Visteon Technical and Services Centre Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 3143/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7684 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-11-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: N V BALAJI
• Keywords: Double taxation relief; Non-deduction of tax

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . . . , !'. . # $ % , ' () BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3143/MDS/2016 * +* /ASSESSMENT YEAR: 2014-15 M/S.VISTEON TECHNICAL AND SERVICES CENTRE PVT. LTD., OFFICE LEVEL #3, BUILDING FORTIUS, OLYMPIA TECHNOLOGY PARK NO.1, SIDCO INDUSTRIAL ESTATE, GUINDY, CHENNAI, TAMIL NADU-600 032. VS. THE DY. COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION-2(2), 121, MAHATMA GANDHI ROAD, CHENNAI-600 034. [PAN: AACCV 3261 H ] ( ,- /APPELLANT) ( ./,- /RESPONDENT) ,- 0 1 / APPELLANT BY : MR.N.V.BALAJI, ADV. ./,- 0 1 /RESPONDENT BY : MR.SHIVA SRINIVAS, JCIT # 0 2' /DATE OF HEARING : 30.01.2017 34+ 0 2' /DATE OF PRONOUNCEMENT : 28.02.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 09.09.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 16, CHENNAI, IN ITA NO.89/CIT(A)-16/14-15 FOR THE AY 2014-15. ITA NO.3143/MDS/2016 :- 2 -: 2.0 ALL THE GROUNDS OF APPEAL ARE RELATED TO TREATING THE ASSESSEE IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE AND IMPO SING TAX AND INTEREST AMOUNTING TO 21,93,128/- U/S.201(1)/(1A) OF INCOME TAX ACT. DUR ING THE FY 2013-14 FROM THE FORM-15CA/CB FILED BY THE A SSESSEE, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS AO) NOTICED THAT THE ASSESSEE HAS REMITTED A SUM OF 1,75,54,741/- TO M/S.VECTOR SOFTWARE INC., USA(VECTOR) BUT NOT DEDUCTED TDS ON REMITT ANCES TO NON-RESIDENTS AS REQUIRED U/S.195 OF INCOME TAX ACT. THE ASSESSE E EXPLAINED BEFORE THE A.O THAT THE PAYMENT WAS MADE TOWARDS PURCHASE OF SOFTWARE LICENSE FROM M/S.VECTOR SOFTWARE INC., USA. THE EXPLANATIO N OF THE ASSESSEE WAS REPRODUCED BY THE AO IN PAGE NO.2 OF THE ASSESSMENT ORDER AND FOR THE SAKE OF CONVENIENCE THE SAME IS EXTRACTED AS UNDER: THE ASSESSEE IN ITS SUBMISSION HAS STATED THAT THES E PAYMENTS ARE TOWARDS PURCHASE OF SOFTWARE LICENSES FROM VECTOR SOFTWARE INC., USA. V ECTOR IS A CORPORATION AND A RESIDENT OF USA HAVING ITS PRINCIPAL PLACE OF BUSINESS AT THE U SA. THE COMPANY HAS BEEN GRANTED A NON-EXCLUSIVE, NON-TRANSFERABLE SOFTWARE LICENSE BY VECTOR USED FOR CARRYING OUT THE TESTING IN CONNECTION WITH THE SOFTWARE DEVELOPED BY THE CO MPANY FOR AUTOMOTIVE INDUSTRIES. ACCORDING TO ASSESSEE, THE KEY TERMS IN RELATION TO LICENSING OF SOFTWARE ARE: THE LICENSE CAN BE USED BY THE COMPANY