ONGC as representative assessee of Computer Modelling Group Ltd., Dehradun V. ADIT, Dehradun

ITA 440/DEL/2012

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1839 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURINDER PAL
• Assessee Lawyers: DEL; AJAY VOHRA SR SHRI GAURAV JAIN; MONISHA SHARMA ITA NOS DEL DEL
• Keywords: Business income; Double taxation relief; Retrospective amendment; Competent authority
• Section: 143(3); 234B; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E : NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892/DEL/2014 AYS: 2006-07, 2007-08, 2008-09, 2009-10 & 2010-11 ONGC AS REPRESENTATIVE ASSESSEE OF COMPUTER MODELLING GROUP OF CANADA, THE DY. GENERAL MANAGER (F&A), OIL AND NATURAL GAS CORPORATION LTD., CORPORATE TAX DIVISION, ROOM NO.244, OLD SECRETARIAT BUILDING, TEL BHAWAN, DEHRADUN. PAN: AAACO1598A VS. DDIT,INTERNATIONAL T AXATION, AAYAKAR BHAWAN, 13A, SUBHASH ROAD, DEHRADUN. ITA NO.1965/DEL/2014 ASSESSMENT YEAR : 2010-11 DDIT, INTERNATIONAL TAXATION, AAYAKAR BHAWAN, 13A, SUBHASH ROAD, DEHRADUN. VS. ONGC AS REPRESENTATIVE ASSESSEE OF COMPUTER MODELLING GROUP OF CANADA, THE DY. GENERAL MANAGER (F&A), OIL AND NATURAL GAS CORPORATION LTD., CORPORATE TAX DIVISION, ROOM NO.244, OLD SECRETARIAT BUILDING, TEL BHAWAN, DEHRADUN. PAN: AAACO1598A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY VOHRA, SR. ADVOCATE, SHRI GAURAV JAIN & MS. MONISHA SHARMA, ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 2 REVENUE BY : SHRI SURINDER PAL, SR. DR DATE OF HEARING : 12.10.2018 DATE OF PRONOUNCEMENT : 19.11.2018 ORDER PER AMIT SHUKLA, JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE ABOVE NAMED ASSESSEE AGAINST SEPARATE ORDERS OF DIFFERENT DATES PASSED BY LD. CIT (APPEALS), DEHRADUN FOR THE QUANTUM OF ASSESSME NT PASSED U/S 143(3) FOR THE ASSESSMENT YEARS 2006-07 TO 2010 -11. IN ASSESSMENT YEAR 2010-11, THE REVENUE HAS ALSO FILED CROSS APPEAL. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE AP PEALS ARISING OUT OF IDENTICAL SET OF FACTS, THEREFORE, A LL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDATED ORDER. 3. WE WILL FIRST TAKE UP THE APPEAL FOR A.Y. 2006-0 7 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1. DEHRADUN HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE APPELLAN T'S CONTENTION THAT THE RECEIPTS OF THE NON-RESIDENT AR E EXEMPT FROM TAX IN INDIA. ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 3 2. WITHOUT PREJUDICE TO THE PRECEDING GROUND, THE L D. COMMISSIONER OF INCOME TAX (APPEALS)-1. DEHRA DUN H AS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE APPELLANT'S CONTENTION THAT THE RECEI PTS OF THE APPELLANT ARE TAXABLE U/S 44BB OF THE ACT. 3. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-L, DEHRADUN HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT DECIDING THE GROUND OF CHARGEABILITY OF SURCHARGE AND EDUCATION CESS HIMSELF AND IN DIRECTING TO THE AO TO LOOK INTO THE APPELLANTS CONTENTION IN ACCORDANCE WITH L AW. 4. THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-L, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CA SE IN NOT DIRECTING THE AO TO DELETE THE INTEREST LEVIED U/S 234B. 4. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE A SSESSEE IS A NON-RESIDENT COMPANY WHICH RECEIVED LICENCE FEES IN TERMS OF MEMBERSHIP AND TECHNOLOGY TRANSFER AGREEMENT NO.I- 097 DATED 10.06.1992. IN TERMS OF THE AFORESAID AGREEM ENT, ONGC WAS REQUIRED TO PAY AN ANNUAL MEMBERSHIP-CUM-LICENC E FEE OVER THE TENURE OF THE AGREEMENT WHICH WAS FOR FIVE YEAR S FOR ACQUISITION OF CERTAIN SPECIFIED LICENCES RELATING TO RESERVOIRS SYNCH. TECHNOLOGY, I.E.:- A) IMEX-4 LICENSES B) STARTS 1 LICENSE C) GEM-1 LICENSE D) WIN PROP-1 LICENSE E) RESULTS-8 LICENSE F) BUILDER-2 LICENSES. ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 4 THE AFORESAID AGREEMENT WAS RENEWED PERIODICALLY VI DE CONTINUATION TO MEMBERSHIP AND TECHNOLOGY TRANSFER AGREEMENT NO.I-097 DATED 03.01.2002/16.01.2002 EXECUTED BETWE EN THE ASSESSEE AND ONGC WHEREIN THE LICENCE FEE WAS DETER MINED FOR THE PERIOD OF FIVE YEARS. FURTHER, IN TERMS OF THE TECHNOLOGY TRANSFER AGREEMENTS, AS AMENDED FROM TIME TO TIME, ANY ADDITIONAL SOFTWARE COMPRISING THE CMG TECHNOLOGY C OULD BE PROCURED BY ONGC THROUGH AN INDEPENDENT PURCHASE OR DER TO BE PLACED UPON THE ASSESSEE FOR MUTUALLY NEGOTIATED CO NSIDERATION. IN THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS RE CEIVED LICENSE FEE OF USD 1,06,523 (RS.49,22,427/-) WHICH WAS CLAIMED BY THE ASSESSEE AS NON-TAXABLE DURING THE RELEVANT ASSESSMENT YEAR. 5. THE LD. ASSESSING OFFICER HELD THAT THE AFOR ESAID AMOUNT WAS COVERED WITHIN THE DEFINITION OF ROYALTY AS ENVIS AGED UNDER CLAUSES (III) OR (IV) OF EXPLANATION 2 TO SECTION 9 (1)(VI) AND WAS TAXABLE IN INDIA U/S 115A OF THE ACT. HOWEVER, CONS IDERING THE FACT THAT THE ASSESSEE WAS RESIDENT OF CANADA, THE ASSESSING OFFICER APPLIED THE TAX RATE OF ROYALTY @ 15% PRESC RIBED IN THE DTAA. FURTHER, THE ASSESSING OFFICER, WHILE COMPUT ING THE TAX LIABILITY OF THE ROYALTY INCOME HAS ALSO ADDED SURC HARGE AND ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 5 EDUCATIONAL CESS @ 15% AND ALSO IMPOSED INTEREST U/ S 234B AND 234D FOR NON-PAYMENT OF THE AFORESAID TAXES. 