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4. The Ld. Officers below failed to appreciate the binding nature of the Supreme Court's order rendered in in the case of Engineering Analysis Centre of Excellence P. Ltd. (2021) 432 ITR 472 (SC) and jurisprudence laid thereafter by various Courts.

5. The learned Officers below failed to interpret the Distribution Agreement/ End Users License agreement (EULA) as a whole, failed to appreciate that the agreement is non-exclusive, customers of the Appellant do not have any right to modify, reproduce or replicate copies of software licensed, restrictions placed, no copyright/ source code is parted to the customer/ Distributor, the software remains Appellant's proprietary technology, software licenses offered by the Appellant are the Standard facilities provided to its customers for a definite period, hence cannot be termed as "Royalty".

5. The Ld.DR relied on the directions of the Ld.DRP and the detailed findings given by the AO in the final assessment order and prayed that the final assessment order made by the AO may be sustained.

6. We have heard the arguments of both sides and perused the materials available on record.

7. The assessee is a resident of Switzerland and it is also not in dispute that the assessee had no permanent establishment or any liaison office in India. They are in the business of supplying the standardised computed aided engineering application software for its end customers either directly or through the Indian distributor. From the various records including the distribution agreement and the end user license agreement, we came to now that the assessee granted the non-exclusive, non-transferable license with limited right to the subscribers i.e. the end customer could download the software through the key provided by the assessee and the embedded software runs only on the designated system and the customers are only permitted to use the software and the source code was never shared either with the distributor or the end customer. In fact, the distributor had only furnished the key provided by the assessee to the end user and not forwarded any source code. Without the source code, the distributor or the IT(IT)A No. 548/Bang/2025 end user cannot take copy of the software or modify the software supplied by the assessee.

17. As regards addition cannot be made by merely filing a review petition in EAC: [Ground 14] Prayer:

Kindly take the above into records. We humbly request your honors to delete the additions made in scrutiny order taking the above into account. We are obliged to provide any other details upon your honors kind intimation."
9. We have also gone through the various materials furnished by the assessee to show that there is no copyright involved in these transactions in order to attract the term royalty / FTS. In fact, in the distribution agreement, it was clearly stated that the assessee had not parted with the source code to the licensee. We have also perused the purchase order placed by the customers in which it was specifically mentioned that the license to use the said software is only for a specific period and it should be renewed after the expiry of the said specific period. It shows that the source code was never shared with the customers and therefore customers would not be able to take copies of the said software to attract the provision royalty / FTS. Further, as seen from the various documents which are all mentioned in the synopsis, we find that the assessee had not transferred any technical knowhow / knowledge to the customers or their employees thereby make available the knowhow to the customers to attract the provision royalty / FTS. When there is no transfer of the technical knowhow and the assessee is not giving any such type of training to the customers on the software license granted to them, it could not be termed as FTS.

19. On considering the agreement with the distributors and reading clause 3.1, it is provided that assessee grants distributor a limited, nonexclusive, non-transferable, revocable right to receive from assessee and to sub-licence the resale of software in object code form only subject to terms of end user licence agreement. In clause 3.3 it also provides that the distributor will not copy, duplicate, translate, reverse engineer, decompile or disassemble the software or attempt to discover any source code or underlying algorithms of the software by any means. It further provides that the distributor will inform the assessee any unauthorised activity by the third party in the territory of the distributor. Thus from the above, it is clear that it is only in the object code form licence to use the software is provided. Thus there is no evidence that assessee also provides source code to the end user or to the distributor. Thus, the observation of the ld. AO is devoid of any merit that assessee has or will part with the source code to the distributor or to end users.