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2023 (9) TMI 1173 - HC - Income TaxIncome accrued in India - royalty receipts - payments received by the assessee for supply of software - India - USA DTAA - HELD THAT:- As decided by Engineering Analysis [2021 (3) TMI 138 - SUPREME COURT] a non-exclusive, non-transferable license, merely enabling the use of a copyrighted product, is in the nature of restrictive conditions which are ancillary to such use, and cannot be construed as a licence to enjoy all or any of the enumerated rights mentioned in section 14 of the Copyright Act, or create any interest in any such rights so as to attract section 30 of the Copyright Act. Thus decided the issue in favour of the taxpayer and laid down that the payments made by resident Indian end-users/distributors to non-resident computer software manufacture/suppliers as consideration for use/resale of shrink-wrapped software does not amount to payment for royalty for the use of copyright in the computer software considering the definition of royalty under the DTAAs. In the present case what is sold is the copyrighted software which is shrink-wrapped.To our minds, the consideration received on the sale of off-the-shelf, shrink-wrapped software to Indian distributors and resellers would not constitute royalty in terms of the India-UK Double Taxation Avoidance Agreement. Thus, in our opinion, no substantial question of law arises for our consideration.
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