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| The Tax Publishers2020 TaxPub(DT) 4911 (Del-Trib) INCOME TAX ACT, 1961
Section 195
Where Singapore based entity brought various licenses from third party manufacturers and in turn sold the same to Indian assessee then this was a clear case of providing services by Singapore entity to the assessee company. Hence, Computer maintenance expenses paid to Singapore entity could not be treated as royalty and no TDS was called for.
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Tax deduction at source - Under section 195 - Computer maintenance expenses paid to non-resident treated as royalty -
Assessee-company claimed deduction of payment made to entity based at Singapore towards computer system maintenance and support services. AO treated the payment as royalty and thus disallowed deduction for want of TDS under section 195.Held: From the bare perusal of nature of services rendered by Singapore entity to assessee, it could be seen that Items Nos. 1-5 of concerned agreement talks only about pure rendition of services and Items No.6-12 talked about entitlement of subscription to use to latest version of software supplied. It was not in dispute that Singapore entity had also purchased software and also sold the same to assessee. From the scope of services rendered by Singapore entity to assessee, it could be safely concluded that said case did not fall within the ambit of purchase of any copyrighted article by assessee so as to constitute the same to be in the nature of royalty. Singapore entity buys various licenses from third party manufacturers and in turn sold the same to Indian assessee. Singapore entity was bought not the owner of any copyright. This was a clear case of providing services by Singapore entity to the assessee company. Hence, same could not fall within the ambit of royalty. Accordingly, no TDS was called for.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
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