6. IN THE FIRST APPEAL, THE LD.CIT(A) HAS UPHEL D THE ORDER OF THE ASSESSING OFFICER HOLDING THAT LICENCE FEES RECEIVA BLE WAS TAXABLE AS ROYALTY U/S 9(1)(VI). THE SUM AND SUBSTANCE OF HIS FINDINGS ARE AS UNDER:- (I) THE ASSESSING OFFICER HAS RIGHTLY HELD THAT PAYMENT MADE TO THE ASSESSEE BY ONGC WAS IN THE NATURE OF ROYALTY UNDER THE PROVISIONS OF SECTION 9(1)(VI) AS THE PROPRIETY RIGHT CONTINUED TO BE WITH THE ASSESSEE, BUT, THE PAYMENT HAS BEEN MADE FOR THE USE OF PROCESS, TRADE MARK OR SIM ILAR PROPERTY WHICH HAS BEEN CLEARLY MENTIONED IN EXPLAN ATION 2 TO SECTION 9(1)(VI). THUS, THE ASSESSING OFFICER W AS RIGHT IN HOLDING THAT SUCH A PAYMENT WAS TO BE ASSESSED U/S 115AA. (II) THE SCIENTIFIC KNOWLEDGE VESTED IN THE SOFTWARE WHI CH HAS BEEN PERMITTED TO BE USED BY ONGC ON PAYMENT OF LIC ENCE FEE THROUGH WHICH RIGHT TO ACCESS AND ADMINISTER TH E SYSTEM DEVISED BY THE ASSESSEE HAS BEEN OBTAINED AND, THER EFORE, IT DOES NOT PARTAKE THE USE OF A FINISHED PRODUCT BY C USTOMER ON PAYMENT OF TAGGED PRICE. (III) THE SOFTWARE HAS BEEN DEVISED TO TRANSFER SCIENTIFI C KNOWLEDGE AND THE ONGC HAS BEEN PRIVILEGED TO ACCES S SUCH INFORMATION THROUGH GRANTING OF LICENCE WHICH MEANS THAT PAYMENT OF LICENSE FEES HAS BEEN AS A CONSIDER ATION FOR SCIENTIFIC WORK. ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 6 7. THE ALTERNATIVE PLEA OF THE ASSESSEE THAT TH E RECEIPT OF THE ASSESSEE SHOULD BE COVERED U/S 44BB WAS ALSO REJECT ED ON THE GROUND THAT THE SAID PAYMENT IS COVERED U/S 115A. REGARDING SURCHARGE AND EDUCATION CESS, HE HAS GIVEN DIRECTIO N TO THE ASSESSING OFFICER TO EXAMINE THE MATTER IN ACCORDAN CE WITH THE LAW AND INTEREST LEVIED UNDER VARIOUS SECTIONS HAS BEEN HELD TO BE CONSEQUENTIAL. 8. BEFORE US, THE LD. SR. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT AS PER THE TERMS OF THE AGREEMENT, THE LICENCE S GRANTED WERE ON NON-TRANSFERRABLE AND ON NON-EXCLUSIVE BASIS. AP ART FROM THAT, THE TITLE OF OWNERSHIP WAS TO REMAIN WITH THE ASSESSEE AND ONGC HAD NO RIGHT TO SELL OR SUB-LICENSE TO ANY THI RD PARTY. THIS WAS POINTED OUT FROM CLAUSE (4)(III) OF THE AGREEME NT. AS PER THE AGREEMENT THE LICENCE WAS TO BE USED ONLY FOR INTER NAL PURPOSES WHICH ARE EVIDENT FROM CLAUSE (6) OF THE AGREEMENT. SOURCE CODE WAS LAST ISSUED IN 1997 ONLY FOR THE INTERNAL USE B Y THE ONGC AND, THEREAFTER, THE SOFTWARE HAS BEEN MADE AVAILAB LE PURELY ON LICENCE BASIS. THE SOURCE CODE OF CMG SOFTWARE HAD NOT BEEN MADE AVAILABLE TO THE ASSESSEE AND THE SOFTWARE LIC ENCES HAVE BEEN TRANSFERRED UPON PAYMENT OF LICENCE FEE. THUS , CONSIDERING THE FACT THAT IN TERMS OF THE AGREEMENT THE ASSESSE E DID NOT ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 7 TRANSFER ANY RIGHT TO EXPLOIT COPYRIGHT IN THE SOFT WARE TO ONGC, AS PER THE PROVISIONS OF SECTION 14 OF THE COPYRIGH T ACT, 1957, THE CONSIDERATION RECEIVED WAS IN LIEU OF PROVIDING ONLY RIGHT TO USE COPYRIGHTED ARTICLE AS AGAINST THE RIGHT TO USE THE COPYRIGHT. UNDER ARTICLE 12(3) OF INDIA-CANADA DTAA, THE PAYME NT CAN BE TAXED AS ROYALTY ONLY WHEN THERE IS RIGHT TO USE THE COPYRIGHT. THUS, UNDER THE TREATY, THE ENTIRE CONSIDERATION RE CEIVED DURING THE YEAR CANNOT BE TAXED AS ROYALTY. IN SUPPORT, R ELIANCE WAS PLACED ON VARIOUS DECISIONS OF THE TRIBUNAL AS ALSO THE HON'BLE DELHI HIGH COURT. SOME OF THEM ARE AS UNDER:- I) DIT VS. NOKIA NETWORKS OY, 253 CTR 417 (DEL)/358 IT R 259 (DELHI); II) DIT VS. INFRASOFT LTD., 20 TAXMAN 273 (DEL) III) CIT VS. DYNAMIC VERTICAL SOFTWARE INDIA (P) LTD., 3 32 ITR 222 (DEL); IV) PCIT VS. M. TECH INDIA P. LTD., 381 ITR 31 (DEL); V) CIT VS. ZTE CORPORATION (2017) 392 ITR 80 (DEL); VI) CIT VS. VINZAZ SOLUTIONS INDIA (P) LTD. (2017) 245 TAXMAN 289 (MAD. HC); AND VII) DASSAULT SYSTEMS K.K, 322 ITR 125 (AAR). ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 8 9. REGARDING THE SHARING OF SOURCE CODE OF SOFT WARE FOR INTERNAL OPERATION WOULD NOT BE TAXABLE AS PROCESS OR COPYRI GHT OR ROYALTY, STRONG RELIANCE WAS PLACED ON THE JUDGMENT OF ITAT, MUMBAI BENCH IN THE CASE OF ADIT VS. BAAN GLOBAL B.V. (2016) 49 ITR (T) 73 (MUM). LASTLY, IT WAS SUBMITTED THAT IN SO FAR AS THE AMENDMENT BROUGHT BY THE FINANCE ACT, 2012, WHEREIN EXPLANATION 4 HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT, WHICH BRINGS INTO THE CONSIDERATION RECEIVED FOR RIGHT TO USE THE COMPUTER SOFTWARE WITHIN THE AMBIT OF ROYALTY AS CONTAINED UNDER THAT SECTION, NOW, IT IS THE SETTLED PROPOSIT ION BY VARIOUS COURTS INCLUDING THAT OF THE DELHI HIGH COURT THAT THE SAID AMENDMENT TO SECTION 9(1)(VI) CANNOT BE READ INTO T HE DEFINITION OF ROYALTY AS CONTAINED UNDER THE DTAA. IN SUPPO RT, HE RELIED UPON DIT VS. NEW SKIES SATELLITE B.V. & ORS. (2016) 382 ITR 114 . 10. IN SO FAR AS THE LEVY OF SURCHARGE, THE LD. SR. COUNSEL SUBMITTED THAT THE RATE PRESCRIBED UNDER DTAA CANNO T BE INCREASED BY ANY SURCHARGE LEVIED UNDER THAT. HOWEV ER, REGARDING EDUCATION CESS, HE AGREED THAT THE SAME WOULD BE CO VERED WITHIN PARA 2 OF DTAA. AS REGARDS LEVY OF INTEREST U/S 23 4B, HE STRONGLY RELIED UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 9 CASE OF DIT VS. GE PACKAGED POWER INC. (2015) 373 ITR 65 (DEL) AND ALSO THE ASSESSEES OWN CASE FOR ASSESSMENT YE AR AND ALSO THE JUDGMENT OF UTTARAKHAND HIGH COURT IN THE CASE OF DIT VS. MAERSK COMPANY LTD. (2011) 334 ITR 79 (UK). 11. ON THE OTHER HAND, THE LD. DR STRONGLY RELI ED UPON THE ORDER OF THE CIT (A) AND POINTED OUT THAT THE JUDGE MENTS REFERRED AND RELIED UPON BY THE LD. COUNSEL ARE DISTINGUISHA BLE AND, IN SUPPORT, HAS STRONGLY RELIED UPON THE JUDGMENT OF T HE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONIC COMPANY LTD. (2012) 345 ITR 494 (KAR.) . 