9911796707
TMI Blog2016 (3) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... 08). Pursuant to the acquisition, the name of the company has been changed from 'Unilever India Shared Services Limited' to 'Capgemini Business Services (India) Limited' with effect from 14 May 2007. During A.Y 2007-08, the assessee had primarily provided business process management services in the areas of finance accounts, operational control assessment, administration of foreign exchange, one off consultancy projects and competitors' intellectual study to Unilever group companies. The services rendered by the assessee have been in the nature of 'Information Technology Enabled Services' (ITES) / 'Back Office Support Services'. Considering that the Unilever Group had an indirect equity stake in excess of 26% in the assessee for the period from 1 April 2006 to 11 October 2006, the transactions between the assessee and Unilever group entities came under the purview of 'Indian Transfer Pricing (TP) Regulations'. The assessee had selected the Transactional Net Margin Method (TNMM) as the most appropriate method to determine the arm's length price for the provision of ITES to group entities and had selected comparable companies rendering ITES for determination of arm's length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nilever group entities for the period: - prior to the acquisition of Appellant's shareholding by Capgemini Group; and - post such acquisition. c. disregarding the Appellant's contemporaneous TP documentation and conducting his own comparability analysis which is not in accordance with contemporaneous documentation requirement under Indian TP regulations, having failed to appreciate that in the case under consideration, none of the conditions set out in Section 920(3) of the Act are satisfied; d. selecting companies that are not comparable to the Appellant vis-a-vis its AEs, for the determination of the arm's length price; e. using current year's financial data (i.e. Financial Year 2006-07) for the comparable companies for benchmarking the Appellant's international transactions pertaining to business process management services rendered to AEs; f. not granting a working capital adjustment to the Appellant to account for the differences in the working capital cycle of the comparables vis-à-vis the Appellant; and g. denying the (+/-) 5% range benefit available under proviso to Section 92C(2) of the Act. The Appellant prays that the book value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermination of ALP of international transactions whereby the operating margin of the assessee was compared vis-à-vis its transactions with Unilever group entities during the period prior to 11.10.06 with its operating margin from transactions with Unilever entities in post 11.10.06 period. This internal comparison was done by the TPO as the functions' profile of the assessee in pre and post scenarios had remained the same. The TPO also carried out external comparability analysis. According to the analysis report given by the assessee the ratio of OP/OC (Operating profit/operating cost) was given at 19.91% whereas as per the comparables taken by the TPO, the OP/OC ratio came to 28.23%. The short contention of the Ld. A.R. before us has been that the assessee otherwise will be satisfied if the comparables introduced by the AO are taken for analysis except the two i.e. Mold-Tek Technologies Ltd. (SCG) mentioned at Sl. No.20 and in case of Vishal International Technology Ltd. mentioned at Sl. No.24 of the comparables taken by the TPO in his order. He has submitted that if the above two comparables are excluded, the arm's length price so arrived after taking the other compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Tek Technologies Ltd. available on their Website is furnished in the form of printout at page 158 to 165 of the paper book and a perusal of the same shows that i t i s a leading provider of engineer ing and design services wi th specialization in civil, structural and mechanical engineering services. It is stated to have a strong team of skilled resources with world class resources and skill sets. It is also stated to have consistently helped the clients to cut down design and development costs of civil, structural, mechanical and plant design by 30-40% and delivered technologically superior outputs to match and exceed expectations. It is claimed to have in-house software development team, quality control training and trouble shooting facilities. M/s Mold-Tek is also rendering web design and development services with experience in turning them into an effective graphic design representation and creating dynamic and graphic rich web applications from IT specs, design prints etc. Keeping in view this information available in the annual report of Mold-Tek as well on its website, we are of the view that the said company is mainly involved in providing high-end services to its clients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees' salary cost as was in the case of the assessee and therefore the business model of the Vishal International Technology Ltd. was different. The Ld. A.R. has relied in this respect to the decision of the Hon'ble Delhi High Court in the case of "Rampgreen Solutions Pvt. Ltd. vs. CIT" in ITA No.102 of 2015 decided vide order dated 10.08.15. The business model of the Vishal International Technology Ltd. being different on the ground that it was indulged in out sourcing of its operations has not only been considered by the special bench of the Tribunal but also by the Hon'ble Delhi High Court in the case of "Rampgreen Solutions Pvt. Ltd." (supra). 