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TMI Blog2017 (5) TMI 1520X X X X Extracts X X X X X X X X Extracts X X X X ..... e case in holding that the payment made by the appellant is in the nature of royalty under Clauses (i),{ii) and (Jii) of Explanation 2 of section 9(l)(vi) of the Act being in the nature of "similar property" and is akin to patent, invention, model, design, secret formula or process or trade mark or similar property. 1.3 The CIT(A) has further erred on facts and in law in holding that the payment made by appellant is covered under Clause (iv) of Explanation 2 to section 9(l)(vi) of the Act without appreciating that the recipient is not engaged in any industrial or commercial activity and does not have the experience, skill, knowledge or capability to impart such industrial or commercial knowledge to the appellant which may be covered under the said clause. Ground No. 2j Without prejudice to Ground No. 1 above, the CIT(A) has erred on facts and in law in denying the benefit of exclusionary clause under section 9(1 )(vi)(b) of the Act by rejecting the appellants claim of exclusion of royalty from ambit of taxation in India by holding that the source of income of the appellant for which payment is being made is in India. 3. The above grounds of appeal are mutually exclusive and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... display, use or otherwise convey to or for any third party, or to or for any of its employees or agents at sites other than the Locations, any of the Services or the Software, Product, regardless of the method of distribution. * Client and each End User may make one copy of each authorized Software Product for archival and backup purposes, provided that such copy shall be subject to this Agreement and bear the appropriate trademarks, copyright notices and other proprietary notices contained in the versions of the software provided by Thomson. Client shall aiso be authorized to make copies of authorized Software Product solely for purposes of disaster recovery. * From and after the date of a written request by Thomson. CSient shall deliver to Thomson written reports certifying the number of authorized display devices using the Software Product or displaying the Service. * THE CLIENT MAY NOT REDISTRIBUTE THE DATA OR ANY PART THEREOF TO ANY COMPETITOR OF THOMSON OR OF THIRD PARTY DATA SUPPLIERS The Client may redistribute insubstantial Portions of the Data in the ordinary course of its business. If. however, Thomson notifies Client that, in the reasonable business judgment of Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supplier or Third Party Licensor Except to the extent otherwise provided herein, both parties agree not to make any use of the trade names and trademarks of the other party without the prior written consent of the requested party. Client agrees not to reverse engineer, decompile, disassemble or otherwise seek to duplicate the performance characteristics of the service or nay part thereof Client shall not: (i) use, copy, modify, merge or transfer copies of the software Product (except as expressly provided m the Agreement); (ii) modify, adapt, translate, reverse assemble or reverse compile the Software Product; (tii) sublicense, rent. lease or assign the Software Product or any copy thereof; or (iv) allow any person (other than client, its employees and agents) io copy or use the Software Product for any purpose whatsoever Client agrees that, the services are of an original and unique character, and that losses caused by a violation or threatened violation of this Section cannot be adequately compensated by money damages alone. Accordingly, Client agrees that Thomson shall be entitled to injunctive relief in the event of a violation or threatened violation of this Section as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reating payment as Royalty/FTS, thereby directing assessee to withhold tax at source at rate of 20%. Subsequent to this, assessee filed tax residency certificate and TDS officer rectified the order passed by Ld. ITO to the extent of granting benefit to assessee under the treaty. As per revised order passed by ITO on 11.09.2007, the rate of withholding tax was granted at 10%, under Article 12 of treaty. 7. Aggrieved by this order, assessee preferred appeal before Ld. CIT(A). Ld. CIT(A) disagreeing with submissions advanced by assessee upheld order passed by ITO. 8. Aggrieved by order of Ld. CIT(A), assessee is in appeal before us now. 9. Ld. Counsel submitted that, database accessed by assessee is a source of information for various commercial, economic, financial matters. As the main function of assessee is to provide customized back-office operations and acting as support centre, it is required to access certain databases such as Bloomberg, Reuters, Once source, Dow Jones and Data Stream. It has submitted that, one such database accessed by assessee is database maintained by Thomson. He referred to global master service agreement, which is placed at page 2 to 5 of paper book da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puter program and storing it in the computer for his own use was only incidental to the facility extended to the licensee to make use of the copyrighted product for his internal business purposes. The said process was necessary to make the program functional and to have access to it and is qualitatively different from the right contempt related by the said provision because it is only integral to the use of copyrighted product. The right to make a backup copy purely as a temporary protection against loss, destruction or damage has been held by Delhi High Court in Nokia Networks OY (supra) is not amounting to acquiring a copyright in the software.)" 11. Ld. Counsel submitted that issue is squarely covered by the decision of Hon'ble Jurisdictional High Court in case of DIT vs. Infrasoft (supra). 12. On the contrary, Ld. DR placed reliance upon decisions of authorities below. He submitted that Explanation 2 clause (iv) to section 9 (1) (iv) covers information received by assessee, for which payment has been made to Thomson. He submitted that clause (v) cannot be made applicable to assessee. 13. We have perused the submissions advanced by both the parties in the light of records pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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