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2016 (5) TMI 955 - ITAT DELHI

2016 (5) TMI 955 - ITAT DELHI - TMI - Receipts from transfer of shrink wrapped software - whether amount to business income or royalty under section 9(1) (vi) and DTAA - Held that:- Terms and conditions of software license in the decision before honorable Delhi high court in Director of Income Tax Versus Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] and in the impugned case before us. We found them similar to the issue decided by honourabel Delhi High court. They are similar as to non-e .....

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ed limited rights to reproduce the program. The Agreement categorically restricts the user to copy, publish, display, disclose, modify, merge etc. the software except for archival purposes and not allowed to exploit the computer software commercially.

On identical facts and circumstances, honourable Delhi high court has held that what is transferred is neither the copyright in the software nor the use of the copyright in the software, but what is transferred is the right to use the c .....

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tax as royalty such as equipment royalty, process royalty etc. Under Article 12 of DTAA but as business income under article 7 of the INDO Finland DTAA. - Decided in favour of assessee. - ITA No.5411/Del/2010, ITA No.5587/Del/2011, ITA No.699/Del/2013 - Dated:- 12-4-2016 - SHRI A.T.VARKEY, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh.Ravi Sharma, Adv For The Revenue : Sh. Anuj Arora, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. For A. Y. 2007-08 is appea .....

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fficer ('AO') under section 143(3) read with section 144C of the Income-tax Act, 1961 ("the Act") is bad in law and void ab-initio. 1.1 That on the facts and circumstances of the case & in law, the Ld. AO erred in assessing the income of the appellant at Rs, 292,124,834/- as against the nil income declared by the appellant. 2. That on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in holding that the receipts in the hands of the appellant from sa .....

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2.3 That consideration received by the appellant from the sale of standard software is for the use of commercial cum scientific equipment. 3. That on the facts and circumstances of the case & in law, the Ld. AO erred in holding that the ancillary services provided by the appellant along with the sale of software comes within the purview of fees for technical services under Art 13(4) (a)/ (b) of DTAA. 3.1 That the Ld. AO failed to appreciate that the services provided by the appellant are anc .....

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not applying the correct conversion rate on the grossed up amount of USD 39,55,712 and coming to the wrong INR equivalent of ₹ 17,17,49,104/-. 6. That on the facts and circumstances of the case & in law, the Ld. AO erred in applying the tax rate of 15% on all the receipts without appreciating that the agreements entered with Vodafone Essar and Idea Cellular were post June, 2005 and accordingly receipts, even if treating the same as royalty thereof ought to be taxed at the rate of 10% .....

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section 144C of the Income-tax Act, 1961 ("the Act") is bad in law and void ab-initio. 1.1 That on the facts and circumstances of the case & in law, the Ld. AO erred in assessing the income of the appellant at ₹ 32,79,71,9337- as against the nil income declared by the appellant in the return of income. 2. That on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in holding that the receipts in the hands of the appellant from sale of "standard sof .....

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le carrying out their business; 2.3 That on the facts and in law, the Ld. AO/DRP erred in holding that consideration received by the appellant from the sale of standard software is for the use of commercial cum scientific equipment 3. That on the facts and circumstances of the case & in law, the Ld. AO erred in holding that the ancillary services provided by the appellant along with the sale of software comes within the purview of fees for technical services under Art 13(4) (a)/ (b) of DTAA. .....

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s and circumstances of the case & in law, the Ld. AO erred in applying the tax rate of 15% on all the receipts without appreciating that the agreements entered with Vodafone Essar and Idea Cellular were post June, 2005 and accordingly receipts, even if treating the same as royalty thereof ought to be taxed at the rate of 10% in view of the provisions of section 115A of the Act. 6. That on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in levying the interest under .....

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tances of the case & in law, the Ld. AO grossly erred in assessing the income of the Appellant at ₹ 52,94,74,960/- as against the nil income declared by the Appellant in the return of income. 2. THAT on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in holding that the receipts in the hands of the Appellant from sale of "standard software" are in the nature of royalty under section 9(1) (vi) clauses (i), (iii), (iva) & (v) of the Act and under .....

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are to the customer who use such process while carrying out their business; 2.3 THAT on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in holding that consideration received by the Appellant from the sale of standard software is for the use of commercial cum scientific equipment. 2.4 THAT on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in holding that the consideration received by the Appellant is royalty for the use of invention/scientif .....

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ed in holding that the aforesaid amendment in the Act have also to be read into the DTAA based on authority drawn from the section 90(3) of the Act read with Explanation 3 thereunder along with Article 3 of DTAA. 4. THAT on the facts and circumstances of the case & in law, the Ld. AO/ DRP erred in not allowing the TDS credit of ₹ 4,16,79,774/- despite of submitting the TDS certificates before the AO/DRP. 4.1 THAT on the facts and circumstances of the case & in law, the Ld. AO erred .....

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on account of the invoices raised directly on customers after grossing up the same. 5.1 THAT on the facts and circumstances of the case & in law, the Ld. DRP erred in not issuing any direction to the Ld. AO who erred in grossing up the receipts without appreciating that the same can be done only in the hands of the payer for the purpose of deduction of taxes and not for computing the income 6. THAT on the facts and circumstances of the case & in law, the Ld. AO/DRP erred in levying the i .....

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the appeal of the assessee are taken up first and decided as under. 7. Comptel Oyj, (herein after referred to as Comptel‟) appellant is a Finnish Software Company listed on Helsinki Stock Exchange. The Assessee is incorporated and registered In Finland and thus, is a resident of Finland as per the provisions of Double Taxation Avoidance Agreement between India and Finland ('DTAA'). It is formed/registered under neither the Companies Act, 1956 nor the control and management of its o .....

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rket player in provisioning and convergent mediation software solutions. Comptel solutions support the core business processes of operators and service providers by generating concrete savings that allow for new business models and sustained consumer loyalty. The Comptel Link product portfolio includes Comptel Event Link for event mediation and usage data management, Comptel Instant Link for automated user provisioning and service activation and Comptel OnlineUnk for online and pre-delivery char .....

