TMI Blog2022 (3) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... to non-resident 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. Also see EY GLOBAL SERVICES LIMITED AND EYGBS (INDIA) PRIVATE LIMITED [ 2021 (12) TMI 571 - DELHI HIGH COURT] - Decided in favour of assessee. - HON'BLE MR. JUSTICE MANMOHAN AND HON'BLE MR. JUSTICE DINESH KUMAR SHARMA Appellant Through: Mr. Sanjay Kumar with Ms. Easha Kadian, Advocates. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users. 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 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 14(b) of the Copyright Act read with sub-section (a)(i)-(vii) thereof. Thus, the conclusion 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 ig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rix Systems (AAR) (supra) is set aside. The appeals from the impugned judgments of the High Court 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of the Supreme Court in Engineering Analysis Centre (supra) cannot be applied because 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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