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4.During the course of hearing before us, the Authorised Representative (AR) referred to various clauses of the agreement entered into by the assessee, that ASL stated that the words end user,license,delivery products, sub license and royalty had definite meaning. He argued that ASL had sold the assessee a software product i.e.a copy righted article, that no right was sold to the assessee in the copy right which ASL had, that there was difference between copyrighted article and copyright,that there was sale of copyright,that the payment could not be termed royalty, that software was a separate entity, that it was not covered by IPR, it was also not covered by section 9(1)(vi) of Explanation-2 of the Act or Article 13.3 of DTAA, that softwares are included in Explanation -4 to section 9(1)(vi), that the DTAA did not make any reference to software,that amendments were made to the Act after the payments were made by the assessee to ASL,that the amendments were retrospective, that the assessee was deducting tax after the amendment to avoid litigation.He referred to the case of Financial Software(47taxmann.com 410); Channel Guide India Ltd.(20 ITR (Trib.) 438); M.Tech India (P.)Ltd.(381ITR31);Dynamic Vertical Software(332ITR222) ;Vinzas Solution (392ITR 155) ;Baan Global BV (49ITR(Trib.)73); Halliburton Export Inc. (IT Appeal 363 of 2016, dated 11/07/2016).

Similarly in the case of Dynamic Vertical Software India (P.) Ltd. the Hon'ble Delhi High Court dealt with similar issue.In that matter the assessee was purchasing the software from Microsoft and sold it further in Indian market.The AO treated the payment made by the assessee to Microsoft as royalty and, therefore, came to the conclusion that tax at source was to be deducted.The FAA confirmed the order of the AO,however,the Tribunal deleted the addition.The Hon'ble Court held that by no stretch of imagination it would be termed as "royalty".In the other cases,referred to by the assessee before us,similar view had been taken.

11.1.With regard to failure of the assessee to deduct tax and application of section 40a(ia) of the Act,we would like to mention that in the case of Dynamic Vertical Software India (P.) Aveva-3506/M/14+6 Ltd.,(supra)the Hon'ble Delhi High Court had held the identical issue.In that case the Hon'ble Court had observed that the assessee had purchased a software from Microsoft and had sold in the Indian market,that it acted as a dealer,that payment made by it could not be termed as royalty,that section 40(a)(i) of the Act had no application.Respectfully,following the above judgment,we allow ground no.4.