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2015 (3) TMI 306 - AT - Income TaxUser rights of software “OPUS” - assessability of consideration received - whether royalty under Article 12 of the Tax Treaty and therefore liable to tax in India at 10%? - India-Germany DTAA - Held that:- in order to qualify as royalty payment, within the meaning of Section 9(1) (vi) and particularly clause (v) of Explanation-II thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copy right of a literary, aliistic or scientific work. Section 2 (0) of the Copyright Act makes it clear that a computer programme is to be regarded as a 'literary work'. Thus, in order to treat the consideration paid by the cellular operator as royalty, it is to be established that the cellular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the presence case, this has not been established. It is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act,1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply contract. Distinction has to be made between the acquisition of a 'copyright right" and a "copyrighted article". The Assessing Officer has clearly stated that the copyright of software vests only with the CGI Group and therefore, even from that standpoint, there can be no divergence from the assessee’s point that what has been transacted in the license agreement is only the grant of user right in the copyrighted software and not the use of copyright itself. Thus respectfully following the decision of the Coordinate Bench of the Tribunal in assessee’s own case for assessment year 2005-06 [2012 (5) TMI 179 - ITAT PUNE] which is the basis for reopening the assessment for the impugned assessment year, we hold that the license charges earned by the assessee is not liable to be treated as Royalty. - Decided in favour of assessee
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