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“computer software”

Chapter III - Incomes Not IncludedSection 10BSection 10B Explanation 2 / Section 80HHF951 judgments

The decision most relied on for computer software is Engineering Analysis Centre of Excellence (P) Ltd. v. CIT (432 ITR 471), cited in 914 judgments on BharatTax.

Leading authorities on computer software

Engineering Analysis Centre of Excellence (P) Ltd. v. CIT
432 ITR 471 · 2021 · Supreme Court
914
citing judgments

Payments for the supply or use of computer software, where there is no transfer of copyright but only a right to use the copyrighted product, are generally considered business profits and not 'royalty' or 'fees for technical services' under the Income Tax Act, 1961 or relevant DTAAs. This principle also applies to transponder fees, which are not taxable as royalty.

CIT v. Samsung Electronics Ltd.
345 ITR 494 · 2012 · High Court
461
citing judgments

Payments by Indian residents to non-resident foreign software suppliers for software are considered royalty, constituting income deemed to accrue in India under section 9(1)(v), thereby requiring tax deduction at source under section 195.

DIT v. Infrasoft Ltd.
39 Taxmann.com 88 · 2013 · High Court
269
citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

III v. HCL Technologies Ltd.
93 Taxmann.com 33 · 2018 · Supreme Court
245
citing judgments

When computing the deduction available under Section 10A of the Income-tax Act, communication expenses must be excluded from the total turnover for the purpose of calculating the eligible relief.

CIT v. Synopsis International Old Ltd.
212 Taxmann 454 · 2013 · High Court
177
citing judgments

Payments for computer software are treated as royalty income under Section 9(1)(vi) of the Income-tax Act, particularly concerning the expanded definition provided by Explanation 2 and Explanation 4.

CIT v. Asahi India Safety Glass Ltd.
346 ITR 329 · 2012 · High Court
129
citing judgments

Expenses incurred for software license purchase, development of miscellaneous software, and maintenance of websites are considered revenue in nature. Such expenses are deductible in the year they are incurred.

Amway India Enterprises v. DCIT
111 ITD 112 · 2008 · ITAT
127
citing judgments

Depreciation is allowable on computer software, including software licenses, at the rate of 60%.

Kotak Mahindra Primus Ltd. v. DDIT
11 SOT 578 · 2007 · ITAT
99
citing judgments

Payments for data processing services using a mainframe computer and specialized software are not taxable as fees for the use of equipment if the Indian entity lacks independent rights or physical access to use the computer or software.

Judgments citing computer software

Deputy Commissioner of Income Tax, Chennai vs. Ashok Leyland Limited, Chennai

In the result, appeal filed by the assessee is partly allowed and

ITA 482/CHNY/2024[2010-11]Status: DisposedITAT Chennai25 Sept 2024AY 2010-11

Bench: Shri Aby T. Varkey & Shri S.R.Raghunathaआयकर अपील सं./Ita No.361/Chny/2024 िनधा"रण वष"/Assessment Year: 2010-11 V. M/S. Ashok Leyland Ltd., The Dcit, No.1, Sardar Patel Road, Non Corporate Circle-8(1), Guindy, Chennai-600 032. Ltu-Ii, Chennai. [Pan: Aaaca 4651 L] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr. Vikram VijayaraghavanFor Respondent: Mr. Nilay Baran Som, CIT
Section 32Section 35

clarify that transfer of rights in respect of any right, property or information includes transfer of right to use a computer software (including granting of a license) irrespective of the medium through which such right is transferred. In the instant case, the Appellant has purchased software licenses which squarely fall

Ashok Leyland Limited, Chennai vs. DCIT Non Corp Circle 8(1) - Ltu - II, Chennai

In the result, appeal filed by the assessee is partly allowed and

ITA 361/CHNY/2024[2010-11]Status: DisposedITAT Chennai25 Sept 2024AY 2010-11

Bench: Shri Aby T. Varkey & Shri S.R.Raghunathaआयकर अपील सं./Ita No.361/Chny/2024 िनधा"रण वष"/Assessment Year: 2010-11 V. M/S. Ashok Leyland Ltd., The Dcit, No.1, Sardar Patel Road, Non Corporate Circle-8(1), Guindy, Chennai-600 032. Ltu-Ii, Chennai. [Pan: Aaaca 4651 L] (अपीलाथ"/Appellant) (""यथ"/Respondent)

For Appellant: Mr. Vikram VijayaraghavanFor Respondent: Mr. Nilay Baran Som, CIT
Section 32Section 35

clarify that transfer of rights in respect of any right, property or information includes transfer of right to use a computer software (including granting of a license) irrespective of the medium through which such right is transferred. In the instant case, the Appellant has purchased software licenses which squarely fall

