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ITA Nos. 73 & 74/PUN/2011, A.Ys. 2004-05 & 2006-07

5. Shri R.R. Vora appearing on behalf of the assessee submitted that the Assessing Officer has erred in holding that consideration received by the assessee for grant of user rights in software and related support services are chargeable to tax in India as „royalty‟. 5.1 Aggrieved against the assessment order, the assessee filed objection before the Dispute Resolution Panel (DRP). The DRP rejected the contentions of the assessee and upheld the findings of Assessing Officer in determining the nature of payments for services provided by the assessee as royalty within the meaning of section 9(1)(vi) of the Act. 5.2 The ld. AR submitted that the assessee/appellant being a principal company of group, procured various softwares with the object of standardization, efficiency, consistency and cost effectiveness. Thereafter, the appellant granted user rights in the softwares to its affiliate company worldwide for their internal use including its affiliates in India i.e. CIL and CSSIL. The assessee/appellant entered into separate agreements dated 07-06-2004 with CIL and CSSIL for grant of user rights in the software and provision of related basic software support services. The appellant obtained licenses in respect of certain software viz. Oracle, Lotus Notes from IBM. Windows from Microsoft, etc. and also included certain additional modules offered by the software vendors. The software programs were procured directly by the appellant as a part of its agreements with the third party vendors, i.e. the owners of such software programs. There was no change made by the appellant to such software programs and the corresponding modules when it was shared with its global affiliates. This is because a copyright in these software programs i.e. source code or object code has not been granted to the appellant by the ITA Nos. 73 & 74/PUN/2011, A.Ys. 2004-05 & 2006-07 software vendors. The appellant has obtained non-exclusive user right and does not have any rights to sub-license/reverse engineer the software. 5.3 The ld. AR contended that the issue; Whether the grant of user rights in the software and the payments made in lieu thereof partake the character of royalty or not, has been considered by the Co-ordinate Bench of Tribunal in the case of John Deere India Pvt. Ltd. Vs. DDIT in ITA Nos. 905 & 906/PUN/2015 for the assessment years 2007-08 and 2008-09 decided on 23-01-2019. The ld. AR pointed that the aforesaid case was the case of payments made to the suppliers, whereas in the present case the assessee is recipient of such payments. The ld. AR further submitted that the Tribunal in the case of Symantec Corporation Vs. DCIT in ITA No. 387/PUN/2017 for the assessment year 2013-14 decided on 05-04-2019 has considered the identical issue. The facts in the aforesaid case were identical to the facts of the case of present assessee, as the appellant therein was also recipient of the payments for providing software to its Indian affiliates. The Tribunal after placing reliance on the decision of John Deere India Pvt. Ltd. (supra) held that the payments received for providing software do not fall within the purview of royalty u/s. 9(1)(vi) of the Act. The ld. AR to further buttress his contentions placed reliance on the following decisions :