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2019 (5) TMI 1209 - HC - Income TaxAssessee-in-default u/s 201(1) - TDS u/s 195 - interest u/s 201(1A) - payment of 'Royalty' for use of Copyrights, Software and Logo of US Company and was covered by Article 12 of DTAA between India and USA - HELD THAT:- What was paid by the assessee as an annual fee is for the use of software which gives a right to use, copy develop and market the same by using the trademark and logo of Mls.Bluestone Software Inc. Therefore, the payment made by the assessee as annual fee would be for the purpose of using the software for copying and developing and also for using the trademark or logo for marketing the product in Indian market. Therefore, in our opinion, the payment of annual fee by the assessee to Mls.Bluestone Software - Inc. squarely falls within the definition "royalty" as provided in Article 12(3) of the Doubt Taxation Avoidance Agreement We agree with the view taken by the Karnataka High Court in [2013 (2) TMI 448 - KARNATAKA HIGH COURT] on the issue that the payments made by the Assessee Company to the US Company for user of its Software, Logo and Trade Marks were in the nature of Royalty covered under Article 12 of the Double Tax Avoidance Agreement (DTAA) between India and USA and therefore, the Assessee, Indian Company was liable to deduct tax at source and pay the same to the State. On account of its failure to do so, it was also liable to pay interest thereon u/s 201(IA) - appeal dismissed
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