TaxTMI 
TaxTMI 
2015 (4) TMI 1273
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmon grounds in all the three appeals. The grounds raised for the AY: 2009-10 are as under; "1.The order of the ld.CIT(A)-IV to the extent prejudicial to the assessee is bad in law. 2. The ld.AO has erred in passing the order without considering all the submissions and/or without appreciating properly the facts and circumstances of the case and the law applicable. The ld. CIT(A)-IV has erred in confirming the action of the AO. 3. The ld.AO and CIT(A)-IV have erred in not appreciating that; i) The qppellant was distributor of computer software licenses and the impugned payments constituting payments for the purpose of 'copyrighted article or product' were not liable for deduction of tax at source under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....termined by the AO and as confirmed by the CIT(A) being not correct is to be deleted. 7. The interest levied u/s 201(1A) of the Act to be deleted. The appellant submits that each of the above grounds/sub-grounds are independent and without prejudice to one another. 3. The assessee is a company engaged in the business of providing computing communication and control-solutions to the energy and automation industry. The solutions are stated to be offered in the form of sale of traded software and in-house developed products/software. The assessee purchases shrink-wrap software from various non-resident vendors for the purpose of distribution and trading of software to end users. The computer software comes with shrink-wrap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of CIT Vs M/s Wipro Ltd dated 25-08-2010 in ITA No.507(Bang.)/2002 and submitted that in an identical case, the Hon'ble High Court has held that the payments were not royalty. Thus, the learned AR submitted that the Division Bench of the Hon'ble High Court has differed from the view taken in the case of M/s Samsung Electronics Co. Ltd (Supra) and therefore, same view has to be taken in favour of the assessee by this Tribunal. 5. On the other hand, learned DR has relied on the order of the authorities below and submitted that the Hon'ble High Court has repeatedly taken this view in the case of M/s Samsung Electronics Co. Ltd (Supra) as well as in the case of /s Synopsis International Ltd. (Supra) vide order dated 03-08-2010. This he has r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r decision of the Tribunal. Even otherwise, we note that the judgment in case of M/s Synopsis International Ltd (Supra) is a prior judgment of the Hon'ble jurisdictional High Court on this issue, then the judgment in case of M/s Wipro Ltd (Supra). Further, the issue before the Hon'ble jurisdictional High Court in the case of M/s Wipro Ltd (Supra) being the last substantial question as reproduced in para-37 of the judgment is as under; "37. The last substantial Question of law famed is as under; "Whether the Tribunal is correct in allowing expenditure on imported software when the expenditure per se is capital in nature and is not allowable?." Thus, the issue before the Hon'ble jurisdictional High Court in case of M/s Wi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re sold in India was shrink-wrapped software and were like any other goods. The sale of such goods should give rise to income from business but, however, since the assessee did not have any Permanent Establishment (PE) in India such business income was not taxable. As per the AO, the consideration received by the assessee on sale of shrink-wrapped software in India was not akin to sale of goods, but only right to use Computer Software and the consideration so received for giving such a ' right to use' partakes the character of 'royalty' within the meaning of India and Ireland. Thereafter, the AO after analyzing the provisions of the Act, DTAA, meaning of the term 'royalty' vis-à-vis the transaction, came to the conclusion that an amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se of the copyright in the said software. Hence, the contention of the assessee that there is on transfer of copyright or any part thereof under the agreements entered into by the assessee with the nonresident was held to be not acceptable. The Hon'ble Court further held that for the license granted to the assessee to make copy of the software into the hard disk of the designated computer and to take a copy for back up purposes, the end user has no other right and the said back up would have constituted an infringement of copyright. That right to make copy of the software itself is a part of copyright. It was further held that what is transferred is the right to use the software, an exclusive right which the owner of the copyright i.e the s....