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2012 (12) TMI 776 - AT - Income TaxSale of Software – Royalty – failure to deduct tax u/s. 195 - assessee in default u/s. 201(1) - Held that:- Analysis of the DTAA, Income Tax Act, Copyright Act that the payment would constitute 'royalty' within the meaning of Article 12(3) of the DTAA and even as per the provisions of 9(1)(vi) as the definition of 'royalty' under clause 9(1)(vi) is broader than the definition of 'royalty' under the DTAA as the right that is transferred in the present case is the transfer of copyright including the right to make copy of software for internal business, and payment made in that regard would constitute 'royalty' for imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill as per clause (iv) of Explanation 2 to Section 9(1)(vi). In view of the provisions of Section 90 agreements with foreign countries DTAA would override the provisions of the Act. Once it is held that payment made by the respondents to the non-resident Companies would amount to 'royalty' within the meaning of Article 12 of the DTAA with the respective country, it is clear that the payment made by the respondents to the non-resident supplier would amount to royalty, thus it is clear that there is obligation on the part of the respondents to deduct tax at source under Section 195 - the facts of the present case are similar to the facts involved in M/s. Samsung Electronics Co. Ltd. v. DCIT (International Taxation) [2012 (8) TMI 112 - ITAT BANGALORE] therefore respectfully following the said order appeals of the assessee dismissed - against assessee.
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