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2013 (4) TMI 514 - AT - Income TaxTDS - Import of software – Royalty - Revenue came to the conclusion that the payments made by the assessee was for procurement of the software and is thus ‘royalty’ and the assessee was liable to deduct tax at source u/s 195 of the IT Act 1961. He, therefore, made disallowance u/s 40a(i) and 40a(ia) of the IT Act 1961. The assessee submitted that the assessee was not required to deduct tax at source as the assessee was only purchasing software on behalf of its client customers who are ultimately given the license to operate the software and the assessee was not the end user. Held that - The learned counsel for the assessee’s placeing reliance on the decision of the Tribunal in the case of M/s Bodhi Professional Solutions Pvt. Ltd., [2013 (4) TMI 513 - ITAT BANGALORE] is misplaced. In the case of M/s Bodhi Professional Solutions Pvt. Ltd., this Bench (both of us are signatory to the said order) while upholding the findings that payments for the purchase of Shrink wrap or off the shelf software would amount to royalty, has remanded the issue to the file of the AO with a direction to reconsider and verify the issue as to whether the payment for hardware and services would be regarded as royalty because in the case, along with purchase of software, the assessee had also imported hardware and payments were also made for services which were also considered as royalty. Further, in the said case, neither the AO nor the CIT(A) had considered the definition of ‘royalty’ in terms of the DTAA and, therefore, the Tribunal deemed it fit and proper to remand the issue for fresh consideration. However, in the case before us, the AO has already considered the definition of ‘royalty’ in DTAA as well as in the IT Act 1961 and has found that the meaning given in the DTAA as well as in the IT Act 1961 is one and the same. In view of the same, the decision of the Tribunal in the case of M/s Bodhi Professional Solutions Pvt. Ltd., [2013 (4) TMI 513 - ITAT BANGALORE] is not applicable to the facts of the case of the assessee. Respectfully following the decision of the Hon’ble Jurisdictional High Court in the case of Samsung Electronics (2011 (10) TMI 195 - KARNATAKA HIGH COURT), we dismiss the appeal of the assessee. - Decided in favor of revenue.
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