TMI Blog2023 (9) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... India. Thus, the assessee itself is not the manufacturer or creator of software. Therefore, assessee cannot own copyright over the softwares as the manufacturer or creator of the software can hold copyright over the software. From the submissions made before the departmental authorities, these facts are clearly discernible. Thus, the products sold by the assessee are ready to use off the shelf or shrink wrapped softwares, which are nothing but copyrighted articles. From the nature of software products sold by the assessee, it can be very well construed that the copyright over the software sold by the assessee were owned by the companies creating such softwares like Microsoft, Adobe, etc. The assessee is merely a trader of software, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority holding that the amount received by the assessee from sale/distribution of software is not royalty within the meaning of Article 12(3) of India Singapore Double Taxation Avoidance Agreement (DTAA). 3. Briefly the facts are, the assessee is a non resident corporate entity incorporated under the laws of Singapore and a tax resident of Singapore. For the assessment year under dispute assessee filed its return of income on 31.03.2018 declaring total income of Rs. 1,56,50,870/-. As observed by the Assessing Officer, the assessee is engaged in the business of providing end to end software and cloud technology solution to its clients. In the year under consideration the assessee entered into certain transactions in India and earned re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Assessee contested the aforesaid addition before learned Commissioner (Appeals). 5. After considering the submissions of the assessee in the context of facts and materials available on record and following the ratio laid down by the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT (2021) 125 taxman.com 42 (SC). Learned Commissioner (Appeals) ultimately accepted assessee s claim that the revenue earned by the assessee is in the nature of sale of a copyrighted article and not for transferring the right to use any copyright. Thus, he held that the amount received is not in the nature of royalty but in the nature of business income and in absence of a Permanent Establishment (PE) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and were sold on principal to principal basis. She submitted, the assessee is a non resident distributor who purchases software from non-resident manufacturers/sellers and re-sales them to distributors/end users in India. She submitted, when the assessee itself does not have any right in the copyright and purchases from another party for re-sale, how can it transfer such non-existent right to others? Thus, she submitted, assessee s case is squarely covered by the decision of the Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT (supra). Further, she submitted the decision of the Tribunal in case of Microsoft Corporation (supra) relied upon by the Revenue could be of no help as in an appeal prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customers in India. In case of Engineering Analysis (supra), the Hon ble Supreme Court had an occasion to examine when the consideration received from sale of software can be considered to be in the nature of royalty. The Hon ble Supreme Court had segregated the transactions relating to the sale of software to following four categories: i) The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserve, though, learned Departmental Representative had placed strong reliance upon the decision of the Tribunal in case of M/s Microsoft Corporation Vs. ADIT (supra), however, while deciding the appeal filed by Microsoft Corporation, the Hon ble Jurisdictional High Court in order dated 18.07.2022 in ITA No. 663/Del/2011, following the decision of the Hon ble Supreme Court in case of Engineering Analysis Center of Excellence Pvt. Ltd. Vs. CIT (supra), has allowed assessee s appeal, thereby, reversing the decision of the Tribunal. Therefore, the decision cited by learned Departmental Representative would be of no help to the Revenue. 12. In view of the aforesaid, we do not find any infirmity in the decision of learned Commissioner (Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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