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TMI Blog2022 (7) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal ('ITAT') in ITA Nos. 1331 to 1336/Del/2008 for Assessment Year(s) 1999- 2000 to 2004-2005. Present appeals had been admitted on 25th April, 2011 and the following substantial questions of law were framed for consideration: - (i) Having concluded that the Microsoft Regional Sales corporation and Microsoft Operations Pte. Ltd. could not be treated as a legal facade, and that the Appellant under its agreement with Microsoft Operations Pte. Ltd. had received only 35% / 40% of the net selling price received by the Microsoft Regional Sales Corporation from the distributors, whether the Tribunal was right on facts and in law in then holding that the entire payment received by Microsoft Regional Sales Corporation from the sale of MS Ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. ii) The second category of cases deals with resident Indian 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. 5. These cases have a chequered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression 'copyrighted article', which could have been used if the intention was as claimed by the applicant. In the circumstances, the distinction sought to be made appears to be illusory." 98. This ruling of the AAR flies in the face of certain principles. When, under a non-exclusive licence, an end-user gets the right to use computer software in the form of a CD, the end-user only receives a right to use the software and nothing more. The enduser does not get any of the rights that the owner continues to retain under section 14(b) of the Copyright Act read with subsection (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 embed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment. 174. The appeals from the impugned judgments of the High Court of Karnataka are allowed, and the aforesaid judgments are set aside. The ruling of the AAR in Citrix Systems (AAR) (supra) is set aside. The appeals from the impugned judgments of the High Court of Delhi are dismissed." Accordingly, substantial questions of law (ii) and (iii) of the present appeals are allowed in terms of the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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