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER AS WEL L AS THE MATERIAL REFERRED TO BEFORE US. THE SOLE ISSUE INV OLVED IS, WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE FROM ONGC FOR ANNUAL MEMBERSHIP-CUM-LICENCE FEE OVER THE TENURE OF AGRE EMENT FOR FIVE YEARS FOR THE ACQUISITION OF CERTAIN SPECIFIED LICENCES RELATING TO RESERVOIR SYNCH. TECHNOLOGY CAN BE TAXED AS R OYALTY; FIRSTLY , U/S 9(1)(VI) OF THE INCOME-TAX ACT; OR SECONDLY , UNDER ARTICLE 12(3) OF INDIA-CANADA DTAA. FIRST OF ALL, WE HAVE TO SEE WHETHER THE PAYMENT UNDER THE MEMBERSHIP AGREEMENT IS FOR MEMBE RSHIP ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 10 WITH CMG, I.E., COMPUTER MODELLING GROUP. CLAUSE (4 ) (III) PROVIDES THAT CMG WILL GRANT TO THE MEMBER A NON-TR ANSFERRABLE, NON-EXCLUSIVE LICENCE FEE TO USE THE CMG TECHNOLOGY . THE RELEVANT CLAUSE READS AS UNDER:- (3) IN ACCORDANCE WITH THE PROVISIONS OF THIS MEMB ERSHIP AGREEMENT, CMG HEREBY GRANTS TO THE MEMBER A NON- TRANSFERABLE, NON-EXCLUSIVE LICENSE TO USE CMG'S TECHNOLOGY. SUCH LICENSE IS FOR CMG'S COMPLETE TECHNOLOGY, PRESENT AND FUTURE. TITLE AND OWNERSHIP OF THE TECHNOLOGY SHALL REMAIN WITH CMG. WITHOUT LIMITATION, THE MEMBER MAY NOT AT ANYTIME SELL, SUB - LICENCE OR TRANSFER ANY TECHNOLOGY IN ANY FORM OR A NY MANNER TO ANY THIRD PARTY. FEES AND PAYEMENTS AND DELIVERY. THE MEMBER SHALL PAY TO CMG THE FEES AS SETFORTH IN THIS MEMBERSHIP AGREEMENT. BEGINNING IN 1996, FOR EACH ADDITIONAL FIVE-YEAR PERIOD OF MEMBERSHIP, THE MEMB ER SHALL PAY TO CMG THE MEMBERSHIP FEE IN EFFECT AT THAT TIM E, PROVIDED, HOWEVER, THAT MEMBERSHIP FEE FOR EACH SUB SEQUENT PERIOD MAY BE CHANGED BY CMG'S BOARD OF DIRECTORS B Y PROVIDING 120 DAYS NOTICE PRIOR TO APRIL 1ST OF EAC H PERIOD. DELIVERY AND PAYMENTS SHALL BE EFFECTIVE OR DEEMED EFFECTIVE AT CMG'S OFFICES IN CALGARY. PAYMENTS ARE DUE WITHI N 30 DAYS OF INVOICE DATE. TERM OF MEMBERSHIP ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 11 (1) THE INITIAL MEMBERSHIP TERM IS INDICATED IN PAGE 3 OF THIS MEMBERSHIP AGREEMENT. THE MEMBERSHIP PROVIDED BY TH IS MEMBERSHIP AGREEMENT SHALL AUTOMATICALLY RENEW FOR FIVE YEAR PERIODS (A MEMBERSHIP PERIOD) ON APRIL 1 ST OF EACH PERIOD UNLESS EITHER THE MEMBER OR CMG GIVES A TERMINATION NOTICE. A TERMINATION NOTICE GIVEN BY THE MEMBER OR CMG SHALL BE EFFECTIVE ON THE FIRST DAY OF THE MEMBERSHIP PERIOD FOLLOWING THE CALENDAR YEAR IN WHICH IT IS GIVEN. A TERMINATI ON NOTICE GIVEN BY CMG FOR BREACH OF CONTRACT SHALL BE EFFECT IVE WHEN RECEIVED BY THE MEMBER, IF NOT REMEDIED WITHIN 30 D AYS. (2) THE MEMBERSHIP PURSUANT TO THIS MEMBERSHIP AGREEMEN T CAN BE TERMINATED, BUT THIS MEMBERSHIP AGREEMENT (CONTR ACT) SHALL SURVIVE MEMBERSHIP TERMINATION. (3) THE MEMBER'S LICENSE TO USE ANY CMG TECHNOLOGY, INC LUDING SOURCE CODE, RECEIVED BY IT PRIOR TO THE EFFECTIVE DATE OF SUCH TERMINATION NOTICE SHALL CONTINUE PERPETUALLY SUBJE CT OTHERWISE TO THE TERMS OF THIS MEMBERSHIP AGREEMENT. THE OTHER RELEVANT CLAUSES FOR FEES AND PAYMENT, TE RMS OF MEMBERSHIP AND ASSIGNMENT, ETC. ARE AS UNDER:- (5) EACH MEMBER OF CMG HAS THE RIGHT TO REASONABLE ENJOYMENT OF MEMBERSHIP AND EACH MEMBER SHALL RESPE CT SUCH RIGHT OF OTHER MEMBERS. (6) MEMBERSHIP IS SUBJECT TO THE PROVISIONS OF CMG S INCORPORATING DOCUMENTS AND BYLAWS. CMG IS A MEMBE R ORGANIZATION AND THE MEMBERS ESTABLISH MEMBER RIGHT S, PRIVILEGES AND OBLIGATIONS OF GENERAL APPLICATION T HROUGH ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 12 PARTICIPATION IN THE CMG ORGANIZATION AND VOTING AT ANNUAL MEMBER MEETINGS AND TECHNICAL ADVISORY COMMITTEE (T AC) MEETINGS. MEMBER RIGHTS, PRIVILEGES AND OBLIGATION S ARE ALSO ESTABLISHED THROUGH THE BOARD OF DIRECTORS WHICH AR E ELECTED BY THE MEMBERS TO DIRECT CMGS OPERATIONS. MEMBER R IGHTS, PRIVILEGES AND OBLIGATIONS ARE THEREFORE SUBJECT TO CHANGE FROM TIME TO TIME BY CMGS BOARD OF DIRECTORS AND M EMBERS PARTICIPATION. (7) THE MEMBER SHALL HAVE THE RIGHTS AND PRIVILEGES OF MEMBERSHIP PURSUANT TO THIS MEMBERSHIP AGREEMENT ON LY DURING THE PERIOD THE MEMBERS MEMBERSHIP IS IN GOO D STANDING. (12) ASSIGNMENT THE MEMBER AGREES IT WILL NOT AT ANY TIME ASSIGN IT S INTEREST OR RIGHTS UNDER THIS MEMBERSHIP AGREEMENT WITHOUT H AVING OBTAINED THE PRIOR WRITTEN CONSENT OF CMG. MODIFICATIONS NO WAIVER, ALTERATION, OR MODIFICATION OF ANY OF TH E PROVISIONS HEREOF SHALL BE BINDING UNLESS IN WRITING AND SIGNE D BY A DULY AUTHORIZED REPRESENTATIVE OF THE MEMBER OR ITS MEMBER REPRESENTATIVE AND BY A DULY AUTHORIZED REPRESENTAT IVE OF CMG. IN THE EVENT THE MEMBER ISSUES A STANDARD-FORM INSTRUMENT RELATING TO THIS MEMBERSHIP AGREEMENT, I T IS HEREBY SPECIFICALLY AGREED THAT SUCH IS FOR THE MEM BERS INTERNAL PURPOSES ONLY. EXCEPT AS HEREIN EXPRESSLY PROVIDED TO THE CONTRARY, THE PROVISIONS OF THIS MEMBERSHIP AGREEMENT ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 13 ARE FOR THE BENEFIT OF THE PARTIES HERETO SOLELY, A ND NOT FOR THE BENEFIT OF ANY OTHER PERSON, PERSONS OR LEGAL ENTIT IES. 13. AS PER CLAUSE (5), THE FOLLOWING AMOUNTS WERE T O BE PAID:- 1.1 INITIAL ENTRANCE AND MEMBERSHIP, TECHNOLOGY TRANSFER, ALL COMPUTER PROGRAMS, INSTALLATION, TESTING AND TRAINING $198,000 1.2 MEMBERSHIP FOR FIVE YEARS 1991 THROUGH 1996 $167,000 TOTAL (US $) $365,000 14. FROM THE AFORESAID CLAUSES, IT IS SEEN THAT; FIRSTLY , UNDER THE MEMBERSHIP AGREEMENT, THE MEMBER IS GRANTED A N ON- TRANSFERRABLE, NON-EXCLUSIVE LICENCE TO USE THE CMG TECHNOLOGY. THE TITLE AND OWNERSHIP OF THE TECHNOLOGY ALWAYS RE MAINED WITH THE CMG AND MEMBER IS PROHIBITED FOR SALE, SUB-LICE NCE OR TRANSFER OF ANY TECHNOLOGY IN ANY FORM OR IN ANY MA NNER TO ANY THIRD PARTY AT ANY TIME; S ECONDLY , THE MEMBERSHIP IS ONLY FOR A PERIOD OF FIVE YEARS WHICH THOUGH MAY BE EXTENDED; THIRDLY , THE AGREEMENT IS ONLY FOR THE MEMBERS INTERNAL OPERATI ON AND BENEFIT; AND LASTLY , MEMBERS WILL NOT, AT ANY TIME, ASSIGN ITS INTEREST OR RIGHTS UNDER THE MEMBERSHIP AGREEMENT. THUS, THERE IS NO TRANSFER OF ANY RIGHT OR RIGHT TO USE ANY COPY RIGHT IN THE SOFTWARE OF CMGS TECHNOLOGY. THE MEMBERS ARE ONLY GIVEN THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 14 RIGHT TO USE ONLY FOR THEIR INTERNAL PURPOSE. SINC