TMI Blog2024 (3) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... nts paid by resident Indian end users/ distributors 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. Decided against revenue. - Shri Challa Nagendra Prasad, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Revenue : Shri Vizay B. Vasanta, CIT DR For the Assessee : Ms. Ananya Kapoor, Adv. ORDER PER C.N. PRASAD, J.M. These two appeals are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal shows that identical issue came up for consideration in assessment years 2013-14 and 2014-15 in respect of taxation of revenue from online database of text journal and books as royalty income under Article 12 of India US Double Taxation Avoidance Agreement (DTAA). The Tribunal held as under: 5. Briefly stated, the facts of the case are that the appellant is an entity incorporated under the laws of USA. At the very outset, we have to state that basis the provisions of section 92 of the Act, the assessee is entitled to invoke the provisions of India-USA DTAA to the extent it is more beneficial to the assessee. Our view is fortified by the decision of the Hon ble Supreme Court in the case of Union of India Vs. Azadi Bachao Andolan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot covered within the scope of royally winch may gel covered under the term Royalty as per the Act. Further, unless the payments are made towards acquiring the right to use a copyright in a literary, artistic, or scientific work, definition of Royalty would not get attracted. Furthermore, in determining whether or not a payment is for the use of copyright, it is important to distinguish between a payment for the right to use the copyright in a programme and the right to use the programme itself. We have outlined below our detailed submission on the distinction between copyright and the copyrighted article: A perusal of the above Article shows that it brings within the ambit of the definition of Royalty the payment made for use of, or the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red a copyright or right to use the copyright in the data. In our considered view, for determining whether or not a payment is for use of copy right, it is important to distinguish between a payment for right to use copy right in a program and right to use program itself . 11. In the case in hand, the revenue derived by the assessee from granting limited access to its data base is akin to sale of book, wherein purchaser does not acquire any right to exploit the underlying copyright. When the purchaser reads the book, he only enjoys the content. Similarly, user of the data base does not receive the right to exploit the copyright in the database, he only enjoys the product in the normal course of his business. 12. Facts on record show that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 end users/ distributors to non-resident computer software manufacturers/suppliers, as consideration for :he 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. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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