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2013 (10) TMI 769 - AT - Income TaxWhether the remittances made by the appellant company to the foreign parties would fall within the purview of sec. 195(1) which requires deduction of tax at source - Bandwidth is bought and sold to consumers and it acts as a conduit only – Held that:- There are no equipments installed in its premises and the contract entered with the foreign parties is only for the services. Mere use of equipment in providing bandwidth services would not amount to transfer of right to use. As a matter of fact there are no goods involved in the transaction and the payments are made only for the use of services - Royalty means the payment of any kind received as a consideration for the use of' or the right to use, any copy right of literary artistic or scientific work but, does not include the words 'use' or right to use, industrial, commercial or scientific equipment. In the appellant's case there is no "right to use equipment. Therefore, the payments made do not fall under 'royalty'. Transactions in respect of which the impugned payments were made was purely on account of services and there is no transfer of right to use the goods - Assessing Officer was not justified in treating the payment as royalty and invoking the provisions of sec. 195 – Reliance has been placed upon the judgment in the case of Hon'ble Bombay High Court in CIT Vs. Godavari Devi Saraf [Smt] [1977 (9) TMI 24 - BOMBAY High Court] – Decided against the Revenue.
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