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assessee field an application before DRP on 11.02.2010, which was decided by DRP on 26.08.2010. Consequently, assessing officer passed final assessment order on 16.09.2010. 10. Ground No 1 of the appeal covers the main controversy in the appeal is whether receipts from transfer of shrink wrapped software amount to business income or royalty under section 9(1) (vi) of the Income Tax Act, 1961 ( Act‟) and the Double Taxation Avoidance Agreement between India and Finland ( DTAA/ Treaty‟ .....

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viders (CSPs) to focus on their core business: developing and delivering innovative and profitable services, collecting usage information and charging customers". "Comtel s products and solutions are designed to adapt to all common telecoms network and IT environments and to evolve to meet the demands of future services". 3.1 The software is delivered at the site of the end customer. The assessee, regarding the nature of software, on 07.10.09 submitted the following: Meaning of Me .....

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ce services in circuit switching and pocket switched mobile networks; provide to mobile service providers flexible and cost efficient charging and billing application such as IP prepaid, postpaid cost control, hybrid and convergent bonus accounting; handle roaming usage data processing in accordance with the specification sets by GSMA and CIBERNET; effective interconnect billing gives mobile service providers a real time view on the profitability of their services; enable mobile service provider .....

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rief catalogue providing a glimpse of the products/solutions. As submitted to this office, the assessee develops mediation, charging and fulfillment solutions and software. During the year under consideration, the assessee granted license of mediation software in India namely Comptel Event Link and Comptel Instant Link. 3.2 The nature of these software is found out from the website of the assessee and are given below: Comptel Event Link enables operators to make their business operations more ef .....

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o the immediate creation of subscriber bills on the basis of the collected real-time usage data Moreover, the solution allows various charging options, meaning that billing can be based on volume, content value, QoS (Quality of Service) or lime, or any combination Of these. Comptel Instant Link release 6 introduces a new combination of customer-driven enhancements and innovative product features It also includes a renewed provisioning logic configuration tool Instant Link Business Service Tool 3 .....

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sks. The further, description of the software as per the website of the assessee are: 1. Comptel Convergent Mediation is the scalable platform for managing the collection and transformation of network transactions from various network types to billable records. It can collect data and process transactions from any network (IMS, mobile, IP, fixed, NGN, WLAN and satellite networks) in both online and offline mode and supply the data Jo any OSS/BSS thus eliminating the need for multiple mediation p .....

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performance and flexibility from a small package, being scalable from 50 000 subscribers up to 500 million with just one physical single server deployment As a highly productized platform with full support for multi-host architecture or cluster environments, it is easily configurable while centralised management ensures easy geographical distribution. With its Convergent Mediation solution, Comptel draws upon more than two decades of experience in the mediation business to deliver a single solut .....

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real-time charging of all services in fixed, satellite and mobile networks. It offers service providers the capability to create more advanced and flexible charging models that combine the strengths of both data and voice charging, while supporting both postpaid and prepaid payment options This vendor-, network- and service-independent system solution provides connectivity to any telecom billing system, offering easy-to-use pricing and high-performance rating and charging in real-time serving u .....

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oduced betow: The Assessee has already submitted that for the purpose of selling the softwares, it has entered into an agreement with IBM United Kingdom Ltd, which is the Channel Partner of the Comptel for the purpose of Sale and delivery of the mediation softwares. The agreements in this regard have already been filed by the assessee as hereunder: -Base Agreement dated February 1, 2003 -Master Statement of Work dated February 1, 2003 -Statement of Work between IBM Global Services India Pvt Ltd .....

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ices described in the relevant SOWs issued under this Base Agreement. Under the base agreement, Deliverables have been defined as items that Supplier prepares far or provides to Buyer or Customer as described in a SOW for Customer. Deliverables may include Program Products, Developed Works, Pre-existing Materials and/or tools. It is humbly submitted that the assessee has only provided program products as deliverables to the Buyer. Program Products has further been defined as Supplier's comme .....

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ry 1,2003 The assessee, for selling its program products, has entered in1o a Master Statement of Work ('MSOW') with ]j3M_Unjled Kingdom Ltd which specifies the terms agreed between the parties regarding marketing, licensing and supply of Supplier's Program Products and Services by Buyer to the Customers. Article 3 of the MSOW defines the program products as identified in Attachment 2 which in turn provides for Compiel Event Link and Comptel Instant link as program products. Article 6 .....

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as well as rights pertaining thereto, including but not limited to paten!, copyright and trademark rights or any other legally protected proprietary right, shall belong to and remain exclusively with Supplier. Buyer acquires only the right to transfer the EULA in respect of the Program Products to Customer strictly in accordance with this Agreement, and does not acquire any right of ownership, title or interest in the Program Product by virtue of such transfer. All rights not expressly grouted t .....

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le and interest m the program products are the property of the assessee the buyer only acquires a right to transfer the EULA to its end customers. End User License Agreement (EULA) is a part of the MSOW as Attachment 1.. We are annexing herewith a copy of MSOW along with the attachments as Annexure 2, The EULA provides the Software License Terms and Conditions under which the assessee license its standard software to the end user. In EULA the term standard software has been defined as software i .....

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ble, revocable, non-sub licensable, and personal right and license (hereinafter the "License") to End User to use the agreed number of machine readable copies of the Standard Software for the agreed Newark that Is being used only by (he End User, and a copy of the Documentation. The right and license to use the Standard Sofftware granted in the previous sentence shall be limited to use by End User only (a) to process data originating from its own business operations and (b) for End Use .....

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ransferable, non assignable , non-sub licensable, revocable, and personal, and be limited to use by the Customer of a reasonable number of machine readable copies of Comptel's Standard Software in the agreed network, and of one copy of the documentation, only (a) to process data originating from Customer's own business operations; (b) for the Customer's own internal operations, in each case for up to the Licensed Amount; and (c) in the hardware and operating system environment define .....

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h is a standard software? This fact is also evident from the restrictions put by (he assessee on the customer to use the standard software as hereunder: Quote 1. Restrictions The End User acknowledges and aggress not to, and not to permit others to (unless, and to the extent only as, permitted by a express provision contained in these Terms and Conditions): (a) reproduce, copy, publish, display, disclose, rent, lease, sub-license, modify', loan, distribute or create derivative works based on .....