DCIT, Intl. Taxn., Circel1(2), Bangalore vs. Blue Yonder Inc., U.S.A

In the result, appeals filed by the Revenue are dismissed

ITA 1326/BANG/2024[2018-19]Status: DisposedITAT Bangalore19 Sept 2024AY 2018-19

Bench: Shri George George K & Shri Waseem Ahmedit(It)A Nos.1302, 1326/Bang/2024 Assessment Years : 2012-13, 2018-19 The Deputy Commissioner Of Income Tax, Vs. M/S. Blue Yonder Inc., International Taxation, 15059 N, Suite 400 Scottsdale, Circle -1(2), Arizona, Foreign, Bengaluru. United States. Pan : Aaccj 3581 C Appellant Respondent C.O.No.34/Bang/2024 (In It(It)A No.1302/Bang/2024) Assessment Years : 2012-13 M/S. Blue Yonder Inc., Vs. The Assistant Commissioner Of Income Tax, United States. Circle -1(2), Pan : Aaccj 3581 C Bengaluru. Cross Objector Respondent Appellant By : Shri. T. Suryanarayana, Advocate & Smt. Tanmayee Rajkumar, Advocate Respondent By : Smt. R. Ilavarasi, Cit(Dr)(Itat), Bengaluru Date Of Hearing : 19.09.2024 Date Of Pronouncement : 19.09.2024 O R D E R Per Bench : These Appeals At The Instance Of The Revenue Are Directed Against Two Orders Of Cit(A) Both Dated 09.05.2024 Passed Under Section 250 Of The Act. The Relevant Assessment Years Are 2012-13 & 2018-19. It(It)A Nos.1302, 1326/Bang/2024 C.O. No.34/Bang/2024 (In It(It)A No.1302/Bang/2024) Page 2 Of 13

For Appellant: Shri. T. Suryanarayana, Advocate and Smt. Tanmayee Rajkumar, AdvocateFor Respondent: Smt. R. Ilavarasi, CIT(DR)(ITAT), Bengaluru
Section 250

Employee insurance charges 11,44,589 4. Professional fees 3,98,45,239 5. Host country tax 8,60,70,802 6. Computer software 17,37,43,255 7. Subscription charges 7,52,70,596 8. Telecommunication charges 1,97,41,529 9. Restricted Stock Unit expenses ... consulting services and that they do not satisfy the conditions to be treated as ‘fees for included services’. As regards payments received towards (i) computer software maintenance; (ii) subscription charges; and (iii) telecommunication charges, the CIT(A) held the same to be in the nature of ‘royalty’ and sustained

DCIT, Intl Taxn, Circle-1(2), Bng, Bengaluru vs. Blue Yonder Inc., U.S.A

In the result, appeals filed by the Revenue are dismissed

ITA 1302/BANG/2024[2012-13]Status: DisposedITAT Bangalore19 Sept 2024AY 2012-13

Bench: Shri George George K & Shri Waseem Ahmedit(It)A Nos.1302, 1326/Bang/2024 Assessment Years : 2012-13, 2018-19 The Deputy Commissioner Of Income Tax, Vs. M/S. Blue Yonder Inc., International Taxation, 15059 N, Suite 400 Scottsdale, Circle -1(2), Arizona, Foreign, Bengaluru. United States. Pan : Aaccj 3581 C Appellant Respondent C.O.No.34/Bang/2024 (In It(It)A No.1302/Bang/2024) Assessment Years : 2012-13 M/S. Blue Yonder Inc., Vs. The Assistant Commissioner Of Income Tax, United States. Circle -1(2), Pan : Aaccj 3581 C Bengaluru. Cross Objector Respondent Appellant By : Shri. T. Suryanarayana, Advocate & Smt. Tanmayee Rajkumar, Advocate Respondent By : Smt. R. Ilavarasi, Cit(Dr)(Itat), Bengaluru Date Of Hearing : 19.09.2024 Date Of Pronouncement : 19.09.2024 O R D E R Per Bench : These Appeals At The Instance Of The Revenue Are Directed Against Two Orders Of Cit(A) Both Dated 09.05.2024 Passed Under Section 250 Of The Act. The Relevant Assessment Years Are 2012-13 & 2018-19. It(It)A Nos.1302, 1326/Bang/2024 C.O. No.34/Bang/2024 (In It(It)A No.1302/Bang/2024) Page 2 Of 13

For Appellant: Shri. T. Suryanarayana, Advocate and Smt. Tanmayee Rajkumar, AdvocateFor Respondent: Smt. R. Ilavarasi, CIT(DR)(ITAT), Bengaluru
Section 250