ONLY IN CONN ECTION WITH ITS INTERNAL BUSINESS THE COMPANY CANNOT DISTRIBUTE EXTERNALLY OR SUB-LIC ENSE OR DEMONSTRATE THE SOFTWARE TO ANY THIRD PARTY. ASSESSEE SUBMITTED THAT, THE SOFTWARE IS USED BY THE COMPANY ONLY FOR INTERN AL PURPOSES OF THE BUSINESS AND CANNOT BE SHARED EXTERNALLY OR SUB-LICENSED TO BE T HIRD PARTY OR COMMERCIALLY EXPLOITED. THE CONSIDERATION PAID FOR USE OF SOFTWARE LICENSE IS NOT TAXABLE AS ROYALTY UNDER THE TREATY SINCE IT IS NOT PAID FOR THE RIGHT TO U SE OF THE COPYRIGHTED BUT ONLY FOR USED OF COPYRIGHTED ARTICLE. THE COMPANY IS NOT PERMITTED TO MAKE COPIES OR MAKE ALTERNATIONS TO THE SOFTWARE. THE ASSESSEE HAS RELIED UPON THE FOLLOWING JUDICIA L DECISIONS OF VARIOUS COURTS. ITA NO.3143/MDS/2016 :- 3 -: 1. INFRASOFT LTD. (ITA NO.1034/2009.) 2. DIT VS. ERICSSON A.B. (2012) 343 ITR 470 (DEL) 3. DIT VS NOKIA NETWORKS OY (2012) (212 TAXMANN 68.) 4. FINANCIAL SOFTWARE AND SYSTEMS PVT. LTD. (CHENNA I ITAT) (ITA NO. 2190 TO 2196 AND 2199/MDS/2013) 5.MUMBAI TRIBUNAL IN THE CASE OF NOVEL INC. 6.DASSAULT SYSTEMS KK, (AAR NO.821/2009.) ASSESSEE ALSO SUBMITTED THAT- WE SUBMIT THAT WHERE IT HAS BEEN THE INTENTION BETWEEN THE TWO CONTRACTING STATES TO COVER PAYMENT FOR COMPUTER SOFTWARE PROGRAMME WI THIN THE AMBIT OF TAXATION AS ROYALTY, THE SAME HAS BEEN EXPRESSLY DONE IN THE RE SPECTIVE TREATIES. IN THIS RESPECT, RELIANCE CAN BE PLACED ON THE DEFINITION OF ROYALTY UNDER ARTICLE 12 OF THE INDIA-RUSSIA TAX TREATY. 3. THE TERM ROYALTIES AS USED IN THIS ARTICLE ME ANS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR RIGHT TO USE, ANY COPYRIGHT OF A LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS OR RECORDINGS ON ANY MEANS OR REPRODUCTION FOR USE IN CONNECTION WITH TELEVISION OR RADIO BROADCASTING, A NY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, KNOW-HOW COMPUTER SOFTWARE PROGRAMME, SECRET FORMULA OR PROCESS, OR ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT OR F OR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT OR FOR INFORMATI ON CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE... 3.0 THE AO FROM THE INVOICES RAISED BY THE VECTOR NOT ICED THAT THE ASSESSEE ACQUIRED THE LICENSE TO USE THE SOFTWARE F OR A PARTICULAR TENURE SUBJECT TO CERTAIN TERMS AND CONDITIONS AND HELD TH AT THE PAYMENT MADE TO M/S.VECTOR SOFTWARE INC., USA, WAS IN THE NATURE OF ROYALTY AND TAXABLE U/S.9(1)(VI) OF INCOME TAX ACT. ACCORDINGLY, THE AO TREATED THE ASSESSEE AS THE ASSESSEE IN DEFAULT AND CHARGED INTEREST OF 2 1,93,128/- U/S.201(1)/(1A) FOR NON-DEDUCTION OF TAX AT SOURCE. 4.