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(viii) "Nature of Appointment: Subject to the terms and conditions set forth herein, Adobe hereby grants Distributor, and Distributor hereby accepts, a non-exclusive, non-

transferable license to supply the Software Products in the Territory, and this shall include the right to license Dealers to supply the Software Products in the Territory This Agreement is not to be interpreted or construed as an agreement between Adobe and Distributor for the sale or license of the copyright in the Software Products. Distributor shall advise its Dealers and other customers that Distributor has a license to supply the Software Products but not the copyright in the Software Product Distributor, its Dealers and customers' are prohibited from duplicating, reverse engineering, selling or licensing the Software Product or the copyright in the Software Product, or using the Software Product for any purpose other than as set out in this Agreement Without prejudice to the foregoing, Adobe reserves the right to: deal directly in the Software Products in the Territory, including the right to license End Users directly, via Internet distribution or otherwise; license other distributors for the Software Products in Ihe Territory; provide technical support in the Territory, and to enter into arrangements or agreements with third parties inducing but not limited to End Users, Dealers, OEMs, systems integrators or VARs in connection with the Software Products in the Territory.

"Software Products" means copies of the Software and tire User Documentation supplied to Distributor as shrink-wrap or TLP Products for the categories of Adobe Software listed in the License Fee Lists that arc supplied by Adobe to Distributor pursuant to this Agreement Software Products shall include TLP Products, End of Life Software Products, Upgrade Products, Unsaleable Software Products and Media."

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2.2 Nature of Appointment. Subject to the terms and conditions set forth herein, Adobe hereby grants Distributor, and Distributor hereby accepts, a non-exclusive, non- transferable license to supply the Software Products in the Territory, and this shall include the right to license Dealers to supply the Software Products in the Territory. This Agreement is not to be interpreted or construed ns an agreement between Adobe and Distributor for the sale or license of the copyright in the Software Products. Distributor shall advise its Dealers and other customers that Distributor has a license to supply the Software Products but not the copyright in the Software Product. Distributor, its Dealers and customers are prohibited from duplicating, reverse engineering, selling or licensing the Software Product or the copyright in the Software Product, or using the Software Product, for any purpose other than of set out in this Agreement. Without prejudice to the foregoing, Adobe reserves the right to: deal directly in the Software Products in the Territory, including the right to license End Users directly, via Internet distribution or otherwise; License other distributors for the Software Products in the Territory; provide technical support in the Territory, and to enter into arrangements or agreements with third parties including but not limited to End Users, Dealers, OEMs, systems integrators or VARs in connection with the Software Products in the Territory.

15. From a bare reading of the aforesaid clauses, it is seen that, what assessee has granted to the Indian distributors is, a non-exclusive, non-transferable license to supply the software products in the Indian Territory. There is no sale or license of the copyright in the software products albeit the distributor has license to supply product, but not the copyright in the software product. Apart from that, the distributors or its dealers or the customers are prohibited from duplicating, reverse engineering, selling or licensing the software product or the copyright in the software product or using the software product for any purpose other than which has been set out in the agreement. The distributors can distribute the software solely in the form of product which has been obtained from the assessee and distributor shall not alter the design or contents of the said product. Further, the distributor is prohibited from translating the software in any other computer language in whole or in part. Thus, it is a clear cut sale of shrink-wrap software product from the assessee company to the Indian distributors and then to the end users. Now under this agreement, whether the payment received from sale of such a copyrighted software product can be reckoned as "royalty" under the India-Ireland DTAA? The relevant paragraph 3(a) of Article 12 of the said treaty reads as under:-

• There is no transfer of any right in respect of copyright by the assessee and it is a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article and cannot be considered as royalty either under the Act or under the DTAA. • The licensees are not allowed to exploit the computer software commercially, they have acquired under licence agreement, only the copyrighted software which' by itself is an article and they have not acquired any copyright in the software.