The Tribunal held that the payment made by the assessee for purchase of off-the-shelf software was not in the realm of “royalty” and as the definition of royalty had not been amended under the Double Taxation Avoidance Agreement, the provisions of the Double Taxation Avoidance Agreement being more beneficial were to be applied and there was no requirement to deduct tax at source out of such payment. The disallowance made under section 40(a)(i) of the Act was not warranted. (AY.2012-13)
Eaton Technologies Pvt. Ltd. v. Dy. CIT (2019) 75 ITR 675 (Pune)(Trib.)
S. 40(a)(i): Amounts not deductible-Deduction at source-Non-resident– Royalty-Payment for purchase of copyrighted software-Not royalty- ‘Royalty’ originally defined in double taxation avoidance agreement not amended-Assessee is not liable to deduct tax for payments made for purchase of off-the-shelf software. [S. 9(1)(vi), 195]