Employee insurance charges 11,44,589 4. Professional fees 3,98,45,239 5. Host country tax 8,60,70,802 6. Computer software 17,37,43,255 7. Subscription charges 7,52,70,596 8. Telecommunication charges 1,97,41,529 9. Restricted Stock Unit expenses ... consulting services and that they do not satisfy the conditions to be treated as ‘fees for included services’. As regards payments received towards (i) computer software maintenance; (ii) subscription charges; and (iii) telecommunication charges, the CIT(A) held the same to be in the nature of ‘royalty’ and sustained

DCIT-14(1)(1), Mumbai vs. Music Broadcast Ltd, Mumbai

In the result, the appeal filed by the assessee is allowed for statistical purpose and

ITA 590/MUM/2024[2012-13]Status: DisposedITAT Mumbai16 Sept 2024AY 2012-13

Bench: Ms. Kavitha Rajagopal, Jm & Shri Girish Agrawal, Am Music Broadcast Limited Asst. Cit-14(2)(2) 5Th Floor, Rna Corporate Park, Room No. 432, 4Th Floor, Kalanagar, Bandra (E), Vs. Aayakar Bhavan, Mumbai-400 020 Bandra, Mumbai-400 051

For Respondent: Smt. Mahita Nair
Section 143(1)Section 143(3)Section 250

benefit’ and are capital expenses in nature where only depreciation is to be allowed. 14. The brief facts are that the assessee had incurred computer software expenses of Rs.1,70,67,431/-, which the assessee has treated it to be ‘revenue in nature’ for the reason that the said expenses

Music Broadcast Limited, Mumbai vs. Assistant Commissioner of Income Tax 14(2)(2), Mumbai

In the result, the appeal filed by the assessee is allowed for statistical purpose and

ITA 525/MUM/2024[2012-13]Status: DisposedITAT Mumbai16 Sept 2024AY 2012-13

Bench: Ms. Kavitha Rajagopal, Jm & Shri Girish Agrawal, Am Music Broadcast Limited Asst. Cit-14(2)(2) 5Th Floor, Rna Corporate Park, Room No. 432, 4Th Floor, Kalanagar, Bandra (E), Vs. Aayakar Bhavan, Mumbai-400 020 Bandra, Mumbai-400 051

For Respondent: Smt. Mahita Nair
Section 143(1)Section 143(3)Section 250

benefit’ and are capital expenses in nature where only depreciation is to be allowed. 14. The brief facts are that the assessee had incurred computer software expenses of Rs.1,70,67,431/-, which the assessee has treated it to be ‘revenue in nature’ for the reason that the said expenses

DCIT, Intl. Taxn., Circle 1(2), Bangalore vs. Blue Yonder Inc., Bangalore

In the result, all the appeals of the revenue are dismissed

ITA 1414/BANG/2024[2015-16]Status: DisposedITAT Bangalore12 Sept 2024AY 2015-16

Bench: Shri George George K. & Shri Waseem Ahmed

For Appellant: Shri T. Suryanarayana, Sr. AdvocateFor Respondent: Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru
Section 133(6)Section 14Section 143(3)Section 250

Employee insurance charges 11,44,589 4. Professional fees 3,98,45,239 5. Host country tax 8,60,70,802 6. Computer software maintenance 17,37,43,255 7. Subscription charges 7,52,70,596 8. Telecommunication charges 1,97,41,529 9. Restricted Stock Unit expenses ... consulting services and that they do not satisfy the conditions to be treated as ‘fees for included services’. As regards payments received towards (i) computer software maintenance; (ii) subscription charges; and (iii) telecommunication charges, the CIT(A) held the same to be in the nature of ‘royalty’ and sustained

DCIT, Circle 1(2) (Intl. Taxn.), Blr, Bangalore vs. Blue Yonder Inc, Bangalore

In the result, all the appeals of the revenue are dismissed

ITA 1413/BANG/2024[2017-18]Status: DisposedITAT Bangalore12 Sept 2024AY 2017-18

Bench: Shri George George K. & Shri Waseem Ahmed

For Appellant: Shri T. Suryanarayana, Sr. AdvocateFor Respondent: Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru
Section 133(6)Section 14Section 143(3)Section 250

Employee insurance charges 11,44,589 4. Professional fees 3,98,45,239 5. Host country tax 8,60,70,802 6. Computer software maintenance 17,37,43,255 7. Subscription charges 7,52,70,596 8. Telecommunication charges 1,97,41,529 9. Restricted Stock Unit expenses ... consulting services and that they do not satisfy the conditions to be treated as ‘fees for included services’. As regards payments received towards (i) computer software maintenance; (ii) subscription charges; and (iii) telecommunication charges, the CIT(A) held the same to be in the nature of ‘royalty’ and sustained

