Case Law Details
DCIT Vs HP Services (Singapore) Pvt. Ltd. (ITAT Delhi)
Ground No. 1 is challenge to the deletion of addition made by the AO qua consideration received by the Assessee from various entities on account of sale/supply of software, by treating as “royalty” within the meaning of Article 12(3) of the India-Singapore-DTAA.
The claim of the revenue more or less is that transaction of sale of computer software to its customers implicit involved making of multiple copies of the software clearly indicates “transfer of copyright” and therefore the consideration received qua said transactions amounts to “royalty” as per the Act and DTAA. 9.1
The Assessee on the contrary claimed that the Assessee purchasing the software from ‘Microsoft company’ and as per terms of the agreement with ‘Microsoft’ having no right to reproduce or to make any change in ‘off the shelf software’ and therefore, the question of passing a right by the Assessee to its customers does not arise.
We observe, recently the Hon”ble Apex Court in para no 173 of its judgment in the case of Engineering Analysis Centre of Excellence Pvt. Ltd (supra), clearly 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.
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