorola Inc. (supra) it held that payment was for a copyrighted article and not the copyright itself. It also stated that definition of royalty under DTAA is more restrictive than that in I.T.Act. It also held that it is incorrect to hold that computer software or a media is an Intellectual Property Right. Hence, the payment was held not to be royalty . In ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the main ground has been allowed, the alternative submissions are not decided. 6.11 In the result, the ground is allowed. 6. It is clear from the order of the CIT(A) that after applying various judicial pronouncements, he reached to the conclusion that payment to M/s. Columbus Travel Media Ltd., and Zagat Survey LLC cannot be treated as royalty u/s.9(1)Ivi) of the Act. Hence, assessee was not required to deduct tax u/s.94 of the Act, accordingly, no disallowance can be made u/s.40 (a) (i) of the Act. 7. With regard to export commission paid to the foreign agents, the CIT(A) recorded a clear finding that commission has been paid for procuring export order and payment was made outside India. After relying on the CBDT Circular No.23 of 1969, 786 of 2000 and 7 of 2009, the CIT(A) held that no tax is deductible in respect of such export commission. The CIT(A) also relied on the decisions of ITAT Delhi in case of Welspring Universal, Madras High Court in case of Faizen Shoes (P) Ltd., which has been accepted by the Department and no SLP has been filed. Accordingly, we do not find any infirmity in the order of CIT(A) for deleting the disallowance made in respect of export commission ..... X X X X Extracts X X X X X X X X Extracts X X X X
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