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tware (or any part thereof), any Documentation nor any Confidential Information of Comptel or its licensors to create software that emulates or performs substantially the same functions as the licensed Standard Software or any part thereof. End User further agrees never to remove any copyright, trademark and other proprietary notices or any other form of product identification affixed to the licensed Standard Software, any Documentation, or any portion of the licensed Standard Software or Docume .....

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ables and Services described in the relevant SOWs issued under this Base Agreement. Deliverables and Services acquired by customer on or after the effective Dale will be covered by this Base Agreement to the extent reference are made hereto by the panics in a W A.This Base Agreement will remain in effect until terminated. 1.0 Definitions: "Deliverables" means items that Supplier pi spares for or provides to Buyer or Customer as described in a SOW for Customer, Deliverables way include .....

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ellip;………………. "End User License Agreement" shall have the meaning as defined in the SOW attached hereto. "Inventions" means ideas, designs, concepts, techniques, inventions, discoveries or improvements, whether or not patentable, conceived or reduced to practice by Supplier Personnel in Performance of this Agreement. "Joint Inventions" means inventions made by Supplier Personnel jointly with Buyer Personnel. No Invention sha .....

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terms and conditions in this Base Agreement, the SOW attached hereto, and other attachments or appendices specifically referenced in the P.A. "Services" means work that Supplier performs far Buyer as described in a SOW for Customer, "Statement of Work" or "SOW" means either (A) the document attached to this Base Agreement which describes the Deliverables and Services, including any requirements, specifications or schedules typically included in a W.A, as well as th .....

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than a Program Product "Work Authorization" or WA" means Buyer's authorization in either electronic or tangible form for Supplier lo conduct transactions under this Agreement in accordance with the applicable SOWs (i .e., a purchase order, or other appropriate Buyer designated document). A SOW is a WA only if designated as such in writing by the parties 2.0 Statement of Work Supplier will provide Deliverables and Services as specified in the relevant SOWs only when ordered by .....

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de for hire. If any Developed Works are not considered works made for hire owned by operation of law, supplier assigns the ownership of copyrights in such works to buyer or customer. 8.2 Preexisting materials Supplier will not include any Preexisting Materials in any Deliverable unless they are listed in the relevant SOW. For the sole purpose of supporting the Customer as expressly specified in the relevant SOW, Supplier grants Buyer a nonexclusive, worldwide, perpetual, irrevocable, paid-up, li .....

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OW, For the sole purpose of supporting the Customer as expressly specified in the relevant SOW, Supplier grants Buyer nonexclusive, worldwide, perpetual, irrevocable, paid-up, license to prepare and have prepared derivative works of such Tools as have been prepared by it and to use, have used, execute, reproduce, transmit, display, perform, transfer, distribute, and sublicense such Tools or their derivative works, and to grant others the rights granted in this Subsection all to the extent as is .....

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grants Buyer a nonexclusive, worldwide, paid-up, license to use Inventions to this extent as is necessary Customer as aforesaid. 8.5 Joint Invention Rights The parties will jointly own all joint Inventions and resulting patents. Either party may license others under joint Inventions (including any patent applications filed on or patents issued claiming Joint Inventions) without accounting to or consent from the other. 8.6 Perfection of Copyrights Upon request, Supplier will provide to Buyer a &q .....

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which it which it will seek patent protection for each Invention. Supplier authorizes Buyer to act as its agent in obtaining in supplier s name patent protection for the inventions in countries where supplier does not seek patent protection. Buyer will pay all expenses in relation to these patent applications and the maintenance of the relevant patents. Supplier will, at Buyer's expense, assist in the filling of patent application on Inventions and have required documents signed. 8.8 Tradem .....

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r the deliverable and use the services to the extent authorized in this agreement and as is necessary to support the relevant customer as aforesaid. 10 Program Products Customer will receive an End User License Agreement from Buyer or Supplier for perform products, to which buyer is neither a party nor liable for violations. Buyer may install and test Program Products for Customer without additional license charge. For recurring charge licenses, Buyer will notify Supplier when to begin invoicing .....

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taken any other action as set out in Section 9-2 for Infringement: 1 . in case Buyer, its personnel or Customer make any authorized changes or modifications to the Deliverables when (he claim would not have occurred but for such changes or modifications; 2. which are based upon use of the Deliverables, or any part thereof, in combination with software not supplied by the Supplier would have been avoided in the absence of such combination, or any use of the Deliverables in a manner for which they .....

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ll sure that Supplier Personnel assigned to work on Buyer's or Buyer's Customer's premises will: 1. to the extent permitted by applicable law, participate in a pre-employment criminal background check covering the countries in which the person by was employed or resided for the past seven years (or longer as required by State legislation), and inform Buyer of any negative findings; 2. to the extent permitted by applicable law maintain a current and complete list of the persons' n .....

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ll parking restrictions and with registration requirements if any; 6. inform Buyer if a former employee of Buyer will be assigned work under this Agreement, such assignment subject to Buyer approval, which approval shall not be unreasonably withheld; 7 . at Buyer's request, remove a person from Buyer's or Buyer's Customer's premises and not reassign such person to work on Buyer's or Buyer's Customer's Premises; and 8. notify Buyer immediately upon completion or termin .....

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;s Customer's premises without Buyer's authorizations; 2. will use Buyer Assets only for purpose of this Agreement and reimburse Buyer for any unauthorized use; 3 . will only connect with, interact with or use programs, tools or routines that Buyeragrees are needed to provide Services; 4. will not share or disclose user identifiers, passwords, cipher keys or computer dial port telephone numbers; and 5 in the event the Buyer Assets are confidential, will not copy, disclose or leave such a .....

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ment, hiring discipline, performance evaluations, termination counseling and scheduling. Supplier's supervisors responsible for each work location will be responsible lo know that work location's planned holiday (and other closing) schedules and the impacts all such schedules have on Supplier's Personnel Supplier will conduct orientation sessions with its personnel before placement on an assignment with Buyer, during which orientation such personnel will be told who their supervisor .....

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d Kingdom Limited and Comptel Corporation. This SOW is effective beginning on 1 February, 2003 and will remain in effect until the Base Agreement terminates Transactions performed under this SOW will be conducted in accordance with and be subject to the terms and conditions of this SOW, the Base Agreement and any Work Authorizations ("WAs") and SOWs for customers (defined below), 1. SCOPE OF WORK This SOW specifies the terms agreed to by the parties with regard to the marketing, licens .....