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA L) (HEREINAFTER REFERRED TO AS LD.CIT(A)) AND THE LD.CIT(A) CONFI RMED THE ORDER OF THE LD.AO. ITA NO.3143/MDS/2016 :- 4 -: 5.0 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSE SSEE FILED APPEAL BEFORE THIS TRIBUNAL. 6.0 APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED TH AT THE ASSESSEE HAS PURCHASED THE SOFTWARE FOR THE EXCLUSIVE USE OF THE COMPANY IN THE AUTOMOBILE INDUSTRY. THE LICENSE CAN BE USED BY TH E COMPANY ONLY IN CONNECTION WITH THE INTERNAL BUSINESS AND THE COMPA NY CANNOT DISTRIBUTE OR SUB-LICENSE OR DEMONSTRATE THE SOFTWARE TO ANY O THER PARTY AND THE SAME CANNOT BE SAVED EXTERNALLY AND THE CONSIDERATI ON PAID FOR USE OF SOFTWARE LICENSE IS NOT TAXABLE AS ROYALTY. THE AS SESSEE ALSO STATED THAT UNDER US,DTAA THERE WAS NO SPECIFIC REFERENCE TO T HE SOFTWARE, HE REFERRED THE TREATY OF INDO US TREATY WHICH READS A SUNDER: THE TERM ROYALTIES AS DEFINED IN INDIA-USA DTAA: A) PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FO R THE USE OF, OR THE RIGHT TO USE, AY COPYRIGHT OF A LITERARY , ARTISTIC, OR SCIENTIFIC WORK, INCLUDING CINEMATOG RAPH FILMS OR WORK ON FILM, TAPE OR OTHER MEANS OF REPRODUCTION FOR US E IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADE MARK, DESIGN OR MOD EL, PLAN, SECRET FORMULA OR PROCESS, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL O R SCIENTIFIC EXPERIENCE, INCLUDING GAINS DERIVED FROM THE ALIENATION OF ANY SUCH RIGHT OR PR OPERTY WHICH ARE CONTINGENT ON THE PRODUCTIVITY, USE, OR DISPOSITION THEREOF; AND B) PAYMENTS OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL, OR SCIENTIFIC EQUIPMENT, OT HER THAN PAYMENTS DERIVED BY AN ENTERPRISE DESCRIBED IN PARAGRAPH 1 OF ARTICLE 8 (S HIPPING AND AIR TRANSPORT) FROM ACTIVITIES DESCRIBED IN PARAGRAPH 2(C) OR 3 OF ARTICLE 8. 6.1 HE ALSO REFERRED THE RELEVANT CLAUSES OF THE LIC ENSE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE VECTOR SOFT WARE INC.USA WHICH READS AS UNDER: (C) CUSTOMER SHALL NOT: REVERSE COMPILE, DISASSEMBLE, OR OTHERWISE REVERSE ENGINEER ANY VECTOR SOFTWARE, OR ALLOW ANYONE ELSE TO DO SO (EXCEPT ONLY TO THE EXTE NT SUCH PROHIBITION IS CONTRARY TO APPLICABLE LAW), AS VECTOR OFFERS ALTERNATIVES TO F ACILITATE INTEROPERABILITY. ITA NO.3143/MDS/2016 :- 5 -: REMOVE OR DESTROY ANY PROPRIETARY MARKINGS OR LEGEN DS OR ANY ENCRYPTED LICENSE KEYS OR SIMILAR SECURITY DEVICES PLACED UPON OR CONTAINE D IN ANY VECTOR SOFTWARE. MODIFY OR ADAPT THE VECTOR SOFTWARE OR CREATE A DER IVATIVE WORK BASED ON OR INCORPORATE THE VECTOR SOFTWARE INTO OR WITH OTHER SOFTWARE. DISTRIBUTE EXTERNALLY, SUBLICENSE, SHARE, DISPLAY, OR DEMONSTRATE OR IN ANY MANNER MAKE THE VECTOR SOFTWARE AVAILABLE TO ANY THIRD