E THE ASSESSEE IS A TAX RESIDENT OF CANADA, THEREFORE, BENEFIT OF IND IA-CANADA DTAA IN TERMS OF SECTION 90 OF THE ACT HAS TO BE GIVEN. PARA 3 OF THE ARTICLE 12 OF INDO-CANADA DTAA READS AS UNDER:- 3. THE TERM ROYALTIES AS USED IN THIS ARTICLE ME ANS: (A) PAYMENT OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY COPYRIGHT OF A LIT ERARY, ARTISTIC, OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS OR WORK ON FILM TAPE OR OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADEMARK, DESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, O R FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR PR OCESS, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL O R SCIENTIFIC EXPERIENCE, INCLUDING GAINS DERIVED FROM THE ALIENA TION OF ANY SUCH RIGHT OR PROPERTY 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, COMMER CIAL, OR SCIENTIFIC EQUIPMENT, OTHER THAN PAYMENTS DERIVED B Y AN ENTERPRISE DESCRIBED IN PARAGRAPH 1 OF ARTICLE 8 FR OM ACTIVITIES DESCRIBED IN PARAGRAPH 3(C) OR 4 OF ARTICLE 8. 15. THE MAIN EMPHASIS IS ON PAYMENT FOR THE USE OF OR RIGHT TO USE ANY COPYRIGHT OF VARIOUS NATURE WHICH ARE NOT AN EXCLUSIVE RIGHTS TO USE ANY COPYRIGHT IN AN ARTICLE WHICH IS IN THE NATURE OF ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 15 TERMS DEFINED THEREIN AND THE SAID USE OF COPYRIGHT HAS TO BE GIVEN TO THE END USER. HERE, AS CAN BE SEEN FROM T HE TERMS OF THE AGREEMENT, NO USE OR RIGHT TO USE ANY COPY RIGHT OF ANY NATURE HAS BEEN GIVEN TO THE ONGC. THIS COORDINATE BENCH I N THE CASE OF ADOBE SYSTEMS SOFTWARE, IRELAND LTD. (ITA NO.5433/DEL/2011, ORDER DATED 09.05.2018), HAVE THREADBARE DISCUSSED THE DEFINITION OF ROYALTY UNDER INDO-IR ELAND DTAA WHICH IS QUITE SIMILAR TO THE DEFINITION GIVEN IN T HE PRESENT DTAA AFTER CONSIDERING VARIOUS DEFINITIONS AS WELL AS TH E DEFINITION ENSHRINED IN THE INDIAN COPYRIGHT ACT, 1957 HAS B EEN ANALYSED. THE RELEVANT OBSERVATIONS AND THE FINDINGS ARE AS U NDER:- 16. THE MAIN EMPHASIS IS ON PAYMENT FOR THE USE O F OR RIGHT TO USE ANY COPYRIGHT OF VARIOUS NATURE, WHICH CONNOTES AN EXCLUSIVE RIGHT TO USE ANY COPYRIGHT IN AN ARTICL E WHICH IS IN THE NATURE OF THE TERMS DEFINED THEREIN AND SAID US E OF COPYRIGHT HAS TO BE GIVEN TO THE END USER. THE CONC EPT OF COPYRIGHT FIRST OF ALL NEEDS TO BE DISCERNED. IN A FAMOUS TREATISE ON COPYRIGHT, COPINGER AND SKONES JAMES ON COPYRIGHT (1999 EDN.) HAS DEFINED COPYRIGHT AS; COPYRIGHT GI VES THE OWNER OF THE COPYRIGHT IN A WORK OF ANY DESCRIPTION THE EXCLUSIVE RIGHT TO AUTHORIZE OR PROHIBIT THE EXPLOI TATION OF THE COPYRIGHT WORK BY THE THIRD PARTIES. THIS INCLUDES THE RIGHT TO COPY THE WORK ITSELF AND ALSO TO USE THE WORK IN OT HER WAYS PROTECTED UNDER THE LAW. COPYRIGHT ALLUDES TO SOME KIND OF NEGATIVE RIGHT. FURTHER PASSAGE FROM THE SAME COMME NTARY IS WORTH TAKING NOTE OF; IT IS IMPORTANT TO RECOGNIZE THAT OWNERSHIP OF COPYRIGHT IN A WORK IS DIFFERENT FROM THE OWNERS HIP OF THE PHYSICAL MATERIAL IN WHICH THE COPYRIGHT WORK MAY H APPEN TO BE EMBODIED. JUST AS THE OWNER OF THE PHYSICAL MATE RIAL ON WHICH A COPYRIGHT WORK IS FIRST RECORDED IS NOT NEC ESSARILY THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 16 FIRST OWNER OF THE COPYRIGHT, SO THE TRANSFER OF TI TLE TO THE ORIGINAL PHYSICAL MATERIAL DOES NOT BY ITSELF OPERATE TO TRA NSFER THE TITLE TO THE COPYRIGHT.. THUS, THE RIGHTS ASSOCIATED W ITH THE COPYRIGHT SHOULD BE OF SUCH A NATURE WHICH ENABLES THE RECIPIENTS TO COMMERCIALLY EXPLOIT THE PRODUCT AND IF SUCH EXCLUSIVE RIGHT FOR COMMERCIAL EXPLOITATION OF THE PRODUCT IS NOT GIVEN, THEN IT CANNOT BE RECKONED THAT USE OR RIGH T TO USE IN A COPYRIGHT HAS BEEN GIVEN BY THE RECIPIENT TO THE P AYER. A LIMITED RIGHT TO USE A COPYRIGHT PRODUCT WITH A NON EXCLUSIVE LICENSE TO THE END USER BEING SOME KIND OF LICENSE PROGRAM THROUGH THE COMPUTER TO THE END USER DOES NOT TANTA MOUNT TO THE USE OF COPYRIGHT OR RIGHT TO USE THE SAME. A DI STINCTION HAS TO BE DRAWN BETWEEN THE PASSING OF A RIGHT TO USE A ND FACILITATING THE USE OF A PRODUCT FOR WHICH THE OWN ER HAS THE COPYRIGHT. IT IS A SINE QUA NON THAT SOME KIND OF E NJOYMENT OR ALL THE RIGHTS WHICH THE COPY RIGHT OWNER HAS, IS N ECESSARY TO TRIGGER THE CONCEPT OF ROYALTY AS DEFINED IN THE TREATY. THE NON EXCLUSIVE AND NON TRANSFERABLE LICENSE ENABLING THE USE OF A COPYRIGHTED PRODUCT CANNOT BE CONSTRUED AS AN AUTHO RITY TO ENJOY ANY OR ALL OF THE ENUMERATED RIGHTS INGRAINED IN A COPYRIGHT. THE PARTING OF SOME KIND OF INTELLECTUAL PROPERTY RIGHT INHERENT IN AND ATTACHED TO THE SOFTWARE PRODUCT IN FAVOUR OF THE LICENSEE/CUSTOMER IS WHAT HAS BEEN CONTEMPLATED IN THE PHRASE, USE AND RIGHT TO USE THE COPYRIGHT IN THE T REATY. 17. SINCE COPYRIGHT HAS NOT BEEN SPECIFICALLY DEFIN ED UNDER THE TREATY, THEREFORE, THE COURTS HAVE HELD THAT THE DE FINITION AS ENSHRINED IN INDIAN COPYRIGHT ACT, 1957 HAS TO BE SEEN. THE RELEVANT SECTION OF THE COPYRIGHT ACT READS AS UNDE R: 14. MEANING OF COPYRIGHT - FOR THE PURPOSE OF THIS ACT, 'COPYRIGHT' MEANS THE EXCLUSIVE RIGHT TO THE PROVIS IONS OF THIS ACT, TO DO OR AUTHORIZE THE DOING OF ANY OF THE FOL LOWING ACTS IN RESPECT OF A WORK OR ANY SUBSTANTIAL PART THEREOF N AMELY; (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 INCLUDING THE STORING OF IT IN ANY ME DIUM BY ELECTRONIC MEANS; (II) TO ISSUE COPIES OF THE WORK TO THE PUBLIC NOT BEING COPIES ALREADY IN CIRCULATION; (III) TO P ERFORM THE WORK IN PUBLIC, OR COMMUNICATE IT TO THE PUBLIC; (I V) TO MAKE MY CINEMATOGRAPH FILM OR SOUND RECORDING IN RESPECT OF THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 17 WORK; (V) TO MAKE ANY TRANSLATION OF THE WORK; (VI) TO MAKE ANY ADAPTATION OF THE WORK; (VII) TO DO, IN RELATIO N TO