The Tax Publishers2021 TaxPub(DT) 1805 (Bang-Trib)

INCOME TAX ACT, 1961

Section 195

Where the amounts paid by assessee 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, was not the payment of royalty for the use of copyright in the computer software, and that the same did not give rise to any income taxable in India, as a result of which the persons referred to in section 195 were not liable to deduct any TDS under section 195.

Tax deduction at source - Under section 195 - Payment made to non-resident computer software manufacturers/suppliers as consideration for resale/use of computer software through EULAs/distribution agreements -

Assessee filed appeal against disallowance made under section 40(a)(i) for non-deduction of TDS on payments made by it to U.S. company towards purchase of software as royalty. Held: Admittedly, the issue involved in these appeals had been set at rest in a recent case of Engineering Analysis Centre of Excellence Pvt. Ltd. 2021 SCC Online SC 159 : 2021 TaxPub(DT) 1208 (SC). While considering the issue of royalty on sale of software, decision in case of CIT v. Samsung Electronics Co.Ltd. [(2011) 203 Taxman 477 (Karn-HC): 2011 TaxPub(DT) 2175 (Karn-HC)] was also considered, wherein it was held that the amounts 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 were not liable to deduct any TDS under section 195. Thus, following the same, no disallowance was required to be made under section 40(a)(i).

Followed:Engineering Analysis Centre of Excellence Pvt. Ltd. 2021 SCC Online SC 159 : 2021 TaxPub(DT) 1208 (SC) and CIT v. Samsung Electronics Co. Ltd. [(2011) 203 Taxman 477 : 2011 TaxPub(DT) 2175 (Karn-HC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08 to 2010-11



IN THE ITAT, BANGALORE BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com