TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 158
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....ord, erred in assessing the income of the Appellant at Rs. 23,21,52,964/-, by treating the receipts to be in the nature of 'royalty' under Section 9(1) (vi) of the Act as well as Article 12(3) of the DAA. 3. That the AO erred on facts and in law in treating the receipts from sale/distribution of software in the hands of the Appellant as 'royalty' without appreciating the settled principles laid down by the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Limited v. CIT and another, (2021) 125 taxmann.com 42 (SC), which is squarely applicable to the present case 4. That the AO failed to appreciate that the Appellant is a mere distributor of the software and that ownership of the copyright continues to remain with the original owner of the software, throughout the term of the agreement. Therefore, the Appellant grants only the use of the software with limited, non-exclusive and non-transferable right to third party and thus, involves only the sale of the copyrighted article. 5. That the AO, contrary to the facts of the case and material on record, grossly erred in holding that the Indian Associated Enterprise ('AE....
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....thout appreciating that such rights of the users, in terms of Article 5 of the above Council, are restricted to only correct errors that affects the operation of the software, and does not grant rights to modify the source code. 14. That the AO failed to appreciate that the permission granted to the affiliates of the sub-licensee to use the software does not result in the receipts being in the nature of "royalty". 15. That the AO failed to appreciate that the modifications as specified in the agreements with third parties merely pertains to modifications to suit the third party's business operations and does not involve/permit modifications to the source code. 16. That the AO ought to have appreciated that the copies of the software as stated in the agreements with third parties refers to creation of duplicates for the purpose of back up and not for commercial use. 17. That the Dispute Resolution Panel, contrary to the provisions of Section 144C of the Act, grossly erred in remanding the matter to the AO for verification. 18. That without prejudice and in any event, the AO erred in not conducting proper verification in line with the directions of the DRP, and therefor....
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....components of reverse-training (sub-licensee training the personnel of the licensor) and associated services for the end user to be provided by the AE. c. Clause 12 itself mentions the copies of the software made by the AB for onward sale d. As per Schedule 2 of the contract with the AE, the actual software being talked about is: The Kondor software suite, including Kondor Global Risk which includes the following components: Core Components: Real Time Date Aggregation Platform Asset Class Agnostic Date Model Integration Api Distributed Architecture Credit Risk And Limit Management Components Credit Risk Analysis Engine Limits Rules Engine API For Real Time Limit Management In The From Office Collateral Management Credit Line Management Advanced Simulation Credit Risk Management Credit Value at Risk Market Risk Management Components Dynamic Risk Dashboard and Visualization Tools Integration API Dedicated To Market Risk Rate Management Module Thus, it is a real time credit and market risk evaluation dashboard and engine that converts billions of data points into insightful information using APIs for integration with third party and in house dev....
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....ses of the agreement between the assessee and Indian AEs, the assessee has submitted before the DRP the following rebuttal. This submission as extracted from the order of the ld. DRP. "(A). Agreement between the Assessee and MTRM 1. W.r.t. clause 5 of the agreement: It is stated that the learned AO has grossly misinterpreted clause 5 of the agreement by concluding that the subsidiary i.e., MTRM is the sub-licensor, whereas the agreement clearly defines that the assessee company is the sub-licensor. Further, the Assessee states that there are no development/ update rights passed on to MTRM by is the Assessee who shall undertake to develop or procure development to software including update to MTRM. 2. W.r.t clause 1 of the agreement: With respect to clause 1 of the agreement, the term 'reproduce' included in the definition of the term "USE" commonly refers to the right to make copies of the work, which generally includes storage of such work, for its own business purpose. Hence, it is not a case that MTRM (i.e., distributor) has access to the source code and is reproducing the same for commercial use. 3. W.r.t clause 6 of the agreement: Assessee submits that cl....
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....defined under clause 1.24 and under clause 1.3 of the agreement wherein it states that name affiliate would include holding/subsidiary company of the sub-licensee. Hence, it is only for internal use (by the group companies of Indusind Bank) against the contention of the Learned AO that the sub-licensee can allow use by any third party. The assessee has also made reference to clauses 17.1 and 17.4 in this regard. 3. W.r.t clause 7 of the agreement: The Assessee submits that the term Modification used in the above mentioned clause of the agreement merely means that Indusind Bank Limited can modify the configurations implemented through use of Finastra application toolkit or approved toolkit, and not through a source code change. As per clause 7, Indusind Bank Limited can only hold license to use such Modifications for as long original software license term. 4. W.r.t clause 1.27 of the agreement: Assessee submits that clause 16.1 of the agreement clearly provides that Indusind Bank Limited has rights to make Copies of the software, only for the limited purpose of keeping back-ups. Owing to above explanations, it can be seen that there is no source code access given to Indusind....