PAR TY, WITH OR WITHOUT COMPENSATION. USE THE VECTOR SOFTWARE TO DEVELOP OTHER SOFTWARE F OR DISTRIBUTION, SALE OR LICENSE TO THIRD PARTIES IF SUCH SOFTWARE IS INTEROPERABLE, OR IS INTENDED TO BE USED, THE VECTOR SOFTWARE. USE ALL OR ANY PART OF THE VECTOR SOFTWARE TO CREAT E OTHER SOFTWARE A PRINCIPAL PURPOSE OF WHICH IS TO PERFORM THE SAME OR SIMILAR FUNCTION S AS, OR TO REPLACE ANY COMPONENT OF, THE VECTOR SOFTWARE. (D) NOT A SALE. CUSTOMER AGREES THAT CUSTOMER DOES NOT HAVE, AND DOES NOT HEREBY ACQUIRE, ANY TITLE OR RIGHTS OF OWNERSHIP IN ANY VE CTOR SOFTWARE OR, EXCEPT FOR THE LICENSE RIGHTS HEREBY GRANTED, ANY RIGHT TO USE, COPY, TRAN SFER OR DISCLOSE ALL OR ANY PORTION OF ANY VECTOR SOFTWARE. THE VECTOR SOFTWARE IS PROTECTED B Y COPYRIGHT LAWS AND INTERNATIONAL TREATIES. THE ASSESSEE ALSO RELIED ON THE DECISION OF JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S.VINZAS SOLUTIONS INDIA PVT. LTD. IN ITA NO.861/2016 DATED 04.01.2017. ON THE OTHER HAND TH E LD.DR RELIED ON THE LOWER AUTHORITIES ORDERS. 7.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. THE ASSESSEE HAS PURCHASED THE SOFTWARE LICENSE FR OM THE VECTOR FOR INTERNAL USE OF THE COMPANY. AS PER THE AGREEME NT FOR PURCHASE OF LICENSE THE ASSESSEE CANNOT TRANSFER/ SHARE EXTER NALLY OR SUB-LICENSE TO THE THIRD PARTY OR COMMERCIALLY EXPLOIT AND CAN ONL Y USE IN THE COMPANY FOR ITS INTERNAL USE. THE COMPANY IS NOT PERMITTED TO MAKE ANY ALTERATION OF THE SOFTWARE AND DID NOT GET ANY OWNERSHIP RIGHT IN ANY VECTOR SOFTWARE EXCEPT RIGHTS OF USE IN THE COMPANY. THE ASSESSEE R EFERRED THE INDO US ITA NO.3143/MDS/2016 :- 6 -: TREATY AND THE COMPUTER SOFTWARE DOES NOT FALL UN DER THE DEFINITION OF ROYALTY. FURTHER THE AR INVITED OUR ATTENTION SECTI ON 14 OF THE COPY RIGHT ACT WHICH WAS PLACED IN PAPER BOOK IN PAGE NO.6 WHI CH READS ASUNDER: THE EXCLUSIVE RIGHT SUBJECT TO THE PROVISIONS OF T HIS ACT, TO DO OR AUTHORIZE THE DOING OF ANY OF THE FOLLOWING ACTS IN RESPECT OF A WORK OR ANY S UBSTANTIAL PART THEREOF, NAMELY: (A) IN THE CASE OF A LITERARY, DRAMATIC OR MUSICAL WORK , NOT BEING A COMPUTER PROGRAMME, I) TO REPRODUCE THE WORK IN ANY MATERIAL FORM INCLUDIN G THE STORING OF IT IN ANY MEDIUM BY ELECTRONIC MEANS; II) TO ISSUE COPIES OF THE WORK TO THE PUBLIC NOT BEING COPIES ALREADY IN CIRCULATION; III) TO PERFORM THE WORK IN PUBLIC, OR COMMUNICATE IT TO THE PUBLIC; IV) TO MAKE ANY CINEMATOGRAPH FILM OR SOUND RECORDING I N RESPECT OF THE WORK; V) TO MAKE ANY TRANSLATION OF THE WORK: VI) TO MAKE ANY ADAPTATION OF THE WORK; VII) TO DO, IN RELATION TO A TRANSLATION OR AN ADAPTATIO N OF THE WORK, ANY OF THE ACTS SPECIFIED IN RELATION