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2022 (9) TMI 1097 - AT - Income TaxTDS u/s 195 - remittances made by the assessee to GEISA towards use of Pro-E software or Global Web - non deduction of tds - CIT(A) concluded that this software not only furnishes the instructions but also actually designs the machines, and, therefore, any payment made to derive such benefit answers the description of royalty - HELD THAT:- Nothing could be more clear that the contents of the agreement referred to above to show that PTC is the sole owner of the Pro-E software and GEISA/GEIE only has limited right to use the software subject to the conditions stipulated in the agreement. There is no sale of copyright of software, but the sale is only in respect of the rights to use the software and not the right to the code in itself. When once the transaction is very clear that no copyright of the software is sold but only the rights to use the software were sold without impacting any rights to the source code, merely because the assessee puts it to a particular use, such a usage will not relate back to change the nature of transaction from the sale of product to the sale of copyright. Facts of the case involved in this matter are squarely covered by the decision in the case of Engineering Analysis Centre Of Excellence (P) Ltd [2021 (3) TMI 138 - SUPREME COURT]. We, therefore, while respectfully following the same hold the issue in favour of the assessee and inasmuch as such payments do not result in any income taxable in India, the person referred to in section 95 of the Act is not liable to deduct any tax under section 195 of the Act. We, therefore, hold that the remittances made by the assessee to GEISA towards use of Pro-E software or Global Web are not royalty income chargeable to tax under the Act as well as under the treaty and consequently the assessee cannot be treated as an ‘assessee-in-default’ under section 201 of the Act for non-deduction of taxes under section 195 of the Act. Grounds of appeal are accordingly allowed.
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