Facts
a)
The assessee had purchased software from residents of different
countries for its business of oil and gas exploration. It made payment for such
purchases without deducting tax at source.
b)
Assessing Officer (AO) was of the view that the Explanation 4 has been inserted with retrospective effect in
section 9(1)(vi) which specifically includes computer software in the
definition of royalty. These payments would be liable for TDS deduction u/s
195. Thus, assessee was to be treated as assessee-in-default.
c)
On appeal, the CIT(A) held that the payment made by the assessee for
purchase of software would not amount to royalty.
d)
The aggrieved-revenue filed an instant appeal before the Tribunal.
The
Tribunal held in favour of assessee as under:
1)
A perusal of the definition of royalty as provided in Article 12 of the
India-USA 'DTAA' reveals that it is the payment which is received as
consideration for the 'use of' or the 'right to use' 'any copyright of
literary, artistic, scientific work including….'(emphasis supplied)