5. Considering the above facts on the file and the submissions made by the Ld. Representatives of the parties, in our view, the Mold-Tek Technologies Ltd. and Vishal International Technology Ltd. cannot be taken as comparables. 6. We, accordingly, direct the AO to exclude Vishal International Technology Ltd. and Mold-Tek Technologies Ltd. while determining the arm's length price of the assessee relating to the transactions with its AEs. This issue is decided accordingly. Ground No.2 7. Ground No.2 is relating to club entrance fees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which have been dealt by different sections. Section 531 of the Internal Revenue Code deals with imposition of 'accumulated earning tax,' whereas, section 884 deals with 'branch profit tax'. The Ld. A.R. has further invited our attention to page 1167 of the paper book which is the "Official Technical Explanation of the Convention and Protocol between the US and India". This technical explanation is an official guide to the convention/DTAA. The scope of Article II relating to "Taxes Covered" has been explained in the said guide/technical explanation. It has been specifically provided that the taxes covered in the case of US, as indicated in paragraph 1(a) of Article II, are the Federal income taxes imposed by the Code, together with the excise tax imposed on insurance premiums paid to foreign insurers (Code section 4371). The Article specifies that the Convention does not apply to the accumulated earning tax (Code section 531), the personal holding company tax (Code section 541) or the social security taxes (Code sections 1401, 3101 and 3111). State and local taxes in the United States are also not covered by the Convention. A perusal of the Article II of the 'DTAA' read with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct. However, the DRP further observed that the software was not sold but a license was given to the assessee to use it in a particular manner in consideration of the license fee. Even after obtaining a copy of the software, the assessee required permission to use the software by way of activation on a certified machine. Therefore, payment made by the end user was towards license to use copyright in software and not for sale of software. The DRP, therefore, held that the license to use the software would fall under the purview of royalty. Being aggrieved by the above finding of the DRP, the assessee has come in appeal before us. 11. We have heard the rival contentions and have also gone through the records. The Ld. A.R. of the assessee has contended that 'MFG Pro Software' purchased by the assessee is an accounting software and is available off the shelf. QAD Singapore Pvt. Ltd. supplied the said software to the assessee company outside India on a computer disk with free on board basis and further that the said entity does not have a permanent establishment in India. He, therefore, has contended that the said disk purchased by the assessee would fall in the definition of 'goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing the Ld. Representatives of the parties, the first and foremost question for adjudication before us is as to whether the definition of 'Royalty' as provided under the Income Tax Act is to be taken or that which has been provided in the DTAA with Singapore. 14. The Ld. D.R. at this stage relying upon the decision of the Hon'ble Madras High Court in the case of "Vrizon Communication Singapore vs. ITO" 361 ITR 0575 (Mad.) has contended that in 'Para 100' of the said decision, the Hon'ble Madras High Court has observed that the definition of royalty under DTAA and the Indian Income Tax are in paramateria. He has further stated that the said decision of the Hon'ble Madras High Court in the case of "Vrizon Communication Singapore" (supra) has been followed by the Mumbai Bench of the Tribunal in "Viacom 18 Media Pvt. Ltd. vs. ADIT (International Taxation) reported in (2014) 44 taxman.com 1 (Mumbai). He, therefore, has vehemently contended that the definition of royalty as provided under the various clauses and explanations of section 9 of the Income Tax Act should be adopted. He, in this respect, has stated that the Explanation 4 to section 9(1) (vi), introduced vide Amendment Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther that nothing contained in this clause shall apply in relation to so much of the income by way of royalty as consists of lump sum payment made by a person, who is a resident, for the transfer of all or any rights (including the granting of a licence) in respect of computer software supplied by a non-resident manufacturer along with a computer or computer-based equipment under any scheme approved under the Policy on Computer Software Export, Software Development and Training, 1986 of the Government of India. Explanation 1.-For the purposes of the first proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date; so, however, that, where the recipient of the income by way of royalty is a foreign company, the agreement shall not be deemed to have been made before that date unless, before the expiry of the time allowed under subsection (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for the assessment year commencing on the 1st day of April, 1977, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred. Explanation 5.