A TRANSLATION OR AN ADAPTATION OF THE WORK, ANY OF TH E ACTS SPECIFIED IN RELATION TO THE WORK IN SUBCLAUSES (I) TO (VI); (B) IN THE CASE OF A COMPUTER PROGRAMME, - (I) TO DO ANY O F THE ACTS SPECIFIED IN CLAUSE (A); (II) TO SELL OR GIVEN ON C OMMERCIAL RENTAL OR OFFER FOR SALE OR FOR COMMERCIAL RENTAL ANY COPY OF THE COMPUTER PROGRAMME; PROVIDED THAT SUCH COMMERCIAL R ENTAL DOES NOT APPLY IN RESPECT OF COMPUTER PROGRAMMES WH ERE THE PROGRAMME ITSELF IS NOT THE ESSENTIAL OBJECT OF THE RENTAL]; THE RIGHTS ENSHRINED IN THE AFORESAID SECTION ARE E XCLUSIVE IN NATURE AND ANYONE WHO CARRY OUT ANY OF THE ACTIVITI ES AS MENTIONED IN THE AFORESAID SECTION OR AUTHORIZES SO MEONE ELSE TO CARRY ANY OF SUCH ACTIVITY, WILL ALONE FALL WITH IN THE SCOPE AND DEFINITION OF COPYRIGHT. IN OTHER WORDS, IF ANY O F THESE RIGHTS ARE PARTED WITH IN FAVOUR OF ANOTHER SO THAT THE OT HER PERSON CAN ENJOY THAT RIGHT IN THE SAME MANNER IN WHICH OW NER CAN, THEN IT CAN BE SAID THAT THOSE SPECIFIC RIGHTS CONC ERNING THE USE OF COPYRIGHT HAVE BEEN CONFERRED ON HIM. THE NATURE OF RIGHT WHICH HAS BEEN GRANTED DEPENDS UPON THE TYPE OF WOR K; HOWEVER SUCH ACTIVITY MUST INCLUDE THE EXCLUSIVE RI GHT TO: 1) COPY THE WORK (REPRODUCTION RIGHT); 2) ISSUE COPIES OF THE WORK TO THE PUBLIC (DISTRIBUTION RIGHT); 3) RENT OR LEND TH E WORK TO THE PUBLIC (RENTAL OR LENDING RIGHT); 4) PERFORM, SHOW, OR PLAY THE WORK IN PUBLIC (PUBLIC PERFORMANCE RIGHT); 5) BROAD CAST THE WORK (BROADCASTING RIGHT); 6) INCLUDE IT IN A CABLE-PROG RAMME SERVICE (CABLE RIGHT); 7) MAKE AN ADAPTATION OF THE WORK, O R DO ANY OF THE ABOVE ACTS IN RELATION TO AN ADAPTATION (RIGHT OF ADAPTATION); 8) THE RIGHT TO AUTHORIZE OTHERS TO CARRY OUT ANY O F THESE ACTIVITIES. 18. FURTHER SECTION 51 OF THE COPYRIGHT ACT ENLISTS COPYRIGHT IN A WORK WHICH SHALL BE DEEMED TO BE INFRINGED; AND SEC TION 52 SPECIFIES THE ACTS WHICH DO NOT CONSTRUE INFRINGEME NT OF COPYRIGHT. FOR THE SAKE OF READY REFERENCE RELEVANT PORTION OF SECTION 51 AND 52 ARE REPRODUCED HEREUNDER:- 51. WHEN COPYRIGHT INFRINGED- COPYRIGHT IN A WORK SHALL BE DEEMED TO BE INFRINGED- ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 18 (A) WHEN ANY PERSON, WITHOUT A LICENCE GRANTED BY T HE OWNER OF THE COPYRIGHT OR THE REGISTRAR OF COPYRIGHTS UND ER THIS ACT OR IN CONTRAVENTION OF THE CONDITIONS OF A LICENCE SO GRANTED OR OF ANY CONDITION IMPOSED BY A COMPETENT AUTHORITY U NDER THIS ACT- (I) DOES ANYTHING, THE EXCLUSIVE RIGHT TO DO WHICH IS BY THIS ACT CONFERRED UPON THE OWNER OF THE COPYRIGHT, OR (II) PERMITS FOR PROFIT ANY PLACE TO BE USED FOR TH E COMMUNICATION OF THE WORK TO THE PUBLIC WHERE SUCH COMMUNICATION CONSTITUTES AN INFRINGEMENT OF THE CO PYRIGHT IN THE WORK, UNLESS HE WAS NOT AWARE THAT HAD NO REASO NABLE GROUND FOR BELIEVING THAT SUCH COMMUNICATION TO THE PUBLIC WOULD BE AN INFRINGEMENT OF COPYRIGHT; OR WHEN ANY PERSON- (I) MAKES FOR SALE OR HIRE, OR SELLS OR LETS FOR HI RE, OR BY WAY OF TRADE DISPLAYS OR OFFERS FOR SALE OR HIRE, OR (II) DISTRIBUTES EITHER FOR THE PURPOSE OF TRADE OR TO SUCH AN EXTENT AS TO AFFECT PREJUDICIALLY THE OWNER OF THE COPYRIGHT, OR (III) BY WAY OF TRADE EXHIBITS IN PUBLIC, OR (IV) IMPORTS INTO INDIA, ANY INFRINGING COPIES OF T HE WORK: PROVIDED THAT NOTHING IN SUB-CLAUSE (IV) SHALL APPL Y TO THE IMPORT OF ONE COPY OF ANY WORK FOR THE PRIVATE AND DOMESTIC USE OF THE IMPORTER. EXPLANATION - FOR THE PURPOSES OF THIS SECTION, THE REPRODUCTION OF A LITERARY, DRAMATIC, MUSICAL OR ARTISTIC WORK IN THE FORM OF A CINEMATOGRAPH FILM S HALL BE DEEMED TO BE AN 'INFRINGING COPY ............ 52(A) XX XX XX XX XX XX XX XX (AA) THE MAKING OF COPIES OR ADAPTATION OF A COMPUT ER PROGRAMME BY THE LAWFUL POSSESSOR OF A COPY OF SUCH COMPUTER PROGRAMME FROM SUCH COPY- (I) IN ORDER TO UTILIZE THE COMPUTER PROGRAMME FOR THE PURPOSE FOR WHICH IT WAS SUPPLIED; OR (II) TO MAKE BACK-UP COPIES PURELY AS A TEMPORARY P ROTECTION AGAINST LOSS, DESTRUCTION OR DAMAGE IN ORDER ONLY T O UTILIZE THE COMPUTER PROGRAMME FOR THE PURPOSE FOR WHICH IT WAS SUPPLIED; (AB) THE DOING OF ANY ACT NECESSARY TO OBTAIN INFOR MATION ESSENTIAL FOR OPERATING INTEROPERABILITY OF AN INDE PENDENTLY CREATED COMPUTER PROGRAMME WITH OTHER PROGRAMMES BY A LAWFUL POSSESSOR OF A COMPUTER PROGRAMME PROVIDED T HAT SUCH INFORMATION IS NOT OTHERWISE READILY AVAILABLE ; ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 19 (AC) THE OBSERVATION, STUDY OR TEST OF FUNCTIONING OF THE COMPUTER PROGRAMME IN ORDER TO DETERMINE THE IDEAS AND PRINCIPLES WHICH UNDERLINE ANY ELEMENTS OF THE PROG RAMME WHILE PERFORMING SUCH ACTS NECESSARY FOR THE FUNCTI ONS FOR WHICH THE COMPUTER PROGRAMME WAS SUPPLIED; (AD) THE MAKING OF COPIES OR ADAPTATION OF THE COMP UTER PROGRAMME FROM A PERSONALLY LEGALLY OBTAINED COPY F OR NONCOMMERCIAL PERSONAL USE. 19. FROM THE AFORESAID PROVISIONS, IT CAN BE INFERR ED THAT COPYRIGHT IS NOT A POSITIVE RIGHT BUT A NEGATIVE RIGHT, I.E., RIGHT TO REFRAIN OTHERS FROM EXPLOITING THE WORK WITHOUT THE COPYRIGHT OWNERS CONSENT OR LICENSE. THE COPYRIGHT IN A WORK REMAINS WITH THE COPYRIGHT OWNER AND THE PURCHASER HAS NOT BOUGHT ANY PART OF IT AND HE CANNOT LAWFULLY ENJOY ANY OF THOS E EXCLUSIVE RIGHTS, REPRODUCTION, ADAPTATION OR THE LIKE, WHICH OWNERSHIP OF THE COPYRIGHT PRESERVES EXCLUSIVELY FOR THE COPYRIG HT OWNER. PURCHASER MAY BUY THE COPYRIGHTED ARTICLE AND CAN U SE THE ARTICLE AS HE DEEMS FIT, BUT IT DOES NOT ENABLE HIM TO USE THE ARTICLE IN A WAY WHICH INFRINGES THE VENDORS RIGHT . 