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2019 (12) TMI 1642 - AT - Income TaxWithholding liability u/s 195 - Royalty payment as under India-Singapore DTAA - copyrighted material - CIT(A) held that the payment for software licence is royalty, is the access to “significant proprietary database” being allowed to the assessed by the software in question - HELD THAT:- We find that assessee to database, in the context of materially similar DTAA provision, has been held to be outside the ambit of "royalty". While holding so, the coordinate bench, in the case of ITO vs Cadila Healthcare Ltd. [2017 (1) TMI 554 - ITAT AHMEDABAD] as held that Departmental Representative could not demonstrate as to how there was use of copyright. In our considered view, it was simply a case of copyrighted material and therefore the impugned payments cannot be treated as royalty payments. When database access by itself does not result in taxation as royalty, such database access being coupled with software licence cannot bring the software hence consideration within the scope of royalty. Nothing, therefore, turns on the reasoning adopted by the learned CIT(A). As per the taxation of payment for licencing of software, we find that the issue is covered in favour of the assessee by a coordinate bench decision in the case of ADIT vs TII Team Telecom International Ltd. [2011 (8) TMI 497 - ITAT MUMBAI] Payment for licence fee of software is not taxable in nature. No contrary decision, which is binding in nature, has been cited before us. We uphold the plea of the assessee and hold that no tax was deductible from remittance in question. Decided in favour of assessee.
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