TMI Blog2015 (9) TMI 710X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee cannot be held responsible for violation of TDS provisions on the basis of a subsequent amendment. Accordingly, we are of the view that the Assessing Officer was not justified in disallowing the licence fee/service charges paid for use of softwares by invoking the provisions of section 40(a)(ia) of the Act - Decided in favour of Assessee. - ITA No. 535/Coch/2014 - - - Dated:- 8-5-2015 - S/SHRI V DURGA RAO B. R. BASKARAN, JJ. For the Appellant : Shri A S Narayanamoorthy For the Respondent : Shri K K John, Sr DR ORDER B. R. Baskaran (Accountant Member).- The appeal filed by the assessee is directed against the order dated September 30, 2014 passed by the learned Commissioner of Income-tax (Appeals)-II, K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce M/s. Mercedes-Benz India P. Ltd. has not transferred the rights over the softwares and further the payments were made only as service charges, the same will not fall under the definition of royalty as given in Explanation 2 under section 9(1)(vi) of the Act. In this regard the learned authorised representative invited our attention to Explanation 3 given under section 9(1)(vi) wherein the expression computer software is defined. The learned authorised representative also invited our attention to the agreement entered into between the assessee and M/s. Mercedes-Benz India P. Ltd. to substantiate his contentions that the assessee was only given licence to use the software and not the ownership. He further submitted that the assessee is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is liable for deduction of tax at source under section 194J of the Act. Further the agreement between the parties itself clearly states that the applicable tax should be deducted at source. Accordingly, he submitted that the learned Commissioner of Income-tax (Appeals) was justified in confirming the disallowance made under section 40(a)(ia) of the Act. 5. We have heard the rival contentions and carefully perused the record. Admittedly, the impugned amount paid by the assessee was for use of two types of software which has been supplied by M/s. Mercedes-Benz India P. Ltd. The terms royalty is defined under Explanation 2 given under section 9(1)(vi) of the Act which, inter-alia, includes consideration paid for transfer of all o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is liable to deduct tax at source. 6. The decision in the case of Infrasoft Ltd. [2013] 96 DTR 113 (Delhi) has been rendered by the hon'ble Delhi High Court in the context of Double Taxation Avoidance Agreement provisions and in the context of section 9(1)(vi) also, it was held that the payment made for right to use a copyrighted article was not royalty . However, the Finance Act, 2012 has brought in amendments to section 9(1)(vi) of the Act with retrospective effect from June 1, 1976. 7. We have noticed that Explanation 4 referred to above was inserted by the Finance Act, 2012 with retrospective effect from June 1, 1976. In the following cases, the co-ordinate Benches of the Tribunal has taken the view that the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Delhi High Court has taken the view in the case of Asia Satellite Telecommunications Co. Ltd. v. DIT [2011] 332 ITR 340 (Del) that the transmission of television signals through satellite/transponders would not fall in the category of royalty as defined under Explanation 2 to section 9(1)(vi) of the Act. Under these set of facts, the co-ordinate bench noticed that the various benches of the Tribunal (referred to above) have held that the assessee cannot be held to be liable to deduct tax at source on the basis of subsequent amendment brought in with retrospective effect. Further the Tribunal held as under : 7. In the instant case, the view entertained by the assessee that the pay channel charges cannot be considered as royalty, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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