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| The Tax Publishers2023 TaxPub(DT) 1663 (Hyd-Trib) INCOME TAX ACT, 1961
Section 195
Payments made by the assessee were essentially for making use of the shrink wrap computer software wherein assessee had non-exclusive and non-transferrable license enabling use of the programme in the copyrighted product and there was no transfer of any copyright in the product nor assessee was granted any commercial right to exploit it other than for permissible usage. Therefore, impugned payments made by assessee did not fall within the definition of 'royalty' and were therefore, not taxable in India. Accordingly, no TDS was called for.
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Tax deduction at source - Under section 195 - Payments to the non-resident parent company for use of the software licences, whether royalty -
Assessee made payments to the non-resident parent company for use of the software licences. AO treated the payment to be in the nature of royalty and, therefore, disallowed deduction for want of TDS under section 195.Held: Payments made by the assessee were essentially for making use of the shrink wrap computer software wherein assessee had non-exclusive and non-transferrable license enabling use of the programme in the copyrighted product and there was no transfer of any copyright in the product nor assessee was granted any commercial right to exploit it other than for permissible usage. Therefore, impugned payments made by assessee did not fall within the definition of royalty and were therefore, not taxable in India. Accordingly, no TDS was called for.
Followed:Engineering Analysis Centre of Excellence Private Limited [TS-106-SC-2021].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
IN THE ITAT, HYDERABAD BENCH
RAMA KANTA PANDA, A.M. & K. NARASIMHA CHARY, J.M.
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