20. HERE IN THE PRESENT CASE, FROM THE READING OF T HE RELEVANT CLAUSES OF THE ARGUMENT, IT IS QUITE OSTENSIBLE THA T NO USE OR RIGHT TO USE OF A COPYRIGHT IN THE SOFTWARE HAS BEE N EVER DIVESTED EITHER TO THE DISTRIBUTORS OR TO THE END U SERS. EVEN FOR THE SAKE OF ARGUMENT, IT IS ACCEPTED THAT COPYRIGHT HAS BEEN TRANSFERRED, THEN REQUIREMENT OF LAW IS THAT, ASSIG NMENTS OF THE COPYRIGHTS HAS TO BE COMPLIED WITH AS PROVIDED IN S ECTIONS 18 & 19 OF THE COPYRIGHT ACT, WHICH READS AS UNDER: 18. ASSIGNMENT OF COPYRIGHT (1) THE OWNER OF THE COPYRIGHT IN AN EXISTING WORK OR THE PROSPECTIVE / OWNER OF THE COPYRIGHT IN A FUTURE WO RK MAY ASSIGN TO ANY PERSON THE COPYRIGHT EITHER WHOLLY OR PARTIALLY AND EITHER GENERALLY OR SUBJECT TO LIMITATIONS AND EITHER FOR THE WHOLE OF THE COPYRIGHT OR ANY PART THEREOF: PROVIDE D THAT IN THE CASE OF THE ASSIGNMENT OF COPYRIGHT IN ANY FUTU RE WORK, THE ASSIGNMENT SHALL TAKE EFFECT ONLY WHEN THE WORK COMES INTO EXISTENCE. (2) WHERE THE ASSIGNEE OF A COPYRIGHT BECOMES ENTIT LED TO ANY RIGHT COMPRISED IN THE COPYRIGHT, THE ASSIGNEE AS R ESPECTS THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 20 RIGHTS SO ASSIGNED AND THE ASSIGNOR AS RESPECTS THE RIGHTS NOT ASSIGNED, SHALL BE TREATED FOR THE PURPOSES OF THIS ACT AS THE OWNER OF COPYRIGHT AND THE PROVISIONS OF THIS ACT S HALL HAVE EFFECT ACCORDINGLY. (3) IN THIS SECTION, THE EXPRESSION 'ASSIGNEE' AS R ESPECTS THE ASSIGNMENT OF THE COPYRIGHT IN ANY FUTURE WORK INCL UDES THE LEGAL REPRESENTATIVES OF THE ASSIGNEE, IF THE ASSIG NEE DIES BEFORE THE WORK COMES INTO EXISTENCE. 19. MODE OF ASSIGNMENT: (1) NO ASSIGNMENT OF THE COPYRIGHT IN ANY WORK SHAL L BE VALID UNLESS IT IS IN WRITING SIGNED BY THE ASSIGNOR OR B Y HIS DULY AUTHORISED AGENT. (2) THE ASSIGNMENT OF COPYRIGHT IN ANY WORK SHALL I DENTIFY SUCH WORK, AND SHALL SPECIFY THE RIGHTS ASSIGNED AN D THE DURATION AND TERRITORIAL EXTENT TO SUCH ASSIGNMENT. (3) THE ASSIGNMENT OF COPYRIGHT IN ANY WORK SHALL A LSO SPECIFY THE AMOUNT OF ROYALTY PAYABLE, IF ANY, TO THE AUTHO R OR HIS LEGAL HEIRS DURING THE CURRENCY OF THE ASSIGNMENT A ND THE ASSIGNMENT SHALL BE SUBJECT TO REVISION, EXTENSION OR TERMINATION ON TERMS MUTUALLY AGREED UPON BY THE PA RTIES. (4) WHERE THE ASSIGNEE DOES NOT EXERCISE THE RIGHT ASSIGNED TO HIM UNDER ANY OF THE OTHER SUB-SECTIONS OF THIS SEC TION WITHIN A PERIOD OF ONE YEAR FROM THE DATE OF ASSIGNMENT, T HE ASSIGNMENT IN RESPECT OF SUCH RIGHTS SHALL BE DEEME D TO HAVE LAPSED AFTER THE EXPIRY OF THE SAID PERIOD UNLESS O THERWISE SPECIFIED IN THE ASSIGNMENT. (5)IF THE PERIOD OF ASSIGNMENT IS NOT STATED, IT SH ALL BE DEEMED TO BE FIVE YEARS FROM THE DATE OF ASSIGNMENT. (6) IF THE TERRITORIAL EXTENT OF ASSIGNMENT OF THE RIG HTS IS NOT SPECIFIED, IT SHALL BE PRESUMED TO EXTEND WITHIN IND IA. (7) NOTHING IN SUB-SECTION (2) OR SUB-SECTION (3) OR S UB- SECTION (4) OR SUB-SECTION (5) OR SUB-SECTION (6) S HALL BE APPLICABLE TO ASSIGNMENT MADE BEFORE THE COMING INT O FORCE OF THE COPYRIGHT (AMENDMENT) ACT, 1994]. 21. THUS, THE MODE OF ASSIGNMENTS SHOULD BE BY WRIT ING AND SUB-SECTION (2) OF SECTION 19 REQUIRES THAT THE ASS IGNMENT OF COPYRIGHT IN ANY WORK MUST; IDENTIFY SUCH WORK; SPE CIFY RIGHT ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 21 ASSIGN; THE DURATION OF THE ASSIGNMENT AND THE TERR ITORIAL EXTENT OF THE ASSIGNMENT. IN NONE OF THE AGREEMENTS, IT CA N BE SEEN THAT THERE IS ANY KIND OF ASSIGNMENT OF COPYRIGHT. 16. THE TRIBUNAL HAS ALSO TAKEN NOTE OF THE COMMENTARY GIVEN IN OECD MODEL TAX CONVENTION ON ROYALTY AND ALSO TH E JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF NOKIA NETWORKS, DIT VS. INFRASOFT LTD. AND CIT VS. ALCATE L LUCENT CANADA (SUPRA). THUS, IF ONE GOES BY THE DEFINITION AS ENSHRINED IN THE TREATY READ WITH RELEVANT PROVISIONS OF INDI AN COPYRIGHT ACT, 1957 AND ALSO THE RELEVANT AGREEMENT AMONGST T HE PARTIES, IT IS SEEN THAT THE PAYMENT FOR CMGS MEMBERSHIP BY TH E ONGC IS PURELY FOR NON-EXCLUSIVE, NON-TRANSFERABLE LICENCE TO USE THE TECHNOLOGY ONLY FOR THE INTERNAL PURPOSE. THERE IS NEITHER SALE NOR LICENCE OF THE COPYRIGHT IN ANY KIND OF SOFTWARE OR TECHNOLOGY. THUS, UNDER THE TREATY, SUCH A PAYMENT CANNOT BE HE LD TO BE RECKONED AS ROYALTY. 17. IN SO FAR AS WHETHER AMENDMENT IN SECTION 9(1)(VI) CAN BE READ INTO THE TREATY, THIS ISSUE NOW STANDS AT REST FOR THE VARIOUS JUDGMENTS OF THE HON'BLE DELHI HIGH COURT INCLUDING THAT OF DIT VS. INFRASOFT LTD. (SUPRA) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE AMENDMENT IN THE DOMESTIC LAW CANNOT BE READ INTO ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 22 THE TREATY. THE RELEVANT OBSERVATIONS AND THE RATI O LAID DOWN BY THE HON'BLE HIGH COURT IN SUM AND SUBSTANCE ARE AS UNDER:- TO BE TAXABLE AS ROYALTY INCOME COVERED BY ARTICLE 12 OF THE DTAA THE INCOME OF THE ASSESSEE SHOULD HAVE BEEN GENERATED BY THE USE OF OR THE RIGHT TO USE OF AN Y COPYRIGHT. THE LICENSING AGREEMENT SHOWS THAT THE LICENSE IS NONEXCLUSIVE, NON-TRANSFERABLE AND THE SOFTWARE HAS TO BE USED IN ACCORDANCE WITH THE AGREEMENT. ONLY ONE COP Y OF THE SOFTWARE IS BEING SUPPLIED FOR EACH SITE. THE L ICENSEE IS PERMITTED TO MAKE ONLY ONE COPY OF THE SOFTWARE AND ASSOCIATED SUPPORT INFORMATION AND THAT ALSO FOR BA CKUP PURPOSES. IT IS ALSO STIPULATED THAT THE COPY SO MADE SHALL I NCLUDE INFRASOFT'S COPYRIGHT AND OTHER PROPRIETARY NOTICES . ALL COPIES OF THE SOFTWARE ARE THE EXCLUSIVE PROPERTY OF INFRA SOFT. THE SOFTWARE INCLUDES A LICENCE AUTHORISATION DEVICE, W HICH RESTRICTS THE USE OF THE SOFTWARE. THE SOFTWARE IS TO BE USED ONLY FOR LICENSEES OWN BUSINESS AS DEFINED WITHIN T HE INFRASOFT LICENCE SCHEDULE. WITHOUT THE CONSENT OF THE ASSESSEE THE SOFTWARE CANNOT BE LOANED, RENTED, SOL D, SUB- LICENSED OR TRANSFERRED TO ANY THIRD PARTY OR USED BY ANY PARENT, SUBSIDIARY OR AFFILIATED ENTITY OF LICENSEE OR USED FOR THE OPERATION OF A SERVICE BUREAU OR FOR DATA PROCE SSING. THE