Assessee, engaged in the business of software exports, remitted a certain amount to a US company towards International Private Leased Circuit (IPLC)/bandwidth services without deducting tax at source. Assessing Officer treated remittances as royalty for use/right to use equipment under section 9(1)(vi) and held assessee to be in default under sections 201(1) and 201(1A). Commissioner (Appeals) held that payments were not royalty and, in the absence of a permanent establishment of the recipient in India, there was no obligation to deduct tax under section 195. Tribunal reversed the order of the Commissioner (Appeals). On appeal, the Court held that   Explanations 4 to 6 to section 9(1)(vi) inserted by the Finance Act, 2012 with effect from 1-4-2012 were not clarificatory in nature but expanded the definition of the term ‘royalty’ prospectively from 1-4-2012.  Since remittance to a non-resident company was not chargeable to tax in India, the need to deduct tax at source under section 195 did not arise and, consequently, disallowance under section 40(a)(i) and action under section 201 could not be sustained.  (AY. 2002-03 to 2003-04)