TaxTMI 
TaxTMI 
2022 (9) TMI 1097
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....ssessee") for the assessment years 2008-09, 2009-10 and 2010-11 under section 201(1) of the Income Tax Act, 1961 (for short "the Act"), assessee filed this appeal. Facts involved for all these assessment years are similar and mostly the grounds of appeal. We, therefore, deem it just and convenient to dispose of these appeals by way of this common order, taking the appeal for the assessment year 2008-09 as a lead case. 2. Brief facts of the case are that the assessee is a company engaged in the business of providing software development and other Information Technology Enabled Services (ITES). During the assessment year 2008-09, learned Assessing Officer noticed that total payments amounting to US$ 378,989 were made to M/s. GE Industrial Sy....
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....but only a standard software which does not contain any element of proprietary knowledge which could be re-used; and that the payments were made for the purchase of goods which cannot be taken as royalty. Assessee referred to the terms of agreement, entered into with the vendors of the software, in support of their contention that what was granted and agreed to grant to the assessee was a non-exclusive and non-transferrable right to use the software without further right either to distribute or to copy the software or the source code therein, it does not give rise to any royalty. 4. Ld. CIT(A) on an appraisal of the contentions raised by the assessee in the light of the agreements and case law on this aspect observed that Pro-E software pu....
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....all over the world which implies that greater the use of bandwidth for greater time the greater the services of M/s. GEC servers dedicated to the data, voice and other services used by the assessee. On this premise, the Ld. CIT(A) held that the payments made for such usage by the assessee amounts to royalty, and for want of deduction of the tax at source the assessee is 'assessee-in-default'. 6. Assessee is, therefore, before us challenging the reasoning adopted by the Ld. CIT(A) is fallacious, inasmuch as the Ld. CIT(A) does not dispute the fact that the assessee purchased the software in question and services. According to the learned AR, when once the computer software is purchased by the assessee directly, who is a resident, from a for....
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.... by Parametric Technology Corporation (PTC), US that helps in developing design concepts, detailed drawings generation, system validation, developing manufacturing tools and it is in confirmation. One of the software supporting services, Global Web, it is a web server owned by GEC, USA and hosts the internet of the assessee company as well as GEISA, and the payments were made to M/s GEC for availing a host of services to enable the assessee in its business of software development and provision of other services. The equipment used was industrial and commercial in nature. Submission of the assessee was that only bandwidth was provided, it is a data base software which hosts GE's Internet to help the IIC division of GEIE to share internal inf....
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....ed that the PTC represents and warrants that it is the sole owner of the licensed program or has procured the license program under a license from the bonus thereof, and PTC further represents and warrants that it has full power and authority to grant the rights therein granted without the consent of any other person. 10. Nothing could be more clear that the contents of the agreement referred to above to show that PTC is the sole owner of the Pro-E software and GEISA/GEIE only has limited right to use the software subject to the conditions stipulated in the agreement. There is no sale of copyright of software, but the sale is only in respect of the rights to use the software and not the right to the code in itself. When once the transactio....