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13. Regarding technical services provided, the assessee furnished the reply and explanation of assessee was accepted and the fees for technical services received by the assessee as per agreement dated 25.02.2008 was taxed @ 10.55%.

14. The Assessing Officer further considered the submissions of the assessee regarding fees for SAP implementation and fees relating to transfer pricing consultancy, wherein the reply of assessee is reproduced at pages 20 and 21 of the assessment order. The first aspect which was decided by the Assessing Officer was whether the license fees received by the assessee is chargeable to tax in India under the Act. The Assessing Officer took note of relevant provisions of royalty as per section 9(1)(vi) of the Act and considered the nature of payment and the definition of computer software as provided in Explanation (3) under section 9(1)(vi) of the Act. The Assessing Officer was of the view that the payment for right to use software was in the nature of royalty and taxable as per clause (v) of Explanation (2) of section 9(1)(vi) of the Act. Reference was also made to the Finance Act, 2012, wherein it has been clarified that the right to use computer software, including granting of license, is royalty as per Explanation (4). In view thereof, the Assessing Officer held that the payment was in the nature of royalty and taxable as royalty under section 9(1)(vi) of the Act. The Assessing Officer Piaggio & C.S.P.A referred to Article 13 of the DTAA between India and Italy which dealt with royalty and fees for included services and was of the view that as per DTAA, royalty means payments of any kind received as consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work or secret formula or process or for information concerning industrial commercial or scientific experience including gains derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof or payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment. The Assessing Officer thus, held that the literary or scientific work obviously includes the software and there is no requirement of transfer of copyright for treating the payment as royalty under DTAA. Another point noted by the Assessing Officer was that the property which has been transferred by the assessee to its affiliates in India is the license and sub-licenses in respect of certain softwares. And it is further charging these affiliates based on the actual usage per annum. The Assessing Officer further observed that as the source code or the object code of these softwares has been protected under the copyright act, these softwares can even qualify as secret formula or secret process. Even by this meaning also, the payment received for granting the software licenses comes under the heading of "royalty". Hence, it was held that the character of payments received for right to use software and for support services was clearly royalty as defined in Article 13 of the DTAA as well as Explanation (2) to section 9(1)(vi) of the Act. The Assessing Officer concluded by holding that the receipts on account of right to use software (license fees) and support services were in the nature of royalty under the Act as well as DTAA between India and Italy.