TMI Blog2012 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for such use can only be royalty. Therefore, in present case, what is paid by the reseller to the applicant and what is paid for updates and maintenance are royalty as defined in Article 12 of the India-Japan DTAC and not business income covered by Article 7 of the India-Japan DTAC. Further, tax needs to be deducted by the customers while making the remittances to the applicant as consideration for the software supplied to them. - A.A.R. No.989 of 2010 - - - Dated:- 27-2-2012 - Justice Mr. P.K.Balasubramanyan, Mr. V.K. Shridhar, JJ. Present for the applicant Mr. Manoj Arora, Advocate Mr. Siddharth Shankar, Advocate Present for the Department Mr. Somanath S Ukkali, DDIT C 1(1), Bangalore RULING The applicant is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant had entered into an arrangement in India, with Apsara Innovations Pvt. Ltd. Apsara Innovations acts as a reseller of products. The reseller quotes it s own prices of products to the end users. After getting acceptance of the terms and prices by the customers, reseller places purchase orders on the applicant. Thereafter the license key is generated and delivered to the customer in India from overseas. The applications developed by the applicants are copyrighted material. The applicant authorizes the end users / customers to have benefit of the data, modules and applications contained in copyrighted products without any further right to deal with them independently. The license given to the customers is copyrighted material by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether on the facts and circumstances of the case and in law, the payments received by Acclerys KK from sale of software products to end users / customers through its independent reseller in India will not constitute royalties and fee for technical services as defined in Article 12 of India-Japan DTAA? 3. Whether any tax needs to be deducted by the customers while making the remittances to the applicant as consideration for the copyrighted software supplied to them on a non-exclusive, non-transferable basis? 4. The Revenue in its submission has taken the stand that the both the sellers and the end-users have rights subject to the terms of their respective agreement with the applicant. Resellers have been given the right to make an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. He also emphasized that in Millennium Ruling Dassault has only been distinguished. 6. We had occasion to consider the ruling in Dassault, the ruling in P.No.30 of 1999 in re.(AAR/821/2009) of this Authority, the other relevant rulings and the ruling in Millenium, in our recent ruling in Citrix Systems Asia Pacific Pty. Ltd. (AAR/822 of 2009). Therein we have held that there cannot be a user of software over which exists a copyright without a use of the copyright therein. The payment for such use can only be royalty. We have also held that what is paid by a seller on behalf of the customer and what is paid by the customer direct, both partake the character of royalty. In the light of that Ruling, it does not appear to be necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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