TO THE WORK IN SUB-CLAUSES (I ) TO (VI); (B) IN THE CASE OF A COMPUTER PROGRAMME, I) TO DO ANY OF THE ACTS SPECIFIED IN CI. (A); II) TO SELL OR GIVE ON COMMERCIAL RENTAL FOR SALE OR FO R COMMERCIAL RENTAL ANY COPY OF THE COMPUTER PROGRAMME; PROVIDED THAT SUCH COMMERCIAL RENTAL DOES NOT APPLY IN RESPECT OF COMPUTER PROGRAMMES WHERE THE PROGRAMME ITSELF IS NOT THE ESSENTIAL OBJ ECT OF THE RENTAL. 7.1 WE HAVE GONE THROUGH THE CLAUSES OF THE LICENSE AGREEMENT OF THE SECTION 14 OF THE COPYRIGHT ACT AND OBSERVE THAT TH E ASSESSEE IS NOT AUTHORIZED TO DO ANY OF ACTS MENTIONED IN THE COP YRIGHTS ACT. THE INDO US TREATY ALSO EXCLUDED THE COMPUTER SOFT WARE FROM THE DEFINITION OF ROYALTY IN THE TREATY. THUS WE ARE OF THE CONSIDER ED OPINION THAT THE COMPANY HAS MERELY BEEN PROVIDED THE ACCESS TO THE COPYRIGHTED SOFTWARE AND NOT RIGHT TO USE THE COPYRIGHT EMBEDDE D IN THE SOFTWARE. IN OTHER WORDS, THE COMPANY IS NOT PERMITTED TO MAKE C OPIES OR MAKE ALTERNATIONS TO THE SOFTWARE. ITA NO.3143/MDS/2016 :- 7 -: 8.0 FROM THE ABOVE FACTS, IT IS CLEAR THAT THE ASSESSE E HAS PURCHASED SOFTWARE FOR THE PURPOSE OF INTERNAL USE AND THE SA ME CANNOT BE HELD AS PAYMENTS TOWARDS ROYALTY. THE PAYMENT MADE TOWARDS THE PURCHASE OF SOFTWARE IS SQUARELY COVERED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE LAW CITED SUPRA. THE JURISDICTION AL HIGH COURT IN CIT VS M/S.VINZAS SOLUTIONS INDIA PVT. LTD. IN ITA NO.861/ 2016 DATED 04.01.2017 HELD AS UNDER: 4. WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTI ON 9[1][VI] DEALING WITH AND DEFINING ROYALTY CANNOT BE MADE APPLICABLE TO A SITUATION OF OUTRIGHT PURCHASE AND SALE OF A PRODUCT. THE CORPUS JURIS SECUNDUM UNDERSTANDS ROYA LTY THUS: THE WORD ROYALTY MEANS A SHARE OF THE PRODUCT OR PROFIT RESERVED BY THE OWNER FOR PERMITTING ANOTHER TO USE THE PROPERTY, THE SHA RE OF THE PRODUCTION OR PROFIT PAID THE OWNER; A SHARE OF THE PRODUCT OR PROCEEDS THEREFROM RESERVED TO THE OWNER FOR PERMITTING THE ANOTHER TO USE THE PROPERT Y; THE SHARE OF THE PRODUCE RESERVED TO THE OWNER FOR PERMITTING ANOTHER TO EXP LOIT AND USE THE PROPERTY; A SHARE OF THE PROFIT, RESERVED BY THE OWNER FOR PERM ITTING ANOTHER TO USE THE PROPERTY; THE AMOUNT RESERVED OR THE RENTAL TO BE P AID THE ORIGINAL OWNER OF THE WHOLE ESTATE. 