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any use in a SOW for Customer of the term "Developed Works11 for software and/or documentation that are in fact Program Products such Program Products such Program Products shall remain Program Products as defined in the Base Agreement and nothing else. Buyer will issue a WA for each specific customer in accordance with this SOW and the relevant SOW for customer (referred to generally in this SOW as SOW for customer ), detailing the specific Deliverables and Services and other terms as may .....

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e deemed to be incorporated in that SOW for Customer, 2. DEFINITIONS "Acceptance Criteria" means the criteria specified in an Acceptance Test Specification,which criteria the Deliverables shall be required to meet during an Acceptance Test "Acceptance of Functional Specifications" means Buyer's review and acceptance of the Functional specification in accordance with Section 4.4 hereof. "Acceptance Tests" means the tests proposed by Buyer and accepted by Supplier .....

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quence for the performance of the Acceptance Tests and the criteria for determining the success or failure thereof. "AEC1" means ho Agreement for Exchange of Confidential Information Number W903UKO185 that has been entered into by and between the Parties on the date hereof. "CODE" means computer-programming code, including both computer programming code substantially in binary form that is directly executable by a computer after processing, but without compilation or assembly .....

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t; means changes or additions to the Program Products: a) "Major Enhancements" means Enhancements which provide substantial additional value and are normally offered to customers for an additional charge (e.g.,, upgrades) "Basic Enhancements" means ail Enhancements, other than Major Enhancements, including those that support new releases of operating systems and devices, and correct Errors. "End User License Agreement (EULA)" means the Supplier's end user Licens .....

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ns Program brochures, manuals, technical specification sheets, ^ ^demonstration presentations, and other marketing sales literature provided by Supplier to Buyer for Buyer's use in performance of marketing activities. Buyer's use of Marketing Materials may include transmission of them through electronic marketing services. "Productive Use" means use of the deliverables in Customer's ordinary operating environment (other than in connection with an Acceptance Test). "Rea .....

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scribed in Attachment in which are based on Supplier's standard maintenance and support services to be provided lo Customer. The terms set out in Attachment 3 may be changed by the Supplier from time-to-time, as the Supplier shall in its sole discretion deem fit. Except as may be otherwise agreed in writing by buyer or Customer, such changed terms will not apply to existing contracts. "Territory'" means the country of incorporation on Buyer Any further countries will be agreed .....

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the Functional Specifications. Promptly after receipt of the Functional Specifications from Supplier, and, unless otherwise specified in the relevant SOW for Customer, latest within working days thereof, Buyer sball notify Supplier in writing of its acceptance (or rejection) Functional Specifications If Buyer rejects, the portions of the proposed Functional Specifications not accepted and of the reason for the rejection, the Buyer makes no such notification of rejection to Supplier within releva .....

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ts outstanding in the Deliverables shall be notified lo Buyer at time of delivery, with appropriate plan for timely resolution of such defects. 4.5.2 Adequate resources to correct defects that may arise during installation and implementation stages of Program Products, provision of technical support to enable Buyer's integration of such items into me solution package by Buyer or Customer. 4.5-3 Provision of training to Buyer or Customer for installation, configuration, implementation and end .....

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arties agree as having a need support the basic sales, implementation and support of program products, at no additional charge. a) At least two training sessions for Program Products stated herein; and b) At least one fining session for each Major Enhancement release of a Program Product The parties shall review find agree training requirements for Program Products upon execution of this SOW Any further training sessions shall be agreed to in each P,A. Upon Buyer's reasonable request, suppli .....

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d Lo by the parties. Buyer will notify Supplier of such training requirement at least thirty (30) days in advance Buyer accepts that owing to limits in Supplier's available resource at any given time, Supplier may not be in a position to render the requested training at the time or venue requested by the Buyer For the avoidance of any doubt, ail travel, accommodation, subsistence and like expenses of the Buyer Personnel participating in any of the aforesaid training sessions shall be borne b .....

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ft a) The substantial satisfaction of ail Acceptance Criteria in an acceptance Test; b) The Deliverables, or any portion thereof, having been put into productive Use by Customer; c) The expiry of the period of thirty (30) days commencing on the date of the relevant RFA, provided that Buyer has not issued any written notice listing the relevant Error in reasonable detail. In addition, Acceptance will occur if the relevant Acceptance Test is not passed due to any deficiency which: Is not primarily .....

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ndemnification" provision (Section 9.3), of the Base Agreement and the Warranty Period set out in Section 7.3 hereof or , in the SOW for Customer. Buyer shall prepare the Acceptance Test Specification in conformity with the Functional Specification for a Deliverable or sets of Deliverables, and submit for Supplier's preview and acceptance within (unless otherwise specified in the relevant SOW for Customer) a period not less than six (6) weeks prior to the date of issue of the RFA in res .....

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its rejection of the Acceptance Test Specifications within the relevant, then they will be deemed accepted by Supplier. Acceptance Test Failure IF, during any Acceptance Tests, the Deliverable fails to meet the Acceptance Criteria, Buyer shall promptly provide written notice to Supplier of such Failure, listing the Errors in reasonable detail Supplier, with appropriate support from Buyer, shall use diligent efforts promptly to correct any such Errors, and deliver resolutions to such Errors . Acc .....

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enable Buyer to effectively market Program Products (including for avoidance of any doubt, Enhancements) and Services to customers, Supplier may grant to Buyer a paid-up, non-exclusive and non-transferable, Object Code License lo use, execute, reproduce, display and perform Program Products for purposes of evaluation and training of Buyer Personnel subject to a supplement to the AEC1 - The results of Buyer's Property, and Buyer is under no obligation to provide such results to Supplier. If s .....

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dware, services or software offerings, Development License for Program Products Supplier will, subject to execution of a Partner Developer's License Agreement and payment of the relevant license fee by Buyer, grant to Buyer a non-exclusive and non- transferable license to configure certain Program Products for a specific Customer. Buyer has all right, little and interest (including ownership of copyright) in such Interface and Additional Software Development Work of Program Products prepared .....

