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2017 (6) TMI 167 - AT - Income TaxTDS u/s 195 - payment towards software purchase - non deduction of tds - Held that:- As gone through the clauses of the License agreement of the Section 14 of the Copyright Act and observe that the assessee is not authorized to do any of acts mentioned in the Copyrights Act. The Indo US treaty also excluded the computer soft ware from the definition of Royalty in the treaty. Thus we are of the considered opinion that The Company has merely been provided the access to the copyrighted software and not right to use the copyright embedded in the software. In other words, the Company is not permitted to make copies or make alternations to the software. The assessee has purchased software for the purpose of internal use and the same cannot be held as payments towards royalty. As per the terms and conditions of the purchase agreement payment made to acquire the software license does not fit into the definition of royalty and non-taxable as per 9(1) (vi) of Income tax act. Therefore, we hold that the payment towards software purchase is not royalty within the meaning of non-taxable u/s.9(1)(vi) of Income Tax Act and not liable for deduction of tax at source, accordingly, we set-aside the orders of the lower authorities allow the appeal of the assessee.
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