(i) In view of our detailed discussion made above, the assessee can not be said to have paid the consideration for use of or the right to use copyright but has simply purchased the copyrighted work embedded in the CD- ROM which can be said to be sale of \u2018good\u2019 by the owner. The consideration paid by the assessee thus as per the clauses of DTAA can not be said to be royalty and the same will be outside the scope of the definition of \u2018royalty\u2019 as provided in DTAA and would be taxable as business income of the recipient. The assessee is entitled to the fair use of the work\/product including making copies for temporary purpose for protection against damage or loss even without a license provided by the owner in this respect and the same would not constitute infringement of any copyright of the owner of the work even as per the provisions of section 52 of the Copyright Act,1957.<\/p>\n
(ii) Even otherwise, the Revenue has not cited any direct case law of the jurisdictional High Court of Bombay before us. In the case laws cited by the Revenue of the Hon\u2019ble Karanatka High Court in the matter of \u201cCIT vs.Samsung Electronics Company Ltd.\u201d (supra) and \u201cCIT vs. Synopsis International Old Ltd.\u201d (supra ) though a view in favour of the Revenue has been taken, but, the Hon\u2019ble Delhi High Court in the case of \u201cDIT vs. Infrasoft Ltd.\u201d (supra) which is a latter decision and has discussed the Samsung case also has taken the view in favour of the assessee. The Hon\u2019ble Delhi High court has taken the identical view favouring the assessee in the case of \u201cDIT vs Nokia Network\u201d (supra) and in the case of \u201cDIT vs. Ericson A.B.\u201d (supra) also. The Hon\u2019ble Bombay High Court in the case of \u201cThe Addl. Commissioner of Sales Tax vs. M\/s Ankit International,\u201d Sales Tax Appeal No.9 of 2011 vide order dated 15 September, 2011 while relying upon the decisions of the Hon\u2019ble Supreme Court in \u201cThe Commissioner of Income Tax V. Vegetable Product Ltd.\u201d (1973) 88 ITR 192 and in \u201cMauri Yeast India Pvt. Ltd. V. State of U.P.\u201d (2008) 14 VST 259(SC) : (2008) 5 S.C.C. 680 has held that, if two views in regard to the interpretation of a provision are possible, the Court would be justified in adopting that construction which favours the assessee. Reliance can also be placed in this regard on the decision of Hon\u2019ble Supreme Court in \u201cBihar State Electricity Board and another vs. M\/s. Usha Martin Industries and another : (1997) 5 SCC 289. We accordingly adopt the construction in favour of the assessee.<\/p>\n","protected":false},"excerpt":{"rendered":"
A comparison of the definition of \u2018royalty\u2019 as provided under the DTAA (as reproduced above) with the definition of \u2018royalty\u2019 as provided under Income Tax Act shows that the same are not at para materia with each other.The definition provided under the DTAA is the very short and restrictive definition, whereas, the definition of the royalty as provided under the Income Tax Act is a very wide and inclusive but vague. A careful reading of the relevant provision under the DTAA and under the Income Tax Act reveals that the DTAA covers only a part of the items mentioned under sub clause (i) to (v)to Explanation 2 to section 9(1)(vi). We may mention here that the section9(1)(vi) having sub clauses (a), (b), & (c) is very vast to cover consideration paid for any right, property or information used or services utilized for the purpose of business or profession. Further, we find that in the said sub clauses(a), (b) & (c) of section 9(1) (vi), the wording is somewhat vague and negatively written.<\/p>\n