TMI Blog2005 (4) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... of copy rights article and not for acquiring any copy right. This view has been arrived at after considering various decisions on the subject as well as the decision of Hon ble Supreme Court in Tata Consultancy Services case [ 2004 (11) TMI 11 - SUPREME COURT] . We accordingly hold that the payments for import of software do not amount to payment of royalty chargeable u/s 9(1)(vi) of the Act. The payments partakes the character of purchase and sale of goods. Actually, the payee has no permanent establishment in India. Hence, it can be concluded that no income is deemed to accrue or arise in India. Accordingly, the provision of section 195 is not applicable to such payment. The assessee therefore cannot be fastened with liability by treating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scussed in detail in the assessment order as to why the payments are in the nature of royalty and therefore, taxable as per article 12 of DTAA which does not contain any conditionality regarding existence of permanent establishment. Further, according to Assessing Officer the payments are also covered by royalty definition under section 9(1)( vi ) and therefore, section 195 applies is this case. The company had sold the software bought in fully packed condition as received from the overseas vendor to various customers in India without opening the package. The appellant did not deduct any tax at source at the time of payment or credit in respect of the above software on the premise that the transactions constitute purchase of software produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt facts and arguments advanced. This Tribunal in the case of Samsung Electronics Co. Ltd. v. ITO [IT Appeal Nos. 264 to 266 (Bang.) of 2002, dated 18-2-2005] has recently held that where the software imported which is a shrink wrapped software or off the shelf software, same amounts to purchase of goods and not payment of royalties. The payment is for use of copy rights article and not for acquiring any copy right. This view has been arrived at after considering various decisions on the subject as well as the decision of Hon ble Supreme Court in Tata Consultancy Services case ( supra ). We accordingly hold that the payments for import of software do not amount to payment of royalty chargeable under section 9(1)( vi ) of the Act. The paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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