TMI Blog2021 (8) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... sion rendered by the co-ordinate bench in AY 2016-17 [ 2021 (7) TMI 615 - ITAT BANGALORE ] we hold that receipts by way of sale of software licenses and provision of ancillary support services connected with the sale of software products cannot be assessed as royalty/FTS income in the hands of the assessee. Accordingly, we set aside the order passed by the AO on this issue. Appeal filed by the assessee is allowed. - IT(TP)A No. 2867/Bang/2018 - - - Dated:- 5-8-2021 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member For the Appellant : Shri T. Suryanarayana, A.R. For the Respondent : Ms. Neera Malhotra, D.R. ORDER PERB.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. placed reliance on the decision rendered by Hon ble High Court of Karnataka in the case of CIT Vs. Samsung Electronics Company Ltd. in ITA No.2808 of 2005 dated 15.10.2011. Accordingly, he proposed to assess the sale receipts on account of sale of software licenses and support services amounting to Rs.42,15,17,354/- as royalty/FTS income in the draft assessment order. 3. The assessee filed the petition before Ld. DRP, which held that the impugned receipts are rightly assessable as royalty income for use of copy right. Accordingly, the A.O. passed the final assessment order assessing the above said income as royalty/FTS. Aggrieved, the assessee has filed this appeal before us. 4. The Ld. A.R. submitted that the assessee has sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded on account of the judgment delivered by the Hon ble Supreme Court in the case of ENGINEERING ANALYSIS CENTRE FOR EXCELLENCE PRIVATE LIMITED VS COMMISSIONER OF INCOME TAX ANOTHER AIR 2021 SC 124 / 432 ITR 471 (SC). The Apex Court in the aforesaid case has held in paragraphs 27, 47, 52, 168 169 as under: 27. The machinery provision contained in Section 195 of the Income Tax Act is inextricably linked with the charging provision contained in Section 9 read with Section 4 of the Income Tax Act, as a result of which, a person resident in India, responsible for paying a sum of money, chargeable under the provisions of [the] Act , to a non-resident, shall at the time of credit of such amount to the account of the payee in any mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with are referred to Section 30 of the Copyright Act, inasmuch as Section 30 of the Copyright Act speaks of granting an interest in any of the rights mentioned in Sections 14(a) and 14(b) of the Copyright Act. The EULAs in all the appeals before us do not grant any such right or interest, least of all, a right or interest to reproduce the computer software. In point of fact, such reproduction is expressly interdicted, and it is also expressly stated that no vestige of copyright is at all transferred, either to the distributor or to the end-user. Asimple illustration to explain the aforesaid position will suffice. If an English publisher sells 2000 copies of a particular book to an Indian distributor, who then resells the same at a profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 12 of the DTAAs mentioned in paragraph 41 of this judgment, it is clear that there is no obligation on the persons mentioned in S.195 of the Income Tax Act to deduct tax at source, as the distribution agreements/ EULAs in the facts of these cases do not create any interest or right in such distributors/endusers, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (S. 9(1) (vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases. 169. Our answer to the question posed before us, is that the amounts paid by resident Indian endusers/distributors to nonresident computer ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
