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21. This clause authorises the assessee to copy the product listed on Exhibit A and to reproduce the same or develop the same. Therefore, the agreement between the assessee and the foreign company is not only to use the copy of a copyright of software but to take copies and to develop the same and they are also permitted to market the product with a trademark and logo of the foreign company. For the purpose of this authorisation to use the software, trademark and logo in the product, the assessee is paying the annual fee. Therefore, the question arises for consideration is whether the annual fee paid by the assessee for using the software, trademark and logo would amount to payment of royalty.

(b) payment of any kind received as consideration for the use of, or right to use, the industrial, commercial, or scientific equipment other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 or Article 8."

23. From a bare reading of the above definition given in http://www.judis.nic.in  Judgt. dt. 23.4.19 in T.C.2184/2006 M/s.Zylog Systems Limited v. ITO the Double Taxation Avoidance Agreement, it is very obvious that any payment received as consideration for use of or right to use copyright or an artistic work or a trademark design or plan would amount to royalty within the meaning of Article 12(3) of the Double Taxation Avoidance Agreement. In. this case, what was paid by the assessee as an annual fee is for the use of software which gives a right to use, copy develop and market the same by using the trademark and logo of Mls.Bluestone Software Inc. Therefore, the payment made by the assessee as annual fee would be for the purpose of using the software for copying and developing and also for using the trademark or logo for marketing the product in Indian market. Therefore, in our opinion, the payment of annual fee by the assessee to Mls.Bluestone Software - Inc. squarely falls within the definition "royalty" as provided in Article 12(3) of the Doubt Taxation Avoidance Agreement. Therefore, we do not find any substance in the argument of the learned representative of the assessee that the payment is not in the form of royalty.

26. Let us now examine the case laws relied upon by the learned representative for the assessee. The final case relied upon by the learned representative is of the Bangalore Bench of this Tribunal in the case of Samsung Electronics Company Ltd. (supra). We have carefully gone through the decision of the Bangalore Bench of this Tribunal. In the case before the Bangalore Bench, the assessee a branch of Samsung Electronics Co. Ltd., Korea engaged in the development, manufacture and export of software for use of its parent company. The software developed by the assessee is for in-house use by the parent company. The assessee imported software product from Tektronix Inc., USA. The assessee has also imported software product from France and Sweden. The assessee contended before the Bangalore Bench of this Tribunal that the software imported by the assessee are readily http://www.judis.nic.in  Judgt. dt. 23.4.19 in T.C.2184/2006 M/s.Zylog Systems Limited v. ITO available in market, therefore, the payment made to software company cannot be treated as royalty. In those factual situations, the Bangalore Bench of this Tribunal found that under Double Taxation Avoidance Agreement, the consideration paid must be for use or right to use any copyright of literary or artistic or scientific work. The Bangalore Bench found that the assessee has received only a copy of the copyright article and the incorporeal right to software remained with owner. Therefore, the Bangalore Bench concluded that the assessee had merely purchased a copy of the copyright article, therefore, the payment does not fall within the. meaning of royalty as provided in Double Taxation Avoidance Agreement. In the case before us/ as per agreement between the assessee and the foreign company Mls.Bluestone Software Inc., clause 1.1 of the Agreement specifically gives a right to copy the licensed product and develop and reproduce the same for marketing. Clause 1.4 of the Agreement authorises the assessee to use the trademark and logo in the product developed or reproduced by the assessee for marketing. Therefore, in the case before us/ it is not a purchase of http://www.judis.nic.in  Judgt. dt. 23.4.19 in T.C.2184/2006 M/s.Zylog Systems Limited v. ITO mere software as in the case of foreign company. In the case before us/ a right to copy/ develop and reproduce the same was specifically given by clause 1.1 of the Agreement. Therefore, in our opinion, the decision of the Bangalore Bench of this Tribunal is not applicable to the facts of this case.

"45. As is clear from the description of the agreement it is an end-user software licence agreement. Clause 2.1 deals with grant of rights. It provides, Software License Synopsys hereby grants licencee a non-exclusive, nontransferable license, without right of sub-licence of use the licensed software and design techniques only in the quantity authorized by a licensee in accordance with the documentation in the use area. Licensee may make a reasonable number of copies of the licensed software for backup and/or archival purposes only. Merely because the words non-exclusive and non-transferable is used in the said licence it does not take away the software out of the definition of the copyright. The word licenced software has been defined. Similarly, the words design, design technique http://www.judis.nic.in  Judgt. dt. 23.4.19 in T.C.2184/2006 M/s.Zylog Systems Limited v. ITO is also defined. The word documentation is also defined and it is not in dispute what is granted is a license. Even if it is not transfer of exclusive right in the copyright, the right to use the confidential information embedded in the software in terms of the aforesaid licence makes it abundantly clear that there is transfer of certain rights which the owner of copyright possess in the said computer software/programme in respect of the copyright owned in terms of the DTAA the consideration paid for the use or right to use the said confidential information in the form of computer programme software itself constitutes royalty and attracts tax. It is not necessary that there should be a transfer of exclusive right in the copyright as contended by the assessee. The consideration paid is for rights in respect of the copyright and for the user of the confidential information embedded in the software/computer programme. Therefore it falls within the mischief of Explanation (2) of clause (vi) of subsection (1) of section 9 of the Act and there is a liability to pay the tax.