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2022 (2) TMI 1292 - AT - Income TaxIncome deemed to accrue or arise in India - Royalty receipt - AO held payment falls under the term “Royalty” within the meaning of clause (iii) of explanation to Section 9(1) of the Income Tax Act, 1961 within the meaning of royalty as defined under Article 13 between India-Netherland treaty and taxed the receipt of Rs.1.83 crores @ 10% - HELD THAT:- We find that this issue stands covered by the order of the Hon’ble Supreme Court decision in Engineering Analysis Centre of Excellence Pvt. Ltd. [2021 (3) TMI 138 - SUPREME COURT] amounts paid by resident Indian end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use 226 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 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. - Decided in favour of assessee. Payment received on account of Information & Communication Technology (ICT) service charges from Perfetti Van Melle India Pvt. Ltd. taxed as “Fees for Technical Services” under Article 12 of the India-Netherlands DTAA - HELD THAT:- As decided in case of SCA Hygiene Products AB [2021 (1) TMI 323 - ITAT MUMBAI] the person receiving the money as royalty, such as the actual seller of the software in this case, and the person providing service ancillary or subsidiary to the enjoyment of that right, must be the same. That's not the case here. In the present case, the payment received by the assessee has been held to be in the nature of reimbursement, which is outside the ambit of taxation. The person selling the SAP software is Be One Solution, Switzerland, whereas the person providing the services in question is the assessee. Article 12(4)(a) will not, therefore, come into play at all. In our considered view, therefore, the taxation under article 12 in the present case can come into play only when the "make available" clause is satisfied, but then the Assessing Officer's justification for the satisfaction of 'make available' clause, for the detailed reasons set out earlier in this paragraph, does not meet our judicial approval. In view of these discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee on this point as well. Accordingly, we hold that the income on account of Information Technology Services is also not taxable under article 12 - Appeal of assessee allowed.
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