-For the removal of doubts, it is hereby clarified that the royalty includes and has always included consideration in respect of any right, property or information, whether or not- (a) the possession or control of such right, property or information is with the payer; (b) such right, property or information is used directly by the payer; (c) the location of such right, property or information is in India. Explanation 6.-For the removal of doubts, it is hereby clarified that the expression "process" includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret;" 16. The definition of "royalty" as provided in the DTAA of India with Singapore, for the sake of convenience and comparison, is also reproduced as under: " Article 12(3) The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), (b) & (c) of section 9(1) (vi), have been restricted only to the consideration paid for the items as mentioned (i) to (vi) of Explanation 2. However, 'Explanation 4' inserted by Finance Act, 2012, provides that the transfer of rights in respect of any right, property or information includes and has always included the right for use or right to use a computer software including granting of a license. We find that so far as Income Tax Act is concerned, 'computer software' has neither been included nor is deemed to be included within the scope or definition of 'literary work' in any definition or explanation provided under the Act. The term 'literary work' has been separately mentioned under clause (v) to Explanation 2 to include the consideration paid for the same within the scope of royalty, whereas, the term 'computer software' has been specifically included, not under the clause (v) to Explanation 2, but, under the main clause (vi) to section 9(1). Hence, the computer software has been recognized as a separate item not only in 2nd proviso to clause (vi) but in Explanation 4 also and has been included in the definition and within the scope of the words 'right', 'property' or 'i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience are reproduced as under: "The decision of the Delhi Bench of the ITAT has dealt with this aspect in its judgment in Gracemac Co. Vs. ADIT 134 TTJ (Delhi) 257 pointing out that even software bought off the shelf, does not constitute a "copyrighted article" as sought to be made out by the Special Bench of the ITAT in the present case. However, the above argument misses the vital point namely the assessee has opted to be governed by the treaty and the language of the said treaty differs from the amended Section 9 of the Act. It is categorically held in CIT Vs. Siemens Aktiongesellschaft, 310 ITR 320 (Bom) that the amendments cannot be read into the treaty. On the wording of the treaty, we have already held in Ericsson (supra) that a copyrighted article does not fall within the purview of Royalty." 21. Further, in a recent judgment in the case of "DIT Vs New Skies Satellite BV," (ITA 473/2012 vide order dated 08.02.2016), the Hon'ble Delhi High Court has observed that no amendment to the Act, whether retrospective or prospective can be read in a manner so as to extend in operation to the terms of an international treaty. In other words, a clarificatory or declaratory amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Ltd. & Others" (supra), "Synopsis International Old Ltd." (supra) and of the Tribunal in the case of "Reliance Infocom Ltd." (supra), the different Benches of the High Courts and the Tribunal have been unanimous to hold that as per the law laid down by the Hon'ble Supreme Court in the case of "Union of India vs. Azadi Bachao Andolan" (2003) 263 ITR 607, that where a specific provision is made in the DTAA, that provision will prevail over the general provisions contained in the Income Tax Act if, the same is more beneficial to the assessee as provided under section 90 of the Income tax Act. All the Hon'ble High Courts (supra) have also been unanimous to further hold that the definition of 'royalty' is restrictive in DTAA whereas the definition of royalty under the Income Tax Act is broader in its content. Therefore, the definition of royalty in DTAA is more beneficial to the assessee and hence the case of the assessee is to be examined in the light of the definition of royalty as provided in the DTAA and that the provisions of the DTAA will, in such an event, override the provisions of the Income Tax Act. Since, the Ld. AR of the assessee has stated that the definition of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definition of royalty in the treaty would include 'software' or not? We note that the term 'Literary work' covers work, which is expressed in print or writing irrespective of the question of its literary merit or quality. It must be expressed in some material form, i.e. writing or print or in some form of notation or symbols, which means in a form capable of either visually or audibly recreating the representation of the original work. As per the provisions of section 2(o) of the Indian Copyright Act, 1957 the term 'literary work' includes computer programs, tables and compilations including computer data base. Therefore, the computer software has been recognized as a copyright work in India, if they are original intellectual creations. 