TMI Blog2021 (4) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... d by India with Australia also contains similar provisions. Accordingly, following the decision rendered by Hon ble Supreme Court in ENGINEERING ANALYSIS CENTRE OF EXCELLENCE PRIVATE LIMITED VERSUS THE COMMISSIONER OF INCOME TAX ANR. [ 2021 (3) TMI 138 - SUPREME COURT] we hold that the payments received by the assessee on sale of software licenses in India are not in the nature of Royalty as per the provisions of DTAA. As observed by Hon ble Supreme Court in the above cited case, there is no requirement to apply provisions of sec. 9(1)(vi) of the Act - We set aside the orders passed by Ld. CIT(A) on this issue in both the years and direct the A.O. to delete the income assessed as royalty in respect of sale of software licenses in both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blishment in India. 4. The assessee company also filed an application before Authority for Advanced Ruling ( AAR ) for determining the taxability of consideration received by it from distributors towards sale of software programs in India. The AAR held that the consideration received by the assessee is royalty within the meaning of section 9(1)(vi) of the Act and also under Article 12 of DTAA entered between India and Australia. The AO also held the same view. 5. The assessee had received a sum of ₹ 17.57 crores in assessment year 2008-09 and ₹ 16.97 crores in assessment year 2009-10 towards sale of software licenses. Accordingly, the AO brought to tax the above said amounts in assessment years 2008- 09 and 2009-10 respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the decision rendered by the AAR in the assessee s case does not constitute the law correctly and accordingly, it was set aside. Finally, the Hon ble Supreme Court concluded that the software licenses sold by the assessee by way of distributor agreements/EULA (End user licence Agreements) do not create any interest or right in such distributor/End users, which would amount to the use of or right to use any copy right. Accordingly, it was held that the payment does not constitute royalty. Accordingly, the Ld. A.R. submitted that the assessments made by the A.O. in both the years treating the payment received by the assessee on sale of software programmes as royalty are liable to be set aside. 8. We heard Ld. D.R. and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in paragraph 4 of this judgement. 170. The appeals from the impugned judgements of the High Court of Karnataka are allowed, and the aforesaid judgements are set aside. The ruling of the AAR in Citrix Systems (AAR) (supra) is set aside. The appeals from the impugned judgements of the High Court of Delhi are dismissed. The Hon ble Supreme Court has held that the payments received on sale of software licenses are not in the nature of royalty, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright under 12AA of India Singapore DTAA. The Ld A.R submitted that the DTAA entered by India with A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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