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29. It is also not the case of the Revenue that pursuant to the observations of revised OECD commentary distinguishing "copyright" from "copyrighted article", that the Government of India has chosen to incorporate the expression "Computer Software"
explicitly in DTAA signed with countries post amendment in OECD commentary. For example in the case of India Saudi Arabia DTAA entered into in the year 2006, the expression "Computer Software" is conspicuous by its absence in Article 12(3) of the treaty. There is a list of other countries namely Armenia, Hungary, Ireland, Portugal, Slovenia, Sudan, Uganda, UAE where tax treaties with India were entered or revised in recent years without incorporating the expression "Computer Software" in the definition of 'royalty'. Thus there is no expressed / implied intention / policy of India to include 'computer software' in the definition of royalty.
45. He has further submitted that treaties are not legislative enactments. These do not flow as acts of Parliament. Being an executive function, the words and phrases used in I. T. Appeal Nos. 1331, 1332, 1333, 1334, 1335 & 1336 (Del) of 2008;
I T. Appeal No. 1392 (Del) of 2005;
A N D I. T. Appeal Nos. 1393, 1394 & 1395 (Del) of 2005.
the treaty are obviously the outcome of negotiations between the officials of the two contracting states. The choice of the words in the treaty are dependent upon the domestic laws of the respective countries, their understanding of the definitions appearing in Model conventions (OECD, UN, US etc), the respective commentaries and the Judicial pronouncements in their countries and elsewhere. In Indian scenario, the word "computer software" has been added at the insistence of the other parties to the negotiation, which is evident from the treaties entered into with other countries. A number of such examples were cited at the time of hearing by the ld. Counsel for the assessee. In his rejoinder, the Ld. Counsel for the appellant referred to certain treaties which Russia has entered into with other countries where computer software is not included. That position is not disputed. Some Russian treaties were cited by the Revenue only as examples to show that words in the treaty may be employed at the insistence of one or the other party and such differences should not be taken to mean change in the official position of either state by reference to what was negotiated with a third state. The treaties where Russia or any other country chose not to include computer software cannot be a guide to decide what transpired between Russia and India. The omission by Russia could be at the insistence of the third party.
I T. Appeal No. 1392 (Del) of 2005;
A N D I. T. Appeal Nos. 1393, 1394 & 1395 (Del) of 2005.
copyright, it should be classified as royalty both under the Income Tax Act and under the DTAA and it would be taxable in the hands of the assessee on that basis. On the other hand if the payment is for a 'copyrighted article', then it only represents the purchase price of the article and therefore cannot be royalty either under the Act or under the DTAA. On the other hand, the contention of the ld. Counsel for the Revenue is that reliance on OECD commentary should not be placed at all and the issue relating to royalty be decided on the basis of provisions of Income tax Act, 1961 read with Indo-US DTAA. He has also submitted that the computer software is different from 'Article' or 'goods' and the Parliament has recognized the difference by enacting section 80-HHE for export of computer softwares. If computer software was included in the definition of 'article' or 'goods' there was no need for enacting a separate section for export of computer softwares.
I. T. Appeal Nos. 1331, 1332, 1333, 1334, 1335 & 1336 (Del) of 2008;
I T. Appeal No. 1392 (Del) of 2005;
A N D I. T. Appeal Nos. 1393, 1394 & 1395 (Del) of 2005.
"This End User Licence Agreement (EULA) is a legal agreement between you (either an individual or a single entity) and Microsoft Corporation for the Microsoft software product identified above, which includes computer software and may include associated media, printed materials, and "on line" or (electronic documentation) "product". An amendment or addendum to this EULA may accompany the product. You agree to be bound by the terms of this EULA by installing, copying, or otherwise using the product. If you do not agree, do not install or use the product; you may return it to your place of purchase for a full refund."