The assessee, a Danish Company, had entered into a global agreement with Microsoft for procuring various shrink-wrapped software user licenses such as Microsoft Visual Studios, dynamic 365, remote Desktop, office 365, etc., for entities within the Saxo group. The assessee received payments against the above licenses from its associated enterprise, M/s. Saxo Group India P. Ltd. (SGIPL) on which tax was withheld under section 195 of the Act. The assessee claimed that receipts from, its associated enterprise, M/s. Saxo Group India P. Ltd., was exempt which the Revenue treated as taxable as Royalty u/s. 9(1)(vi) of the Act because such receipt was for allowing use of its information technology infrastructure which consists of various third-party software, owned/leased/supported platforms including hardware systems. On appeal to the Tribunal, after going through the documents produced and agreements, it held that the amount cross charged by the assessee did not pertain to any use or right to use of any copyright as neither the assessee nor M/s. Saxo Group India P. Ltd., could  sub-licence, transfer, reverse engineer, modify or reproduce the software/user licence. M/s. Saxo Group India P. Ltd., acknowledged that the Microsoft Software had been granted to the assessee by Microsoft Denmark ApS under an object code-only, non-exclusive, non-sublicensable, non-transferable, revocable licence to access and use the object code version of the proprietary software, solely for the assessee and its group/associate companies’ internal business purposes. Therefore, it held that mere fact that tax has been deducted does not automatically make the receipt taxable as royalty. (AY. 2020-21)