TMI Blog2022 (3) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... resident Indian end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. - Decided in favour of assessee. - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MR. JUSTICE SUDHIR KUMAR JAIN Appellant Through : Mr. Sanjay Kumar, Advocate. Respondent Through : Mr. Nageshwar Rao with Ms. Deepika Agarwal, Advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian endusers. iii) The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non-resident seller, resells the same to resident Indian distributors or end-users. iv) The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment by foreign, non-resident suppliers to resident Indian distributors or end-users. xxxx xxxx xxxx 97. The AAR then reasoned that the fact that a licence had been granted would be sufficient to conclude that there was a transfer of copyright, and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclusion that when computer software is licensed for use under an EULA, what is also licensed is the right to use the copyright embedded therein, is wholly incorrect. The licence for the use of a product under an EULA cannot be construed as the licence spoken of in section 30 of the Copyright Act, as such EULA only imposes restrictive conditions upon the end-user and does not part with any interest relatable to any rights mentioned in sections 14(a) and 14(b) of the Copyright Act. xxxx xxxx xxxx 101. Also, any ruling on the more expansive language contained in the explanations to section 9(1)(vi) of the Income Tax Act would have to be ignored if it is wider and less beneficial to the assessee than the definition contained in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Delhi are dismissed. 5. Further, this Court on similar facts has allowed writ petitions filed by the similarly placed assessee in EY Global Services Limited vs. Assistant Commissioner of Income Tax Anr, W.P.(C) 11957/2016 and EYGBS (India) Private Limited vs. Joint Commissioner of Income Tax Ors., W.P.(C) 12003/2016. The relevant portion of the said judgment is reproduced hereinbelow:- 13. A reading of the above judgment would clearly show that for the payment received by EYGSL (UK) from EYGBS (India) to be taxed as royalty , it is essential to show a transfer of copyright in the software to do any of the acts mentioned in Section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause it confines itself only to the four categories mentioned in paragraph 4, also cannot be accepted. Though the Supreme Court was on facts considering the four categories of cases that arose in the appeals before it, it has laid down the law for general application. The law, as laid down by the Supreme Court, when applied to facts of the present case, squarely covers the same in favour of the petitioners. 17. The submission made by the learned counsel for the revenue relying upon the amendment to Section 9(1)(vi) of the Income Tax Act, 1961 has also been specifically considered and rejected by the Supreme Court. 18. In view of the above, the Impugned Rulings dated 10.08.2016 passed by the learned AAR are set aside and it is held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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