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for Customers Supplier shall upon Buyer's reasonable request and subject to a relevant SOW for Customer, grant Buyer the right to offer a non-charge and limited period evaluation license to potential Customers, subject to the terms and conditions of the then current Supplier software evaluation license agreement End User License Agreement Program Products provided by Buyer to Customers will be subject loan EULA. Buyer will provide Program Products to customers under the terms of tie EULA Sup .....

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) consider such a request on a timely basis; and 2) not unreasonably refrain from making such reasonable amendments to the EULA so as to comply with the relevant compelling legislation, Customers may include agencies or other units of a government, or third parties under contract with, a government ("Public Sector")- in the event a Public Sector Customer requires modification to the End User License Agreement, Supplier agrees to negotiate without prejudice but in good faith such reques .....

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es of Program Products, wilt not, unless otherwise agreed, owe Supplier a fee for access to or assignment of a license to Program Products. In addition, Buyer will not, unless otherwise agreed, owe Supplier a fee to transfer the applicable Program Products to a Buyer computer system which is of like configuration as Customer's Systems for which the Program Products were licensed The Program Products will only be used on behalf of the- license. Upon expiration or termination of the agreement .....

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h as Buyer's business partners. 'The use of such entities by Buyer does not relieve h of its obligations under this SOW, the relevant WA or SOW for customer and Buyer shall ensure that such entities comply with the obligations of this SOW. This SOW does not grant Buyer or any such entities any ownership of copyright in Program Products 01 Preexisting Materials Restrictions Buyer shall not and shall not permit others to, save as expressly set out in this Section 6, (i) reproduce, copy, pu .....

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all copies made pursuant to the Agreement, Buyer agrees never to remove any such notices or any other form of product identification. Program Products The parties hereby agree that all title to, ownership of and interests in all or any portion or component of the Program Products (whether Deliverables or not and including all updates, upgrades, modifications and enhancements thereto, and related documentation therefore, if any, whether licensed heralds or provided in connection with the provisio .....

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ll rights not expressly granted to Buyer are reserved by Supplier. Buyer acknowledges that the Program Products and its sequences, structure and organization are property of supplier, that Supplier retains exclusive ownership thereof, as set forth above, and that the same constitutes Confidential Information of Supplier that shall be subject to the undertakings as to confidentiality and non-use set forth in the AECI 7. SUPPLIER'S RESPONSIBILITIES Supplier proposals for Customers When providi .....

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he relevant SOW for Customer, and will use its commercially reasonable efforts to meet the agreed delivery dates and quantities 12.PAYMENTS Except as otherwise expressly agreed by the parties in a SOW for Customer, the following shall apply: 11-1 Prices far Program Products A) Prices Tor Program Products with published or established license fees For Program Products that Supplier has a published or established license fee amounts as specified in Attachment 2 ("Hereinafter in this Item A re .....

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f which Supplier has no published or established license fee Program Products for new implementations, new offerings and certain licensing configurations as may be determined by Supplier, Supplier shall provide Prices for such Program Products in its response to Buyer's request for proposals and quotations to support specific Customer bids. Supplier agrees that the Prices for such Program Products shall in any event not be less favourable than the rate that it offers to other similar compani .....

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writing, any changes to Prices above for such significant Customer bids shall only apply for the specific Customer bid. Buyer at all times remains free to determine its own prices with and to Customers for Deliverables, including Program Products and Services. Except as otherwise stated in a SOW for Customer, all Prices are exclusive of taxes, duties and the like (collectively, for purposes of this section, "Taxes"), All such Taxes, excluding taxes based on suppliers net income, if any .....

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documentation evidencing that it has paid any and all withholding and like Taxes m accordance with the laws of the country destination. 11.2 Prices for Supplier Maintenance Support Prices for Supplier Maintenance Support for Program Products will be Supplier's applicable standard maintenance and support services charges and per quotations to Buyer However, in the event that Buyer provides support services to Customer, i.e., first line support end helpdesk services, the Prices for Supplier M .....

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t periods as provided by Supplier 31.3 Prices for Services Prices for Services shall be as defined in the specific SOW for Customer, consistent with quotations submitted by Supplier or as may be subsequently agreed by the parties. Where Services relate to provision of STOW, the Price for such Services shall be charged on a time and material basis. In the event that Buyer requires significant Services for a Customer engagement and where use of Supplier's standard services rates substantially .....

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te of receipt of invoice by Buyer shall be deemed to have received each invoice latest on the dale that the relevant invoice is sent per facsimile to Buyer, as confirmed by the transmission report of the facsimile machine. Title: Statement of "Work Mater Agreement #49003UKOI84 PA #49G4IN0575 Statement of Work £490<flNQ576 This statement of Work ("SOW") #49Q4rN0576 adopts and incorporates by reference the terms and conditions of Agreement reference the Software Services En .....

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performed under this SOW will be conducted in accordance with and be subject 10 the terms and conditions of this SOW, the Agreement and any applicable Work Authorizations ("WAS"). This SOW is not a WA 1.0 PROJECT DOCUMENTS This Statement of Work (SOW) and the associated exhibits: » Exhibit A - Technical Scope of Work o Exhibit B -Bill Of Materials » Exhibit C -Pricing over 10 years o Exhibit D - Description of Service Line Responsibilities 1.1 DEFINITIONS "Customer&qu .....

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WORK The solution to be provided by Comptel is described in the Technical Scope of Work and 'Solution Delivery Documents (V2.0) which are part of this Statement of Work. Items included within Comptel's scope are: » Comptel Online Link Software - core software, no customizations » Comptel Lookup server - provides with memory based lookups for rating purposes o Comptel Online Link Business Logic - GUI based configuration performed by Compte! o Comptel Online Link interface to V .....

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Coraptel Online Link "NS Lookup interface - this does not include configuration of DNS Server and MS Lookup utility and DNS data population. • Configuration of tables for the Lookup Server - this does not include population Ihese tables. •> Any other items that Comptel may require to provide this that are not included ID IBM's responsibilities, 3.0 DESCRIPTION OF DELIVERABLES AND SERVICES The following Deliverables shall be supplied by the Supplier lo the Buyer: Comptel Li .....

