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2015 (3) TMI 683 - AT - Income TaxNon deduction of tds - payments made by the appellant towards the purchase of software to non-resident entities - whether the payments made by the appellant for the use of copyrighted software are in the nature of “royalty” as defined in Explanation 2 to section 9(1)(vi) of the Act - Held that:- Right to make a copy of the software and use it for internal business by making copy of the same and storing the same In the hard disk of the designated computer and taking back up copy would itself amount to copyright work under Section 14 (1) of the Act and licence is granted to use the software by making copies, which work, but for the licence granted would have constituted Infringement of copyright and licencee is in possession of the legal copy of the software under the licence. Therefore, the contention of the learned senior counsel appearing for the respondents that there is no transfer of any part of copyright or copyright and transaction only involves sale of copy of the copyright software cannot be accepted. As relying on Citrix Systems Asia Pacific Pty. Limited (2012 (2) TMI 258 - AUTHORITY FOR ADVANCE RULINGS ) has held that sale or licensing for use of copyrighted software is grant of right to use copyright and payment thereof is ‘royalty’ and is liable for deduction of tax at source under section 195 of the Act. CIT(A) is justified in his conclusion that the payment made for the purchase of software from the non resident for the purpose of downloading of licensed software is liable for deduction of tax under section 195 of the Act. Therefore, we are of the view that the CIT(A)’s order is correct and in accordance with law and no interference is called for. - Decided against assessee.
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