25. "Computer programme" as defined in the Copyright Act, means a set of instructions expressed in words, codes, schemes or in any other form, including a machine-readable medium capable of causing a computer to perform a particular task or to achieve a particular result. The words 'schemes or in any other form' would seem to indicate that the source code and object code of a computer programme are entitled to copyright protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk wrap agreements do not follow the normal practice of an agreement between the parties, where the terms of an agreement are negotiated between the parties. The other popular way of transfer/sale or licensing the software is through 'Click Wrap' agreements. In these licenses, software developers do not receive a signed agreement from the user instead of he relies on the customers manifestation of ascent via the internet. The user generally is asked to review the terms of the agreement and indicate the ascent by clicking on the button/icon at the end of the license. The button or the icon provided in these agreements is generally 'I agree' and 'I decline'. The 'I agree' or 'Ok' button/icon constitutes agreement to the 'click wrapped' license agreement. Some times when 'shrink wrapped' software is downloaded on the computer, it may again ask to agree to certain terms as in case of Click wrap software. The purchaser or the end user once has clicked the 'Ok' button he has no right to decline the terms of agreement by returning the software. There is no bargaining involved in these licenses whose terms are set by the licensor. 28. Software contracts, like many other transactions, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arnataka High Court in the case of "CIT vs. Synopsis International Old Ltd." (2013) 212 taxman 454 wherein the Hon'ble Karnataka High Court has observed that even in case of end-user software license agreement granted for a non exclusive, non transferable, without right of sub license of use of the licensed software and design techniques, that does not take away the software out of the definition of the copyright. Even if it is not a transfer of exclusive right in the copyright, the right to use the confidential information embedded in the software in terms of the license makes it abundantly clear that there is transfer of certain rights which the owner of a copyright possesses in the said computer software/programme in respect of the copyright. The Hon'ble Karnataka High Court while analyzing the provisions of the DTAA held that the consideration paid 'for the use' or 'right to use' the said confidential information in the form of computer programme software itself constitutes royalty and attracts tax. It has been further held that it is not necessary that there should be a transfer of exclusive right in the copyright. That the consideration paid is for rights in respect of copyri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that one has also copyright in it. 31. Now, after going through the divergent views of the different Benches of the High Courts on this issue, the question that arises before us as to whether the sale of shrink wrapped software can be said to be sale of 'Good' or grant of 'License to use'. Section 2 (7) of the Sale of Goods Act, 1930 defines 'good' as 'every kind of movable property other than actionable claims and money, and includes stock and shares, growing crops, grass....' This definition of 'goods' thus includes all types of movable properties, whether tangible or intangible. The Hon'ble Supreme Court in the case of "Tata Consultancy Services vs State of Andhra Pradesh" 271 ITR 401 (2004), has considered computer software as 'goods' and stated that notwithstanding the fact that computer software is intellectual property, whether it is conveyed in diskettes, floppy, magnetic tapes or CD ROMs, whether canned (shrink-wrapped) or uncanned (customized), whether it comes as part of the computer or independently, whether it is branded or unbranded, tangible or intangible. The Hon'ble Supreme Court held that, 'it would become goods provided it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result; As per Explanation 3 to section 9(1)(vi), the computer software has been defined as follows: " 'computer software' means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme or any customized electronic data." Hence, like any other literary work, computer programme can not be read or utilized without downloading on a media like hard disk, CD, floppy or any other such device. As an author of a literary work may be having some ideas in his mind in an intangible form but the copyright in those ideas is created when they are expressed in a particular manner in the shape of some impressions, symbols or language or visuals etc. on a media such as book, film or CD or screen etc. Now a days not only the computer programmes but also the other literary work can be transmitted over the internet from one media/computer to the other media /computer. But these expressions of ideas called literary work including computer programmes can not be read or utilized without down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of this order. Further, the computer software as generally observed has a shorter life cycle. When a shrink wrapped software is sold, the owner gets the price of the copy of the product/work. Even if the owner/licensor has fixed the duration or the time limit for the use of the product, on the expiry of which the same becomes unusable, he in-fact receives the price for the expected life of the work and product. In such case the purchaser pays the price for the product itself and not the license to use. 34. The next contention of the Revenue is that in case of software Licenses, the copyright owner gives a license to use the copyright in the software and that the owner of software exercises power over not only the software itself but also over people who may wish to use the software and that the owner of the software decides who will use his work. It has therefore been strongly contended on behalf of the Revenue that it is the right given to use the copyright in the software. 