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ration & Maintenance Guide Comptei Training, as detailed !n Exhibit A: o Compte! Online Link Overview (0.5 day) •> Comptel Online Link Administration (0.5 day) o Comptel Online Link Configuration (0.5 day) " Complel Online Link Configuration - Laboratory exercise (O.Sday) Comptel Services including configuration and implementation are detailed in Exhibit A: 4.0 SUPPLIER'S RESPONSIBILITIES 4.1 To deliver the Deliverables and Services defined in section 3.0 in accordance with .....

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iduals in the provision of the Services if they are suitable, competent and capable for the tasks which they are to undertake 4.5 Prompt notification of problems and issues that will impact conformance to the Supplier's obligations stated in this SOW. 4.6 Provide Buyer with Supplier Maintenance Support (in accordance with Attachment of the Master Statement of Work), Provided that such Supplier Maintenance Support shall . limited to provision of 2nd and 3rt line support services to Buyer. The .....

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lier also has and can demonstrate the use of processes to correct errors or other non-conformances. 6.0 BUYER'S RESPONSIBILITIES 6.1 The Buyer agrees lo enable access to the appropriate business and technical resources within Buyer and Customer organizations in a timely fashion. 6.2 The Buyer agrees lo provide timely review and approval of project deliverables, and to facilitate timely review and approval of project deliverables by the Customer. 6.3 Prompt notification of problems and issues .....

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The Bill Material and indicative Pricing, based on projected growth over the Gamine 10 years, is attached as Exhibit C Please note that the years given in Exhibit C are calendar years, with year 1 being 2004. The Comptel product licenses and delivery services provided for year 1 arc sold at a fixed price, in Euros. It is important to note that while Comptel initially grant the right to use the Comptel Online Link product to a capacity level of 300 IPS, the payments are phased over a 3 year peri .....

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d TPS capacity level exceeds 300, a License upgrade will be invoiced as ad when the threshold is exceeded, at the upgrade price detailed in Exhibit C. Note: TPS = average amount of GPRS, WAP and MMS transactions per second during busy hour (15% of daily traffic). 9.1 Terms of Payment The terms of payment will be as is act forth in this Agreement, In the event Supplier has not received payment as agreed, Supplier will notify Buyer and Buyer will make prompt payment The payment shall be made net 6 .....

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d a 3 month Warmth period have passed, Support and Maintenance will be provided based on a percentage of the software license value Pricing for this Support and Maintenance given in Exhibit C, is based on the assumption that Acceptance and Warranty will have finished by the end of May, so payable for 7 months only in calendar year 2005. If this assumption is not correct, the Support and Maintenance price may be adjusted accordingly The given Support and Maintenance pricing is based on the unders .....

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e payment by buyer of all agreed consideration defined in this SOW, Supplier grants to Buyer a non-exclusive, non-transferable (except as defined herein below), non-sub licensable and personal right and license to use the Program Products for the performance of outsourcing services for the exclusive benefit of Bharti Tele Ventures Ltd.(outsourcing services) Subject to the preceding sentence the terms and conditions of the supplier s EULA (attachment to the Master Statement of Work) shall be appl .....

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assessment order , Ld. AO has held that the consideration received by the assessee falls in the category of royalty both under the Income tax Act u/s 9 (1) (vi) clauses ( i), (iii), (iva) and clause (v) of explanation 2 and article 13 (3) (a) & (b) of Indo Finland DTAA. According to him a. The software for use of which the license is granted is a technical or commercial equipment and therefore the consideration received by the assessee is for the use of commercial cum scientific equipment. b .....

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le a "process" to the customers who "use" the process while carrying out their business. It is, therefore, this specialized software also represent a "process" which can be used in a particular industry specific core activity. c. According to him, it is not a sale of copyrighted product but it is copyright. 13. He therefore held that ₹ 12, 03, 75,730/- shown as software consideration is held to be royalty and applied rate of tax @ 10%. Further, the other gross .....

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ture of standard software, which have been supplied by the Appellant. b) issue in question has already been decided on identical facts by the Jurisdictional High Court of Delhi in the case of DIT vs. Infrasoft Ltd [264 CTR 329] wherein it was held that the receipts from transfer of shrink wrapped software is not taxable in India by stating that the licensing of computer software involves limited right to use 'copyrighted' material & does not give rise to any royalty income. For this, .....

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a particular industry Used for Telecom industry Used for civil engineering work 2. Licensing Agreement shows that the license is non-exclusive, non-transferable and the software has to be used in accordance with the Agreement   3. As per the Agreement, all the intellectual property rights in the form of patent, copyright, trademark etc. are the property of the seller only and at no point of time,it has been transferred to either the buyer/ customer.   4. As per t .....

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the licensee has no right to deal with the product just as the owner would be in a position to do.   c) Thereafter ld. AR referred to various Clauses of the agreements / documents and submitted that i. subject matter of transfer is a standard software in the form of a mediation software and they are a copy righted article ii. all the intellectual property rights in the form of patent, copyright, trademark etc. are the property of the Appellant only and at no point of time same h .....

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r the use of the copyright in the software, but what was transferred was the right to use the copyrighted material, which was clearly distinct from the rights in a copyright. Hence, where the payment made is in connection with transfer of a copyrighted article then it represents the purchase price of an article and cannot be considered as royalty either under the Act or under the Treaty; rather it is business income of the appellant. e) His next argument was the an income to be categorized as ro .....

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eived by the Appellant is not for acquisition of a right to use a copyright , but is for acquisition of a copyrighted article and, therefore, the consideration cannot be assessed as royalty. f) On the aspect of definition of Royalty as per Indo FINLAND DTAA he submitted that definition of royalty as per article 13(3) of the Treaty is narrower than the definition contained under section 9(1) (vi) of the Act. According to him under the Treaty the income of the Appellant should have been generated .....

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business income of the assessee according to article 7 of DTAA. Hence, the taxability of these software sales is not royalty as held by AO. 16. Before us,Ld. DR vehemently contended and submitted that the software is a not a standard software as per reasons given by ld. AO in his order. He further stressed up on the order of DRP for subsequent years and stated that retrospective amendment of section 9 (1) has been considered by DRP. He further submitted that when there is an amendment in the law .....