LICENSEE IS FURTHER RESTRICTED FROM MAKING COPI ES, DECOMPILE, DISASSEMBLE OR REVERSE-ENGINEER THE SOFT WARE WITHOUT INFRASOFTS WRITTEN CONSENT. THE SOFTWARE CO NTAINS A MECHANISM WHICH INFRASOFT MAY ACTIVATE TO DENY THE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 23 LICENSEE USE OF THE SOFTWARE IN THE EVENT THAT THE LICENSEE IS IN BREACH OF PAYMENT TERMS OR ANY OTHER PROVISIONS OF THIS AGREEMENT. ALL COPYRIGHTS AND INTELLECTUAL PROPERTY RIGHTS IN AND TO THE SOFTWARE, AND COPIES MADE BY LICENSEE, W ERE OWNED BY OR DULY LICENSED TO INFRASOFT. IN ORDER TO QUALIFY AS ROYALTY PAYMENT, IT IS NECES SARY TO ESTABLISH THAT THERE IS TRANSFER OF ALL OR ANY RIGH TS (INCLUDING THE GRANTING OF ANY LICENCE) IN RESPECT OF COPYRIGH T OF A LITERARY, ARTISTIC OR SCIENTIFIC WORK. IN ORDER TO TREAT THE CONSIDERATION PAID BY THE LICENSEE AS ROYALTY, IT I S TO BE ESTABLISHED THAT THE LICENSEE, BY MAKING SUCH PAYME NT, OBTAINS ALL OR ANY OF THE COPYRIGHT RIGHTS OF SUCH LITERARY WORK. DISTINCTION HAS TO BE MADE BETWEEN THE ACQUISITION OF A 'COPYRIGHT RIGHT' AND A 'COPYRIGHTED ARTICLE' COPYR IGHT IS DISTINCT FROM THE MATERIAL OBJECT, COPYRIGHTED. COP YRIGHT IS AN INTANGIBLE INCORPOREAL RIGHT IN THE NATURE OF A PRIVILEGE, QUITE INDEPENDENT OF ANY MATERIAL SUBSTANCE, SUCH A S A MANUSCRIPT. JUST BECAUSE ONE HAS THE COPYRIGHTED ARTICLE, IT DO ES NOT FOLLOW THAT ONE HAS ALSO THE COPYRIGHT W IT. IT DOE S NOT AMOUNT TO TRANSFER OF ALL OR ANY RIGHT INCLUDING LI CENCE IN RESPECT OF COPYRIGHT. COPYRIGHT OR EVEN RIGHT TO US E COPYRIGHT IS DISTINGUISHABLE FROM SALE CONSIDERATIO N PAID FOR 'COPYRIGHTED' ARTICLE. THIS SALE CONSIDERATION IS F OR PURCHASE OF GOODS AND IS NOT ROYALTY. ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 24 THE LICENSE GRANTED BY THE ASSESSEE IS LIMITED TO T HOSE NECESSARY TO ENABLE THE LICENSEE TO OPERATE THE PRO GRAM. THE RIGHTS TRANSFERRED ARE SPECIFIC TO THE NATURE OF CO MPUTER PROGRAMS. COPYING THE PROGRAM ONTO THE COMPUTER'S H ARD DRIVE OR RANDOM ACCESS MEMORY OR MAKING AN ARCHIVAL COPY IS AN ESSENTIAL STEP IN UTILIZING THE PROGRAM. THEREFORE, RIGHTS IN RELATION TO THESE ACTS OF COPY ING, WHERE THEY DO NO MORE THAN ENABLE THE EFFECTIVE OPERATION OF THE PROGRAM BY THE USER, SHOULD' BE DISREGARDED IN ANAL YZING THE CHARACTER OF THE TRANSACTION FOR TAX PURPOSES. PAYMENTS IN THESE TYPES OF TRANSACTIONS WOULD BE DEALT WITH AS BUSINESS INCOME IN ACCORDANCE WITH ARTICLE 7 OF DTA A. THERE IS A CLEAR DISTINCTION BETWEEN ROYALTY PAID O N TRANSFER OF COPYRIGHT RIGHTS AND CONSIDERATION FOR TRANSFER OF COPYRIGHTED ARTICLES. RIGHT TO USE A COPYRIGHTED AR TICLE OR PRODUCT WITH THE OWNER RETAINING HIS COPYRIGHT, IS NOT THE SAME THING AS TRANSFERRING OR ASSIGNING RIGHTS IN R ELATION TO THE COPYRIGHT. THE ENJOYMENT OF SOME OR ALL THE RIG HTS WHICH THE COPYRIGHT OWNER HAS, IS NECESSARY TO INVOKE THE ROYALTY DEFINITION. VIEWED FROM THIS ANGLE, A NON-EXCLUSIVE AND NONTRANSFERABLE LICENCE ENABLING THE USE OF A COPYR IGHTED PRODUCT CANNOT BE CONSTRUED AS AN AUTHORITY TO ENJO Y ANY OR ALL OF THE ENUMERATED RIGHTS INGRAINED IN ARTICLE 1 2 OF DTAA. WHERE THE PURPOSE OF THE LICENCE OR THE TRANSACTION IS ONLY TO RESTRICT USE OF THE COPYRIGHTED PRODUCT FOR INTE RNAL BUSINESS PURPOSE, IT WOULD NOT BE LEGALLY CORRECT T O STATE ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 25 THAT THE COPYRIGHT ITSELF OR RIGHT TO USE COPYRIGHT HAS BEEN TRANSFERRED TO ANY EXTENT. THE PARTING OF INTELLECTUAL PROPERTY RIGHTS INHEREN T IN AND ATTACHED TO THE SOFTWARE PRODUCT IN FAVOUR OF THE LICENSEE/CUSTOMER IS WHAT IS CONTEMPLATED BY THE TR EATY. MERELY AUTHORIZING OR ENABLING A CUSTOMER TO HAVE T HE BENEFIT OF DATA OR INSTRUCTIONS CONTAINED THEREIN W ITHOUT ANY FURTHER RIGHT TO DEAL WITH THEM INDEPENDENTLY DOES NOT, AMOUNT TO TRANSFER OF RIGHTS IN RELATION TO COPYRIG HT OR CONFERMENT OF THE RIGHT OF USING THE COPYRIGHT. THE TRANSFER OF RIGHTS IN OR OVER COPYRIGHT OR THE CONFERMENT OF THE RIGHT OF USE OF COPYRIGHT IMPLIES THAT THE TRANSFEREE/LICENSEE SHOULD ACQUIRE RIGHTS EITHER IN ENTIRETY OR PARTIALLY CO-EXTENSIVE WITH THE OWNER- TRANSFERO R WHO DIVESTS HIMSELF OF THE RIGHTS HE POSSESSES PRO-TANT O. THE LICENSE GRANTED TO THE LICENSEE PERMITTING HIM TO DOWNLOAD THE COMPUTER PROGRAMME AND STORING IT IN T HE COMPUTER FOR HIS OWN USE IS ONLY INCIDENTAL TO THE FACILITY EXTENDED TO THE LICENSEE TO MAKE USE OF THE COPYRIG HTED PRODUCT FOR HIS INTERNAL BUSINESS PURPOSE. THE SAID PROCESS IS NECESSARY TO MAKE THE PROGRAMME FUNCTIONAL AND T O HAVE ACCESS TO IT AND IS QUALITATIVELY DIFFERENT FROM TH E RIGHT CONTEMPLATED BY THE SAID PARAGRAPH BECAUSE IT IS ON LY INTEGRAL TO THE USE OF COPYRIGHTED PRODUCT. APART F ROM SUCH INCIDENTAL FACILITY, THE LICENSEE HAS NO RIGHT TO D EAL WITH THE PRODUCT JUST AS THE OWNER WOULD BE IN A POSITION TO DO. ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 26 THERE IS NO TRANSFER OF ANY RIGHT IN RESPECT OF COP YRIGHT BY THE ASSESSEE AND IT IS A CASE OF MERE TRANSFER OF A COPYRIGHTED ARTICLE. THE PAYMENT IS FOR A COPYRIGHT ED ARTICLE AND REPRESENTS THE PURCHASE PRICE OF AN ARTICLE AND CANNOT BE CONSIDERED AS ROYALTY EITHER UNDER THE ACT OR UN DER THE DTAA. THE LICENSEES ARE NOT ALLOWED TO EXPLOIT THE COMPUT ER SOFTWARE COMMERCIALLY, THEY HAVE ACQUIRED UNDER LIC ENCE AGREEMENT, ONLY THE COPYRIGHTED SOFTWARE WHICH' BY ITSELF IS AN ARTICLE AND THEY HAVE NOT ACQUIRED ANY COPYRIGHT IN THE SOFTWARE. IN THE CASE OF THE ASSESSEE COMPANY, THE LICENSEE T O WHOM THE ASSESSEE COMPANY HAS SOLD/LICENSED THE SOFTWARE WERE ALLOWED TO MAKE ONLY ONE COPY OF THE SOFTWARE AND ASSOCIATED SUPPORT INFORMATION FOR BACKUP PURPOSES WITH A CONDITION THAT SUCH COPYRIGHT WOULD INCLUDE INFRASO FT