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2017 (1) TMI 767 - AT - Income TaxTDS u/s 195 - non deduction of TDS for purchase of copyrighted software - Held that:- The software allegedly purchased by the assessee are the end user software license packages and the remittances are to companies in various countries, such as USA, UK, Germany, Japan, Singapore etc. The copies of the invoices are produced in the form of a paper book and a glance through them shows that the payments are for purchase of End User License packages. The assessee gets the right to use the product. Thus, it can be seen that what the assessee has been granted is the license to use the software to test whether the wireless equipments are working according to the desired specifications. Thus, it can be see that the software is for assisting the assessee in rendering its services of software development and testing services to its group companies. Thus, these softwares are, in a way, the tools used the assessee. By the issuance of license to use the software, it cannot be said that the assessee has been granted a right to utilize the copyright embedded in the software, but it is seen that the assessee has been granted only a right to use the software product. We agree with the assessee’s contention that the software purchased by the assessee is the copyrighted articles and cannot be construed as the license to use the copyright itself. In view of the same, we find that this issue is covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of M.Tech India (P) Ltd (2016 (1) TMI 812 - DELHI HIGH COURT ) wherein held that what was transferred was not copyright or the right to use a copyright but a limited right to use the copyrighted material and that did not give rise to any royalty income. - Decided in favour of assessee. Payments made to Verizon Business USA for providing internet and bandwidth services and also providing CPE to the assessee is not in the nature of royalty and therefore, TDS provisions are not applicable.
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