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s. He submitted that Explanation 4, 5, and 6 inserted under section 9(1) by the Finance Act, 2012 w.r.e.f. 01.06.1976 clearly covers the issue in favour of revenue. For this, that corresponding amendment to the DTAA is not required for the assessee's receipts in respect of computer software to be taxed as 'royalty'. For this, he vehemently relied on the terms "right" and / or "rights" and / or "information" are not defined in DTAA. Therefore, the meaning .....

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Director of Income tax v. Nokia Networks OY where honorable high court has considered the retrospective amendment in section 9 of the Income tax Act for and held that amendment cannot be read in to the treaty. 18. We have carefully considered the rival contentions. We have also perused the decision of Honorable Delhi High court in case of [2013] 39 taxmann.com 88 (Delhi) Director of Income taxv. Infrasoft Ltd. In that decision, also the assessee was developing customized software to be used for .....

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received by the Assessee company from sales/licensing of the software was royalty in terms of the said definition. The reasoning of the AO to arrive at this conclusion is as under:- (i). The software is licensed not sold. The copyright of the software remains with the Assessee however it allows the use of copyright to the person making payment to it. As per the Indian Copyright Act, 1957 as amended in 1994 software are entitled to copyright protection. The Assessee possesses Copyright in the sof .....

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of the customer in India. (ii) The software owned by the Assessee is patented software. Consideration for allowing the use of the patented article falls within the definition or royalty payment. Even if it is considered that the software owned has not been patent, there is no denial of the fact that it is essentially an invention. The development of such software requires highly technical manpower, with highly sophisticated infrastructure and huge investments. Similarly, the software can also be .....

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hat cost of the medium viz. computer discs, floppy etc., on which the program is written is negligible as compared to the overall price of software. Had it not been a secret programming, anybody could have written these types of programs and sold it at a very low price as compared to the price of the original software. (iv) The software developed by infrasoft is customizing software which are used for specific purposes like design of highways, railways, airport, port, mines etc. This software ar .....

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rs: INFRASOFT LICENCE AGREEMENT. 2. GRANT, SUPPLY AND USE OF LICENSE Infrasoft grants Licensee a non-exclusive, non-transferable license to use the software in accordance with this Agreement and the Infrasoft License Schedule. The license is perpetual unless identified as being for a specified term in the Infrasoft License Schedule. Any third party software incorporated in the software is licensed only for use with the software. Infrasoft will supply one copy of the software for each site and, w .....

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hich restricts the use of the Software as specified in the Infrasoft License Schedule. The Software shall be used only for Licensee's own business as defined within the Infrasoft License Schedule and shall not, without prior written consent from Infrasoft: be loaned, rented, sold, sub-licensed or transferred to any third party used by any parent, subsidiary or affiliated entity of Licensee Used for the operation of a service bureau or for data processing If Licensee was granted an educationa .....

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ereto Infrasoft undertakes to make information relating to interoperability available to Licensee subject to such reasonable conditions as Infrasoft may from time to time impose including a reasonable fee for doing so. To ensure Licensee receives the appropriate information, Licensee must first give Infrasoft sufficient details of its objectives and the other software concerned. Requests for the appropriate information should be directed to the Vice President Technical of Infrasoft. 3. LICENCE F .....

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the foregoing generality, value added/purchase tax, excise tax (tax on sales, property or use), import or other duties and whether levied in respect of this Agreement, the Software its use or otherwise. All such taxes shall be the responsibility of the Licensee and shall be payable in addition to the license fee. Infrasoft advises the Licensee that the Software contains a mechanism which Infrasoft may activate to deny the Licensee use of the Software in the event that the Licensee is in breach o .....

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the Agreement. Only one copy of the software is being supplied for each site. The licensee is permitted to make only one copy of the software and associated support information and that also for backup purposes. It is also stipulated that the copy so made shall include Infrasoft's copyright and other proprietary notices. All copies of the Software are the exclusive property of Infrasoft. The Software includes a license authorisation device, which restricts the use of the Software. The softw .....

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39;s written consent. The Software contains a mechanism which Infrasoft may activate to deny the Licensee use of the Software in the event that the Licensee is in breach of payment terms or any other provisions of this Agreement. All copyrights and intellectual property rights in and to the Software, and copies made by Licensee, are owned by or duly licensed to Infrasoft. 86. The Licensing Agreement shows that the license is non-exclusive, non-transferable and the software has to be uses in acco .....

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. The software is to be used only for Licensee's own business as defined within the Infrasoft License Schedule. Without the consent of the Assessee the software cannot be loaned, rented, sold, sub-licensed or transferred to any third party or used by any parent, subsidiary or affiliated entity of Licensee or used for the operation of a service bureau or for data processing. The Licensee is further restricted from making copies, decompile, disassemble or reverse-engineer the Software without .....

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ts (including the granting of any license) in respect of copyright of a literary, artistic or scientific work. In order to treat the consideration paid by the Licensee as royalty, it is to be established that the licensee, by making such payment, obtains all or any of the copyright rights of such literary work. Distinction has to be made between the acquisition of a "copyright right" and a "copyrighted article". Copyright is distinct from the material object, copyrighted. Cop .....

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se of goods and is not royalty. 88. The license granted by the Assessee is limited to those necessary to enable the licensee to operate the program. The rights transferred are specific to the nature of computer programs. Copying the program onto the computer's hard drive or random access memory or making an archival copy is an essential step in utilizing the program. Therefore, rights in relation to these acts of copying, where they do no more than enable the effective operation of the progr .....

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relation to the copyright. The enjoyment of some or all the rights which the copyright owner has, is necessary to invoke the royalty definition. Viewed from this angle, a non-exclusive and non-transferable license enabling the use of a copyrighted product cannot be construed as an authority to enjoy any or all of the enumerated rights ingrained in Article 12 of DTAA. Where the purpose of the license or the transaction is only to restrict use of the copyrighted product for internal business purpo .....

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in relation to copyright or conferment of the right of using the copyright. The transfer of rights in or over copyright or the conferment of the right of use of copyright implies that the transferee/licensee should acquire rights either in entirety or partially co-extensive with the owner/transferor who divests himself of the rights he possesses pro tanto. 90. The license granted to the licensee permitting him to download the computer programme and storing it in the computer for his own use is .....

