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| The Tax Publishers2020 TaxPub(DT) 3407 (Mum-Trib) INCOME TAX ACT, 1961
Section 195 Section 9(1)(vi), Expln. 2
Payment for software licence was actually payment for a product giving certain results, and not the process of execution of instructions embedded therein was not even allowed to tinker with process on the basis of which such software was running or to even work around technical limitations of the software. Accordingly, consideration for database access being coupled with software licence could not be treated as royalty and, therefore, assessee was not liable to withhold tax under section 195.
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Tax deduction at source - Under section 195 - Payment for software licence made to non-resident treated as royalty taxable in India -
Assessee made payment to Singapore based entity towards licence fee for software. AO treated the payment as royalty and thus disallowed deduction for want of TDS under section 195. Held: Payment for software licence was actually payment for a product giving certain results, and not the process of execution of instructions embedded therein was not even allowed to tinker with process on the basis of which such software was running or to even work around technical limitations of the software. Accordingly, consideration for database access being coupled with software licence could not be treated as royalty and, therefore, assessee was not liable to withhold tax under section 195.
Followed:ITO v. Cadila Healthcare Ltd. [(2017) 162 ITR 575 (Ahd) : 2017 TaxPub(DT) 0173 (Ahd-Trib)].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, MUMBAI BENCH
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