DCIT, Circle 1(2), (Intl. Taxn.), Bangalore vs. Blue Yonder Inc., Bangalore

In the result, all the appeals of the revenue are dismissed

ITA 1412/BANG/2024[2016-17]Status: DisposedITAT Bangalore12 Sept 2024AY 2016-17

Bench: Shri George George K. & Shri Waseem Ahmed

For Appellant: Shri T. Suryanarayana, Sr. AdvocateFor Respondent: Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru
Section 133(6)Section 14Section 143(3)Section 250

Employee insurance charges 11,44,589 4. Professional fees 3,98,45,239 5. Host country tax 8,60,70,802 6. Computer software maintenance 17,37,43,255 7. Subscription charges 7,52,70,596 8. Telecommunication charges 1,97,41,529 9. Restricted Stock Unit expenses ... consulting services and that they do not satisfy the conditions to be treated as ‘fees for included services’. As regards payments received towards (i) computer software maintenance; (ii) subscription charges; and (iii) telecommunication charges, the CIT(A) held the same to be in the nature of ‘royalty’ and sustained

Adp Private Limited, Hyderabad vs. DCIT, Circle -1 (1), Hyderabad

In the result, ground 4 of the assessee is partly allowed and ground

ITA 95/HYD/2022[2017-18]Status: DisposedITAT Hyderabad09 Sept 2024AY 2017-18

Bench: Shri Prakash Chand Yadav & Shri Madhusudan Sawdia

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: : Shri Kumar Pranav, CIT-DR
Section 115JSection 142(1)Section 143(2)Section 92C

facts of the case are that the assessee company M/s. ADP Private Limited with PAN of AANCA8983A is engaged in the business of providing Computer Software Development Services and Information Technology Enabled Services to its Associated Enterprises. It filed its ITA No.95/Hyd/2022 2 Return of Income

Comparex India P.Ltd, New Delhi vs. ITO, Circle-4(2), New Delhi

In the result, the appeal filed by the assessee is partly allowed

ITA 2151/DEL/2022[2018-19]Status: DisposedITAT Delhi09 Sept 2024AY 2018-19

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Accountant Member)

For Appellant: Shri Ajit Jain, ARFor Respondent: Shri Rajesh Kumar, CIT DR
Section 143(2)Section 143(3)Section 144C(10)Section 144C(13)Section 144C(8)Section 92CSection 92C(3)

Rules C. Erroneous adjustment of INR 1,996,462 with respect to international transaction pertaining to Payment of sourcing fee, Purchase and Sale of computer software 12. On the facts and in law, the Revenue erred in including/ selecting companies that are not comparable to the Appellant in terms

Nokia India Pvt. Ltd., Gurgaon vs. JCIT, Special Range-6, New Delhi

In the result, the appeal filed by the assessee is partly allowed as indicated above

ITA 7745/DEL/2018[2014-15]Status: DisposedITAT Delhi30 Aug 2024AY 2014-15

Bench: disregarding the ALP determined by the Appellant and proceeded to determine the ALP himself.

Section 143(3)Section 144CSection 92CSection 92C(3)Section 92D

Insufficient segment information: However, it has opted to disclose segmental information pertaining to market segment/sector only. 3. Owns insignificant intangibles: Engaged in development of computer software in-house. It also has intangible assets under development amounting to INR 41.83 Crores which is around 35% of value of transaction of software

DCIT, Circle -1 (1), Tirupati vs. Dasan India Private Limited, Vijaywada

In the result, appeal of the assessee is partly allowed for statistical purpose

ITA 126/HYD/2022[2017-18]Status: DisposedITAT Hyderabad29 Aug 2024AY 2017-18

Bench: Shri K. Narasimha Chary & Shri Madhusudan Sawdia

For Appellant: Shri H Srinivasulu, AdvFor Respondent: : Shri Kumar Pranav, CIT-
Section 143(3)

subcontractor of TCIL for the work of “erecting communication towers, posting VSAT and antennas, laying cables, setting up computer hardware and installing computer softwares and power backups to run those systems”. The total receipt of the assessee from TCIL is Rs. 441,84,400/-( page

Aet Laboratories Private Limited, Medak vs. DCIT, Circle-8(1), Hyderabad

In the result, appeal filed by the assessee is partly allowed for statistical purposes

