EYGBS was an Indian company engaged in providing back-office support and data processing services. It entered into an agreement with the EYGSL (UK) whereby it received “right to benefit from the deliverables and/or services” from the UK company. The Authority for Advance Rulings held that the amount received was assessable as royalty in India. On a writ petition against the ruling the Court held that   that for the payment received by the UK company from EYGBS to be taxed as “royalty”, it is essential to show a transfer of copyright in the software to do any of the acts mentioned in section 14 of the Copyright Act, 1957. A licence conferring no proprietary interest on the licensee, does not entail parting with the copyright. Where the core of a transaction is to authorise the end-user to have access to and make use of the licenced software over which the licensee has no exclusive rights, no copyright is parted with and therefore, the payment received cannot be termed as “royalty”. EYGBS, in terms of the service agreement and the memorandum of understanding, merely received the right to use the software procured by the UK company from third-party vendors. The consideration paid for the use thereof therefore, could not be termed “royalty”. The rights acquired by the UK company from the third-party software vendors were not relevant. What was relevant was the agreement between the UK company and EYGBS. As the agreement did not create any right to transfer the copyright in the software, the payment would not fall within the ambit of the term “royalty”.  Referred  Engg. Analysis Centre of Excellence P. Ltd. v. CIT [2021] 432 ITR 471 (SC).