COPYRIGHT AND ALL COPIES OF THE SOFTWARE WOULD BE E XCLUSIVE PROPERTIES OF INFRASOFT. LICENSEE WAS ALLOWED TO USE THE SOFTWARE ONLY FOR I TS OWN BUSINESS AS SPECIFICALLY IDENTIFIED AND WAS NOT PER MITTED TO LOAN/RENT/SALE/SUB-LICENCE OR TRANSFER THE COPY OF SOFTWARE TO ANY THIRD PARTY WITHOUT THE CONSENT OF INFRASOFT . THE LICENSEE HAS BEEN PROHIBITED FROM COPYING, DECOMPILING, DE-ASSEMBLING, OR REVERSE ENGINEERING THE SOFTWARE WITHOUT THE WRITTEN CONSENT OF INFRASOFT. THE LICENCE AGREEMENT BETWEEN THE ASSESSEE COMPANY AND ITS CUSTOMERS STIPULATES THAT ALL COPYRIGHTS AND INTELL ECTUAL ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 27 PROPERTY RIGHTS IN THE SOFTWARE AND COPIES MADE BY THE LICENSEE WERE OWNED BY INFRASOFT AND ONLY INFRASOFT HAS THE POWER TO GRANT LICENCE RIGHTS FOR USE OF THE SOFTWA RE. THE LICENCE AGREEMENT STIPULATES THAT UPON TERMINAT ION OF THE AGREEMENT FOR ANY REASON, THE LICENSEE SHALL RE TURN THE SOFTWARE INCLUDING SUPPORTING INFORMATION AND LICEN CE AUTHORIZATION DEVICE TO INFRASOFT. THE INCORPOREAL RIGHT TO THE SOFTWARE, I.E., COPYRI GHT REMAINS WITH THE OWNER AND THE SAME WAS NOT TRANSFE RRED BY THE ASSESSEE. THE RIGHT TO USE A COPYRIGHT IN A PROGRAMME IS TOTALLY DIFFERENT FROM THE RIGHT TO US E A PROGRAMME EMBEDDED IN A CASSETTE OR A CD WHICH MAY BE A SOFTWARE AND THE PAYMENT MADE FOR THE SAME CANNOT B E SAID TO BE RECEIVED AS CONSIDERATION FOR THE USE OF OR R IGHT TO USE OF ANY COPYRIGHT TO BRING IT WITHIN THE DEFINITION OF ROYALTY AS GIVEN IN THE DTAA. WHAT THE LICENSEE HAS ACQUIRED IS ONLY A COPY OF TH E COPYRIGHT ARTICLE WHEREAS THE COPYRIGHT REMAINS WIT H THE OWNER AND THE LICENSEES HAVE ACQUIRED A COMPUTER PROGRAMME FOR BEING USED IN THEIR BUSINESS AND NO R IGHT IS GRANTED TO THEM TO UTILIZE THE COPYRIGHT OF A COMPU TER PROGRAMME AND, THUS, THE PAYMENT FOR THE SAME IS NO T IN THE NATURE OF ROYALTY. IT IS NOT NECESSARY TO EXAMINE THE EFFECT OF SUBSEQ UENT AMENDMENT TO SECTION 9(1)(VI) AND ALSO WHETHER AMOU NT RECEIVED FOR USE OF SOFTWARE WOULD BE ROYALTY IN TE RMS ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 28 THEREOF FOR THE REASON THAT THE ASSESSEE IS COVERED BY THE DTAA, THE PROVISIONS OF WHICH ARE MORE BENEFICIAL. THE AMOUNT RECEIVED BY THE ASSESSEE UNDER THE LICEN CE AGREEMENT FOR ALLOWING THE USE OF THE SOFTWARE IS N OT ROYALTY UNDER THE DTAA. WHAT IS TRANSFERRED IS NEITHER THE COPYRIGHT IN THE SOFTWARE NOR THE USE OF THE COPYRIGHT IN THE SOFTWARE, BUT W HAT IS TRANSFERRED IS THE RIGHT TO USE THE COPYRIGHTED MAT ERIAL OR ARTICLE WHICH IS CLEARLY DISTINCT FROM THE RIGHTS I N A COPYRIGHT. THE RIGHT THAT IS TRANSFERRED IS NOT A RIGHT TO USE THE COPYRIGHT BUT IS ONLY LIMITED TO THE RIGHT TO USE T HE COPYRIGHTED MATERIAL AND THE SAME DOES NOT GIVE RIS E TO ANY ROYALTY INCOME AND WOULD BE BUSINESS INCOME. IN V IEW OF ABOVE, IT IS CONCLUDED THAT THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE ON GRANT OF LICENSES FOR USE OF SOFTWARE IS NOT ROYALTY WITHIN THE MEANING OF ARTICLE 12(3) OF THE DTAA BETWEEN INDIA AND USA 18. THE AFORESAID OBSERVATION AND THE RATIO HAVE BEEN F URTHER REITERATED IN THE JUDGMENT OF ALCATEL LUCENT CANADA (SUPRA). THUS, IN VIEW OF THE BINDING JUDICIAL PRECEDENTS AN D DISCUSSION MADE ABOVE, WE HOLD THAT NATURE OF PAYMENT AS RECEI VED BY THE ASSESSEE THROUGH ONGC IN TERMS OF THE AFORESAID AGR EEMENT CANNOT BE CHARACTERIZED AS ROYALTY AND, THEREFORE , THE SAME IS ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 29 OUTSIDE THE PURVIEW OF TAXATION IN VIEW OF INDIA-CA NADA DTAA. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 19. IN VIEW OF OUR FINDING GIVEN ABOVE, THE ISSUE OF LE VY OF SURCHARGE AND INTEREST U/S 234B HAS BECOME PURELY A CADEMIC THOUGH AS STATED BY THE LD. COUNSEL THIS ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENTS REFERRED AND RELIED UPON BEFORE US. 20. IN THE ASSESSMENT YEARS 2007-08 TO 2010-11, SIMILAR ISSUE IS PERMEATING, THEREFORE, OUR FINDING GIVEN ABOVE W ILL APPLY MUTATIS MUTANDIS IN THESE YEARS ALSO. HOWEVER, FROM ASSESSMENT YEAR 2007-08 ONWARDS THERE IS A PAYMENT FOR PURCHAS E ORDER OF ADDITIONAL SOFTWARE FOR ANNUAL LEASE WHEREIN CERTAI N ADDITION HAS BEEN MADE IN THE EARLIER MEMBERSHIP AND TECHNOLOGY TRANSFER AGREEMENT WHEREBY CERTAIN TECHNOLOGY EXECUTABLE HAS BEEN GIVEN ACCESS TO. THE ONGC IS PAYING ANNUAL LEASE CHARGE W ITH MAINTENANCE, WHICH AGAIN, IS NOT FOR PURCHASE OF AN Y SOFTWARE AND SIMILAR PAYMENT IN ASSESSMENT YEAR 2005-06 HAS BEEN HELD TO BE NOT ROYALTY BY THE LD. CIT(A). FROM THE PERUS AL OF THE INVOICES RAISED, IT IS SEEN THAT THE PAYMENT HAS BE EN MADE FOR ANNUAL LEASE CHARGES WITH MAINTENANCE AND ONCE IN T HE EARLIER ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 30 YEARS IT HAS BEEN HELD NOT TO BE IN THE NATURE OF R OYALTY, THEN, SAME PAYMENT CANNOT BE HELD TO BE ROYALTY IN THIS YEAR. OTHERWISE ALSO ALL THE OTHER ELEMENTS IN THESE YEAR S REMAIN THE SAME AND, THEREFORE, OUR FINDING GIVEN FOR THE ASSE SSMENT YEAR 2006-07 WILL APPLY AS IT IS. THUS, ALL THE APPEALS OF THE ASSESSEE ARE TREATED AS ALLOWED. 21. IN SO FAR AS THE REVENUES APPEAL FOR ASSESSMENT YE AR 2010-11 IS CONCERNED, THE SAME IS WITH REGARD TO LE VY OF INTEREST U/S 234B. THE SAME HAS RENDERED PURELY ACADEMIC AS THE INCOME WHICH HAS BEEN SOUGHT TO BE TAXED HAS ALREADY BEEN DELETED BY US. 22. IN THE RESULT, ALL THE APPEALS OF THE ASS ESSEE ARE ALLOWED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19.11.2018. SD/- SD/- ( L.P. SAHU) (AMIT SH UKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:19 TH NOVEMBER, 2018 DK ITA NOS.3046/DEL/2010; 3908/DEL/2011; 440 & 6170/DEL/2012; & 1892 & 1965/DEL/2014 31 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI