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2016 (7) TMI 762 - HC - Income TaxSale of pre-packaged software - ‘royalty or ‘fee for technical services’ - whether not taxable as business income? - Held that:- It is not in dispute that Article 12 (3) of the Double Taxation Avoidance Agreement (‘DTAA’) between India and the United States of America (USA) is relevant for deciding the above issue. Section 90 (3) of the Act makes it clear in the context of an agreement ('treaty') for avoidance of double taxation, that it is only when the provisions of the Act are more beneficial to the Assessee the Act will prevail over the treaty. Conversely, where the provision of the treaty is more beneficial to the Assessee, the treaty would prevail over the Act. the right to use a copyright in a programme is totally different from the right to use a programme embedded in a cassette or a CD which may be a software and the payment made for the same cannot be said to be received as consideration for the use of or right to use of any copyright to bring it within the definition of royalty as given in the DTAA. What the licensee has acquired is only a copy of the copyright article whereas the copyright remains with the owner and the Licensees have acquired a computer programme for being used in their business and no right is granted to them to utilize the copyright of a computer programme and thus the payment for the same is not in the nature of royalty. See Director of Income Tax v. Infrasoft Limited (2013 (11) TMI 1382 - DELHI HIGH COURT )
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