TMI Blog2023 (6) TMI 926X X X X Extracts X X X X X X X X Extracts X X X X ..... III [concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non- resident seller, resells the same to resident Indian distributors or end-users] The amounts paid by resident Indian end-users/distributors to non-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 were not liable to deduct any TDS under section 195 of the Income-tax Act. Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40(a)(1) of the Act which is arbitrary, unjustified and bad in late. 4. The appellant craves the right to add, amend or modify any ground of appeal. 3. Briefly stated, the said quarrel relates to the treatment of products, namely, turnitin and Ithenticate which are software solutions and not journals as mentioned in Form No. 15CA filed and claimed by the assessee. 4. The Assessing Officer was of the opinion that as per the provisions of section 9(1)(vi) of the Income-tax Act, 1961 [the Act, for short], consideration for software constitutes Royalty under the Act and such royalty is taxable in India and hence the company was required to deduct TDS on payments made to Innovative Education Services PTE Ltd, Singapore. Accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 40 (a)(i) of the Act, if the assessee has paid sum chargeable under the Act to Non-resident (M's Innovative Education Services PTE Ltd, Singapore), on which tax is deductible at source under Chapter XVII-B of the Act and such tax has not been deducted, then such sums would not allowable as deduction while computing the income of the assessee Accordingly, expenditure of Rs 10,51,32,369/- which is income in the hands of M/s Innovative Education Services PTE Ltd, Singapore and which is subject to TDS under chapter XVII-B of IT Act, 1961, is being disallowed as per Section 40(a)(i) of the Act because due TDS has not been made by the assessee on such payments. In fact the assessee had tried to mislead by mentioning these payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. (iii) The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non- resident seller, resells the same to resident Indian distributors or end-users. (iv) The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment by foreign, non-resident suppliers to resident Indian distributors or end-users. 11. The present appellant comes under Category III. 12. The DTAA considered by the Hon'ble Supreme Court at Para 40 as the DTAA between India and Republic of Singapore at Item No. 14. Category III which belongs to the assessee has been considered by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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