35. This contention, though, on the face of it may seem to be quite plausible or reasonable, however, when we examine the nature of the transactions in case of shrink wrapped software, we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not ask the name or address or other details of the user. It is not mentioned in such type of agreements that who is using the product. It is the computer upon which such software is loaded that can be said to have agreed to abide by the terms of the software license as the user remains unidentifiable. In such type of software licenses, there are certain inbuilt mechanism made by the buyer preventing the misuse or infringement of the copyright in the product; the moment the end user attempts to violate such conditions, such software becomes inoperative on the computer or sometimes also damage the other data/applications on the computer. However, for the enforceability of such license agreement it is not known who is actual user or which person actually has violated the terms of the agreement. Suppose, in case of a company a product is purchased by the staff of the company, for its use in regular course of work or business of the company and an employee of the company while installing the software on the computer in the office of the company clicks the button or the icon 'I agree' and thereafter such an employee or any other employee of the company violates any condition of the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put in a contract which are often in the form of standard format and being so much detailed and numerous and are generally not read by the other party/buyer of the product, should be fair and any unfair condition restricting the users' rights relating to the goods or the services availed of, which can be held to be unreasonable and against the public policy, cannot be enforced. Thus these licenses create a clear conflict between copyright law and contract law, which have different purposes and objectives. The technological restrictions such as encryption technology and transactional design having restrictions on the development, use, services, may be called in question under the Competition Act, 2002 also. Further the condition in the agreement that the ownership of each copy of software would remain with the software publisher and that the user will have only right to use the software is to be looked in terms of the Indian Contract Act to arrive at a conclusion whether such a condition is reasonable and is not against the public policy or whether it is restricting the fair use of right of the user/purchaser of the product. It is also a determinative factor as to whether the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusive use of the information rather, the purpose of copyright protection is to regulate the dissemination of information viz. production of the copies of the copyrighted work/information and distribution thereof. The use of information viz. a new technology or invention can, however, be protected under the Patents Act, 1970. However, it is pertinent to mention here that even under the Patents Act 1970, the computer Software can not be patented. The computer software, subject to certain exception, have been specifically excluded from patentable items under the Patents Act, 1970. 40. At this stage, we think it appropriate to discuss here the relevant provisions of the Copyright Act, 1957 also. The copyright has been defined under section 14 of the Copyright Act, 1957 as under: "14. Meaning of copyright - For the purposes of this Act, 'copyright' means the exclusive right subject to the provisions of this Act, to do or authorize the doing of ay of the following acts in respect of a work or any substantial part thereof, namely: (a) in the case of a literary, dramatic or musical work, not being a computer programme, - (i) to reproduce the work in any material from including t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... domestic use of the importer. Explanation.- For the purposes of this section, the reproduction of a literary, dramatic, musical or artistic work in the form of a cinematograph film shall be deemed to be an "infringing copy" 42. Certain provisions of section 52 of the Copyright Act which are relevant are also reproduced as under: "52. Certain acts not to be infringement of copyright.