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2024 (4) TMI 584 - AT - Income TaxRoyalty receipt - transfer of right to use a computer software - taxation @ 10% as per 115A(1)(b)(A) or @ 20% as per section 206AA - HELD THAT:- Assessee has developed a data base cloud Indix which enable the customers to structure crawled product data and a data-as-a-service business model for most consumer retail product categories. As per agreement between the assessee and M/s.Samsung R&D Institute India Bangalore Pvt. Ltd., the assessee had agreed to categories and integrates data services as shopping application of the Indian Company, whereby, the Indian Company would use Indix Data services to internally copy, store, reproduce and modify assessee’s licensed data for their shopping application. Integrating the Indix Data services into the shopping application and developing shopping application and also use a reasonable number of copies of documentation or materials provided solely in connection with the Indix Data services. From a combined understanding of the assessee’s services, as per agreement between the parties and as per provisions of Sec. 9(1)(vi) of the Act, it is clear that the services provided by the assessee to Indian company is in the nature of transfer of right to use a computer software and the consideration received is for the transfer of all or any right/s (including granting of license) to use of computer software owned by the assessee and thus, in our considered view, the services provided by the assessee to the India payee falls under the definition of royalty in terms of Sec. 9(1)(vi). Therefore, the assessee offering income as per Sec. 115A(1)(b)(A) of the Act @ 10% is in accordance with law. The Ld.CIT(A) without appreciating relevant facts and also not considering the agreement between the parties, simply directed the AO to assess sum received by the assessee @ 20% and thus, we set aside the order of the CIT(A) and direct the AO to assess royalty received by the assessee from Indian Company u/s. 115A(1)(b)(A) of the Act, and charge tax @10%. The AO is also directed to verify Form No.26AS of the assessee and give credit for the taxes - Appeal filed by the assessee is allowed.
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