ITA 963/HYD/2017[2010-11]Status: DisposedITAT Hyderabad26 Aug 2024AY 2010-11

Bench: Shri Laliet Kumar & Shri Manjunatha, G.आ.अपी.सं /Ita No.963/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2010-11) Aet Laboratories (P) Ltd Vs. Dy. C. I. T. Medak Circle 8(1) Pan:Aadcm6591L Hyderabad (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri A Srinivas, Ca राज" व "ारा/Revenue By:: Shri Srinath Sadanala, Dr सुनवाई की तारीख/Date Of Hearing: 26/08/2024 घोषणा की तारीख/Pronouncement: 26/08/2024 आदेश/Order

For Appellant: Shri A Srinivas, CAFor Respondent: : Shri Srinath Sadanala, DR
Section 10B

charges and stability storage charges, gain on foreign currency fluctuation, miscellaneous receipts etc., are not derived from the activities of export of goods or computer software and thus, not eligible for exemption u/s 10B of the I.T. Act, 1961. Therefore, re-computed the profits and gains of eligible undertaking ... submitted that as per amended provisions, for the purpose of sub-section (1) profits derived from export of article or thing or computer software Page 4 of 11 ITA No 963 of 2017 AET Laboratories P Ltd Medak shall be the amount which bears to the profits of the business

V K Jewellery, Mumbai vs. DCIT, Circle 17(1), Mumbai

In the result, the appeal by the assessee is allowed for statistical purposes

ITA 3163/MUM/2024[2012-13]Status: DisposedITAT Mumbai26 Aug 2024AY 2012-13

Bench: Shri Sandeep Singh Karhail & Smt. Renu Jauhri

For Appellant: Shri Sunil HirawatFor Respondent: Shri R.R. Makwana, Sr. DR
Section 10ASection 143(3)Section 250

attributable to the delivery of the articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India;” V K Jewellery. 9. We find that the coordinate bench of the Tribunal in BT E-serv (India

Kpmg Assurance and Consulting Services LLP, Mumbai vs. Assistant Commissioner of Income Tax-Circle-16(2), Mumbai

Accordingly, Ground No. 5 & 6 raised by the Revenue are dismissed

ITA 2415/MUM/2023[2014-15]Status: DisposedITAT Mumbai12 Aug 2024AY 2014-15

Bench: SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

Also in other respects Article 7 and the Commentary thereon could be of assistance for the interpretation of Article 14, e.g. in determining whether computer software payments should be classified as commercial income within Article 7 or 14 or as royalties within Article 12. 4. Even if Articles

Kpmg Assurance and Consulting Services LLP, Mumbai vs. Assistant Commissioner of Income Tax-Circle-16(2), Mumbai

Accordingly, Ground No. 5 & 6 raised by the Revenue are dismissed

ITA 2414/MUM/2023[2015-16]Status: DisposedITAT Mumbai12 Aug 2024AY 2015-16

Also in other respects Article 7 and the Commentary thereon could be of assistance for the interpretation of Article 14, e.g. in determining whether computer software payments should be classified as commercial income within Article 7 or 14 or as royalties within Article 12. 4. Even if Articles

Kpmg Assurance and Consulting Services LLP, Mumbai vs. Assistant Commissioner of Income Tax-Circle-16(2), Mumbai

Accordingly, Ground No. 5 & 6 raised by the Revenue are dismissed

ITA 2413/MUM/2023[2016-17]Status: DisposedITAT Mumbai12 Aug 2024AY 2016-17

Bench: IN THE INCOME TAX APPELLATE TRIBUNAL "I" BENCH, MUMBAI SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

Also in other respects Article 7 and the Commentary thereon could be of assistance for the interpretation of Article 14, e.g. in determining whether computer software payments should be classified as commercial income within Article 7 or 14 or as royalties within Article 12. 4. Even if Articles

Kpmg Assurance and Consulting Services LLP, Mumbai vs. Assistant Commissioner of Income Tax -16(2), Mumbai

ITA 2411/MUM/2023[2012-13]Status: DisposedITAT Mumbai12 Aug 2024AY 2012-13

Also in other respects Article 7 and the Commentary thereon could be of assistance for the interpretation of Article 14, e.g. in determining whether computer software payments should be classified as commercial income within Article 7 or 14 or as royalties within Article 12. 4. Even if Articles

DCIT, Cir 16(2), Mumbai vs. M/S Kpmg Assurance and Consulting Services LLP, Mumbai

ITA 2277/MUM/2023[2017-18]Status: DisposedITAT Mumbai12 Aug 2024AY 2017-18

Also in other respects Article 7 and the Commentary thereon could be of assistance for the interpretation of Article 14, e.g. in determining whether computer software payments should be classified as commercial income within Article 7 or 14 or as royalties within Article 12. 4. Even if Articles