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1. There is no transfer of any right in respect of copyright by the Assessee and it is a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article and cannot be considered as royalty either under the Income-tax Act or under the DTAA. 92. The licensees are not allowed to exploit the computer software commercially, they have acquired under license agreement, only the copyrighted software which by itself is an article an .....

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identified and was not permitted to loan/rent/sale/sub-license or transfer the copy of software to any third party without the consent of Infrasoft. 93. The licensee has been prohibited from copying, decompiling, de-assembling, or reverse engineering the software without the written consent of Infrasoft. The license agreement between the Assessee company and its customers stipulates that all copyrights and intellectual property rights in the software and copies made by the licensee were owned b .....

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the right to use a programme embedded in a cassette or a CD which may be a software and the payment made for the same cannot be said to be received as consideration for the use of or right to use of any copyright to bring it within the definition of royalty as given in the DTAA. What the licensee has acquired is only a copy of the copyright article whereas the copyright remains with the owner and the Licensees have acquired a computer programme for being used in their business and no right is g .....

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he Agreement, all the intellectual property rights in the form of patent, copyright, trademark etc. are the property of the seller only and at no point of time same has been transferred to either the buyer/ customer, the rights acquired in relation to the copyright are limited to those necessary to enable the user to operate the program, for example, where the transferee is granted limited rights to reproduce the program. The Agreement categorically restricts the user to copy, publish, display, .....

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ight to use the copyright but is only limited to the right to use the copyrighted material and the same does not give rise to any royalty income and would be chargeable to tax as business income. Therefore respectfully following the decision of Honourable Delhi high court we hold that that consideration received by the assessee on sale of software is not chargeable to tax as royalty such as equipment royalty, process royalty etc.Under Article 12 of DTAA but as business income under article 7 of .....

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are (including granting of a license) irrespective of the medium through which such right is transferred. Therefore, it was the argument of the revenue that as the explanation says that granting of license for use of a computer software is transfer of all or any rights in respect of software. Therefore,according to ld. DR despite there being no amendment in DTAA, if there is any amendment in the Domestic tax law, there is no need of any amendment in the DTAA to characterizethe receipts of the as .....

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elevision or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. As Per Income Tax Act 1961 Explanation 2.- For the purposes of this clause, royalty means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeabl .....

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r similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; (iva) the use or right to use, any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB ; (v) the transfer of all or any rights (including the granting of a license) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with televi .....

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of Article 3 (2) of the India Finland DTAA , the meaning of these words contextually defined in the Income Tax Act should apply for this purposes. LD. DR relied up on two decision namely Viacom 18 Media (P.) Ltd. [2014] 44 taxmann.com 1 (Mumbai - Trib.) and Vodafone South Ltd. [2015] 53 taxmann.com 441 (Bangalore - Trib.) for advancing this argument. Article 3 (2) of the DTAA provides that 2. As regards the application of the agreement at any time by a Contracting State any term not defined ther .....

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eement. b) The term, which is subject matter of reference, is not defined in the treaty. c) Then it shall have meaning as per the laws of for taxation of that state at that time when the treaty is applied. Therefore, in this background we are of the viewthat the context is determined by the intent of the contracting states at the time of entering in to the convention. It is apparent from the definition of royalty in DTAA as well as in the Income tax Act prevailing at the time of entering in to D .....

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ax v. Nokia Networks OY* as under:- 23. It will be of relevance to point out that Section 9 of the Act has been amended vide Finance Act, 2012. The following provisions have been added to Section 9 of the Act vide sub-Section (b) of Section 4 of the Finance Act, 2012 seeking to clarify the scope of clause (vi) of sub-Section (1) of Section 9 of the Act:- "Explanation 4:- For the removal of doubts, it is hereby clarified that the transfer of all or any rights in respect of any right, properl .....

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e 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 .....

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ransfer of all or any right in respect of certain rights, property or information. Some judicial decisions have interpreted this definition in a manner which has raised doubts as to whether consideration for use of computer software is royalty or not; whether the right, property or information has to be used directly by the payer or is to be located in India or control or possession of it has to be with the payer. Similarly, doubts have been raised regarding the meaning of the term processed. Co .....

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f all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred. (ii) To amend section 9(1)(vi) to clarify that 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 l .....

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to the assessment year 1977-78 and subsequent assessment years." On the basis of this amendment made effective from 1.6.1976, Mr. Parasaran argued that the above amendments are only clarificatory in nature depicting the Parliament intention viz; (i) the medium through which the software is transferred itself will not affect the taxability of the royalty payments made for the transfer of right to use or actual use of the software in India by a non-resident. (ii) It is not necessary that the .....

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ight to make copies is granted. The decision of the Delhi Bench of the ITAT has dealt with this aspect in its judgment in Gracemac Corpn. v. Asstt. DIT [2010] 42 SOT 550 (Delhi) 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 s .....

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has held in case of DIT V New Skies Settliete BV ITA No 473/2012 dated 8/2/2016 59. On a final note, India s change in position to the OECD Commentary cannot be a fact that influences the interpretation of the words defining royalty as they stand today. The only manner in which such change in position can be relevant is if such change is incorporated into the agreement itself and not otherwise. A change in executive position cannot bring about a unilateral legislative amendment into a treaty co .....

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sufficient to persuade this Court to hold that such amendments are applicable to the DTAAs. 60. Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to the word royalty in Asia Satellite , when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 a .....

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x Avoidance Agreement. 26. In the above decision of Honourable High court decision of Honorable Madras High court in case of Verizone Communication Singapore Pte 361 ITR 575 was considered and not followed holding that:- 31. In a judgment by the Madras High Court in Verizon Communications Singapore Pte Ltd. V. The Income Tax Officer, International Taxation, the Court held the Explanations to be applicable to not only the domestic definition but also carried them to influence the meaning of royal .....

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coordinate benches to support the case of the revenue;however, both the cases were following the decision ofHonourable Madras high court of Verizon Communications Singapore (P.) Ltd. v. ITO (Intl. Taxation) [2014] 361 ITR 575/39 taxmann.com 70. Decision of Honourable Madras High court has not been followed by Honourable Delhi high court, therefore respectfully following Honourable Delhi high both the Decision of Coordinate bench are now not relevant for deciding the controversy. 27. In view of t .....

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