-(1) The following acts shall not constitute an infringement of copyright, namely: (a) a fair dealing with a literary, dramatic, musical or artistic work 104 [not being a computer programme] for the purposes ofhttp:// private use, including research; criticism or review, whether of that work or of any other work;" (aa) the making of copies or adaptation of a computer programme by the lawful possessor of a copy of such computer programme, from such copyin order to utilize the computer programme for the purposes for which it was supplied; or to make back-up copies purely as a temporary protection against loss, destruction or damage in order only to utilise the computer programme for the purpose for which it was supplied;" (ab) the doing of any act necessary to obtain information essential for o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific exclusive rights covered by the copyright statue. Further there are certain exceptions also. As per the proviso to sub clause (iv) to the clause (b) to section 51, import into India of one infringing copy of any work for the private and domestic use of the importer will not be considered as infringement. Further, the section 52 of the Act provides for certain other exceptions and the doing of such acts as mentioned under section 52 is not considered as infringement of the copyright as per the statute. In case of software, it has been provided that making of copies or adaptation of a computer programme by the lawful possessor of a copy of such computer programme from such copy in order to utilize the computer programme for the purpose of which it was supplied or to make back-up copies purely as a temporary protection against loss, destruction or damage and in order to utilize the computer programme and further the doing of any act necessary to obtain information essential for operating inter operatability of an independently created computer programme with other programmes in case such information is not otherwise readily available, the observation, study or test of func ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a citizen of India or domicile in India. Section 40 of the Copyright Act 1957, provides for International Copyrights. As per the section 40 of the Act, the Government of India may by an order published in the official gazette direct that all or any provisions of this Act shall apply to the work published or unpublished in any territory outside India. Such a right is extended in relation to countries which have entered into a treaty or which are a party to a convention relating to rights of the copyright owners and have undertaken to make such provisions in their laws in relation to the Indian authors for protection of their rights in their country. Section 40, 40A and section 41of the Copyright Act, 1957 are relevant in this respect. Section 42 of the Copyright Act, however, put certain restrictions on the rights in works of foreign authors first published in India wherein it has been provided that if a foreign country does not give adequate protection to the works of the Indian authors, the Central Government may direct that such of the provisions of the Act as confer copyright on works first published in India of the foreign authors shall not apply. So if a foreign country rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then in that event it cannot be said to be an infringement of copyrights of the author or owner of the work. As held by the Hon'ble Karnataka High Court in the case of "Samsung Electronics Company Ltd. & Others" (supra) while relying upon Article 3 sub section (2) of the DTAA with US as the identically worded article being there in almost all the tax treaties with other countries, that any term not defined in the convention shall, unless the context otherwise requires, have the meaning which it is under the laws of that 'State' concerning the tax to which the convention applies. In view of above, when we see the definition as per the statutory provisions/domestic law of the country i.e. Copyright Act,1957 of India which is the taxing State in this case, it is apparent that the fair use of the work for the purpose of which it is being purchased and doing of such other acts including making of copy for protection from damage or loss can not, in any case, said to be any infringement of copyright whether or not any license in this respect has been granted by the author/owner of the work. The right to use or for use of the product accrues to the purchaser by the operation of the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DTAA can not be said to be royalty and the same will be outside the scope of the definition of 'royalty' as provided in DTAA and would be taxable as business income of the recipient. The assessee is entitled to the fair use of the work/product including making copies for temporary purpose for protection against damage or loss even without a license provided by the owner in this respect and the same would not constitute infringement of any copyright of the owner of the work even as per the provisions of section 52 of the Copyright Act,1957. 52. Even otherwise, the Revenue has not cited any direct case law of the jurisdictional High Court of Bombay before us. In the case laws cited by the Revenue of the Hon'ble Karanatka High Court in the matter of "CIT vs. Samsung Electronics Company Ltd." (supra) and "CIT vs. Synopsis International Old Ltd." (supra ) though a view in favour of the Revenue has been taken, but, the Hon'ble Delhi High Court in the case of "DIT vs. Infrasoft Ltd." (supra) which is a latter decision and has discussed the Samsung case also has taken the view in favour of the assessee. The Hon'ble Delhi High court has taken the identical view favouring the assessee in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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