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2. The brief facts of the case are that, the assessee M/s.

Temenos Headquarters SA, company incorporated under the laws of Switzerland and is a wholly owned subsidiary of Temenos AG. The registered office of the assessee is located in Geneva, Switzerland. The assessee company is engaged in the business of providing the software license to its customers.

The assessee company provides non-exclusive, non-

transferable basis with no right to modification of source code the Intellectual Property ('IP') rights in the software system and any material provided to the clients are the exclusive IP of Appellant. The Appellant is the sole owner of the copyright in the said software. Further, as per the agreement entered into by Appellant with its clients, it undertakes to provide client with updates which are in the form of recurring licenses with upgrades and enhancements to the current version in the form of modules. The said updates are inextricably and essentially :-3-: ITA. Nos: 1573, 1574 & 1575/Chny/2023 SA Nos: 20 & 21/Chny/2024 linked to the sale of software license and the activity of providing revised version of software (through software updation and maintenance) forms integral part and parcel of sale of software license(viz. software licensing activity). With regard to the same, the customers will be paying annual recurring licenses/ Annual maintenance service fee. Please note that, while the payment is made towards recurring licenses the payment for such recurring licenses are referred to as annual maintenance services.

7. The assessee has contended that the above payments are not royalty because the Indian companies have only received a limited right to merely use the software without any right to modify the source code or replicate it. As already mentioned, there are various kinds of rights associated with a copyrighted article and the right to copy it is not the only right that attracts the provisions of Article 12 of the India Switzerland DTAA. The assessee also relied upon the Copyright Act to state that copyright means an "exclusive right". This argument however has been countered by various Court judgements such as the Karnataka High Court in the case of CIT vs. CGI Information systems and Management consultants (P.) Ltd, [2014] 226 Taxman 319 (Karnataka), in which the Hon'ble Court has observed as follows: