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2021 (3) TMI 687 - AT - Income TaxTDS u/s 195 - Addition u/s 40(a)(ia) - disallowance of software expenses paid to non-residents - HELD THAT:- It is clear from the order of the Assessing Officer passed u/s 201(1A) of the I.T.Act and the order of the CIT(A) confirming the same that assessee had only purchased software, which is copyrighted article and there is no transfer of copyright, and therefore, in such cases, the same cannot be treated as “royalty” under the respective tax treaty. The Hon’ble Apex Court in the case of Engineering Analysis Centre of Excellence Private Limited [2021 (3) TMI 138 - SUPREME COURT] has noted that the end user can only use the computer programme by installing it in the computer hardware and cannot reproduce the same for sale or transfer and the licence granted vide the End-User License Agreements is not a license in terms of section 30 of the Indian Copyright Act, 1957 (CA) but is a licence which imposes restrictions or conditions for the use of the computer software. Hon’ble Apex Court has held that the provisions of the Act [section 9(1)(vi), along with Explanations 2 and 4 thereof), are not more beneficial to the assessee and hence, the same have no application. Thus we hold that amounts paid by the assessee to the non-resident computer software manufacturers / suppliers as consideration for the resale / use of computer software, is not payment of royalty for use of copyright in the computer software. Hence, the consideration paid to non-resident software manufactures / suppliers does not give rise to income taxable in India and was not liable for deduction of tax at source u/s 195 of the I.T.Act. - Decided in favour of assessee.
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