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2010 (8) TMI 11 - AAR - Income TaxSupply of software -supply of software license - installation and commissioning of software - upgradation, maintenance and support of the software - fee for technical services (FTS) - Royalty u/s 9(1)(vi) - Held that: - . In the definition of royalty under the Act, the phrase "including the granting of a licence" is found. That does not mean that even a non-exclusive licence permitting user for in-house purpose would be covered by that expression. - Apparently, grant of 'licence' has been referred to in the definition to dispel the possible controversy a licence - whatever be its nature, can be characterized as transfer. - as the law now stands, the owner need not necessarily grant licence for mere reproduction or adaptation of work for one's own use. Even without such licence, the buyer of product cannot be said to have infringed the owner's copyright. When the infringement is ruled out, it would be difficult to reach the conclusion that the buyer /licensee of product has acquired a copyright therein." - whether copyright has been transferred or not is the line of inquiry which should precede the application of clause (v). It is, however, not necessary to consider the implications of Section 115A in detail, having regard to the clear provision in Tax Treaty. It is well settled that an assessee can seek the benefit of Tax Treaty (DTAA) irrespective of the provisions in domestic law. - It may be noted that in AAI case (2010 -TMI - 75810 - AUTHORITY FOR ADVANCE RULINGS), customization of software was involved and moreover the software had to be modified and adapted as per the requirements at the site. None of these features are present in the instant case - the amount payable under SLTC contract to the applicant does not amount to 'royalty' within the meaning of Article 12.4 of DTAA (Tax Treaty) between India and The Netherlands, nor can it be treated as 'fees for technical services'
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