5. THE MADRAS HIGH COURT IN CIT VS. NEYVELI LIGNIT E CORPORATION LTD., REPORTED IN 243 ITR 458 STATES THUS EXPLAINING THE CONCEPT OF ROYAL TY:- THE TERM ROYALTY NORMALLY CONNOTES THE PAYMENT M ADE BY A PERSON WHO HAS EXCLUSIVE RIGHT OVER A THING FOR ALLOWING ANOTHER T O MAKE USE OF THAT THING WHICH MAY BE EITHER PHYSICAL OR INTELLECTUAL PROPERTY OR THING. THE EXCLUSIVITY OF THE RIGHT IN RELATION TO THE THING FOR WHICH ROYALTY IS PAID SHOULD BE WITH THE GRANTOR OF THAT RIGHT. MERE PASSING OF INFORMATION CONCERNING THE D ESIGN OF A MACHINE WHICH IS A TAILOR-MADE TO MEET THE REQUIREMENT OF A BURYER DOE S NOT BY ITSELF AMOUNT TO TRANSFER OF ANY RIGHT OF EXCLUSIVE USER SO AS TO RE NDER THE PAYMENT MADE THERE FOR BEING REGARDED AS ROYALTY. 6. COURTS HAVE CONSISTENTLY NOTED THE DIFFERENCE B ETWEEN A TRANSACTION OF SALE OF A COPYRIGHTED ARTICLE AND ONE OF COPYRIGHT ITSELF . SEE TATA CONSULTANCY SERVICES VS. STATE OF ANDHRA PRADESH [2004] 271 ITR 401 [SC]; SUNDWIGER E MFG [2004] 266 ITR 110; DASSAULT SYSTEMS K.K., IN RE, (2010) 229 CTR 125 [AAR]; ISRO SATELLITE CENTRE [ISAC], IN RE (2008] 307 ITR 59 [AAR]; AND ASIA SATELLITE TELECOM MUNICATIONS CO. VS. DIT (2011] 332 ITR 340 [DELHI]. 7. THE PROVISIONS OF SECTION 9(1)(VI) AS A WHOLE, WOULD STAND ATTRACTED IN THE CASE OF THE LATTER AND NOT THE FORMER. EXPLANATIONS 4 AND 7 RELIED BY THE AUTHORITIES WOULD THUS HAVE TO BE READ AND UNDERSTOOD ONLY IN THAT CONTEXT AND CANNOT BE EXPANDED TO BRING WITHIN ITS FOLD TRANSACTION BEYOND THE REALM OF THE PROVISION. THE TRIBUNAL HAS RELIED ON THE DECISION OF THE DIVISION BENCH OF THE DELHI HIGH CO URT IN THE CASE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX-6 V. M.TECH INDIA PVT LT D, WHICH SUPPORTS OUR VIEW AS ABOVE. IT IS BROUGHT TO OUR NOTICE THAT THE DECISION OF TH E DELHI HIGH COURT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN SLP IS PENDING. BE THAT AS IT MAY, IN VIEW OF THE FACTS AND CIRCUMSTANCES AS OBSERVED ABOVE, WE HAVE NO HESITAT ION IN DISMISSING THE DEPARTMENTAL ITA NO.3143/MDS/2016 :- 8 -: APPEAL ANSWERING THE QUESTIONS OF LAW IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. NO COSTS. 9.0 AS PER THE TERMS AND CONDITIONS OF THE PURCHASE AG REEMENT PAYMENT MADE TO ACQUIRE THE SOFTWARE LICENSE DOES NOT FIT I NTO THE DEFINITION OF ROYALTY AND NON-TAXABLE AS PER 9(1) (VI) OF INCOME TAX ACT AND SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL HIGH COUR T SUPRA. THEREFORE, WE HOLD THAT THE PAYMENT TOWARDS SOFTWARE PURCHASE IS NOT ROYALTY WITHIN THE MEANING OF NON-TAXABLE U/S.9(1)(VI) OF INCOME TAX A CT AND NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE, ACCORDINGLY, WE SET-ASI DE THE ORDERS OF THE LOWER AUTHORITIES ALLOW THE APPEAL OF THE ASSESSEE. 10.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( !' . . # $ % ) (D.S.SUNDER SINGH) ' /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 28 TH FEBRUARY, 2017. TLN 0 .2$6 76+2 /COPY TO: 1. ,- /APPELLANT 4. # 82 /CIT 2. ./,- /RESPONDENT 5. 69 .2 /DR 3. # 82 ( ) /CIT(A) 6. '* < /GF