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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

DCIT, C-1(1), Chandigarh vs. M/S Fidelity Information Services India Pvt. Ltd., Chandigarh

In the result, the cross-objection filed by the assessee is dismissed

ITA 1328/CHANDI/2019[2014-15]Status: DisposedITAT Chandigarh07 Jun 2024AY 2014-15

Bench: SHRI. AAKASH DEEP JAIN (Vice President), SHRI. VIKRAM SINGH YADAV (Accountant Member)

For Appellant: Shri Vishal Kalra, Advocate and Ms. Sumisha, C.AFor Respondent: Shri Rohit Sharma, CIT DR
Section 37(1)

this issue has been made because as per the terms of agreement, the assessee company had to provide the services for development of computer software and allied products on specific orders and specifications provided from time to time by M/s SF Inc. USA. Further ... develop specific software as per the direction of the company M/s SF Inc USA. Therefore, the assessee company was only engaged in development of computer software and allied products for M/s SF Inc USA and was not required to do any servicing on behalf

DDIT (It) 2(1), Mumbai vs. Siemens Ag, Mumbai

ITA 2179/MUM/2014[2009-10]Status: DisposedITAT Mumbai07 Jun 2024AY 2009-10
Section 144CSection 144C(5)Section 153Section 9(1)(vi)

Supreme Court vide its order grouped various appeals before it into following four categories: - The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer. - The second category of cases deals with resident ... Indian companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users. 10 ITA No.2153/Mum/2014 & 2179/Mum/2014 Siemens Sktiengesellshaft - The third category concerns cases wherein the distributor happens to be a foreign, non- resident

Siemens Aktiengesellschaft, Mumbai vs. DDIT (It) 2(1), Mumbai

In the result, appeal of the assessee is allowed and appeal of the Revenue is dismissed

ITA 2153/MUM/2014[2009-10]Status: DisposedITAT Mumbai07 Jun 2024AY 2009-10

Bench: SHRI B R BASKARAN (Accountant Member), SHRI AMIT SHUKLA (Judicial Member)

Section 144CSection 144C(5)Section 153Section 9(1)(vi)

Supreme Court vide its order grouped various appeals before it into following four categories: - The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer. - The second category of cases deals with resident ... Indian companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users. - The third category concerns cases wherein the distributor happens to be a foreign, non- resident vendor, who, after purchasing software from

Music Broadcast P.Ltd, Mumbai vs. DCIT RG 10(1), Mumbai

In the result, appeals of the assessee and revenue are treated as partly allowed

ITA 7593/MUM/2014[2010-11]Status: DisposedITAT Mumbai04 Jun 2024AY 2010-11

Bench: Justice (Retd.) C V Bhadang, Hon’Ble & Shri B.R. Baskaranassessment Year 2010-11 C.O. No.88/Mum/2016 (Arising Out Of Ita No.7277/Mum/2014,A.Y.2010-11)

For Appellant: Shri Manish MalikFor Respondent: Shri Ashok Kumar Ambastha, Sr.AR
Section 143

objection. 3. We shall first take up the appeal filed by the revenue. The 1st issue contested by the revenue relates to disallowance of computer software license fee of Rs.1.54 crores. The assessee had claimed computer software license fees as revenue expenditure. However, the Assessing Officer treated the same ... Tribunal, vide its order dated 3 ITA NO.7593/MUM/2014 & ITA NO.7277/MUM/2014 Assessment Year 2010-11 C.O No.88/Mum/2016 25.01.2017 passed in ITA No.3532/Mum/2013, has allowed the computer software license fee as revenue expenditure. However, in assessment year 2009-10 the ITAT, vide its order dated 10-02-2015 passed in ITA No.6763/Mum/2012

DCIT 14(2)(2), Mumbai vs. Music Broadcast P.Ltd, Mumbai

In the result, appeals of the assessee and revenue are treated as partly allowed

ITA 7277/MUM/2014[2010-11]Status: DisposedITAT Mumbai04 Jun 2024AY 2010-11

Bench: Justice (Retd.) C V Bhadang, Hon’Ble & Shri B.R. Baskaranassessment Year 2010-11 C.O. No.88/Mum/2016 (Arising Out Of Ita No.7277/Mum/2014,A.Y.2010-11)

For Appellant: Shri Manish MalikFor Respondent: Shri Ashok Kumar Ambastha, Sr.AR
Section 143

objection. 3. We shall first take up the appeal filed by the revenue. The 1st issue contested by the revenue relates to disallowance of computer software license fee of Rs.1.54 crores. The assessee had claimed computer software license fees as revenue expenditure. However, the Assessing Officer treated the same ... Tribunal, vide its order dated 3 ITA NO.7593/MUM/2014 & ITA NO.7277/MUM/2014 Assessment Year 2010-11 C.O No.88/Mum/2016 25.01.2017 passed in ITA No.3532/Mum/2013, has allowed the computer software license fee as revenue expenditure. However, in assessment year 2009-10 the ITAT, vide its order dated 10-02-2015 passed in ITA No.6763/Mum/2012

ACIT, Chennai vs. Johnson Lifts Pvt. Ltd., Chennai

In the result the appeal is partly allowed

ITA 47/CHNY/2024[2016-17]Status: DisposedITAT Chennai31 May 2024AY 2016-17

Bench: Shri Aby T. Varkey, Jm & Shri Amitabh Shuklaआयकर अपील सं./Ita No.47/Chny/2024 & Ita No.48/Chny/2024 निर्धारण वर्ा /Assessment Year: 2016-17 & 2017-18

For Appellant: Shri R.Vijayaraghavan, AdvocateFor Respondent: Shri P.Sajit Kumar, JCIT
Section 32Section 36(1)(vii)Section 40Section 9

accessories such as printer, scanner etc. are considered as Computer peripherals and they form integral part of Computer System. 5. Restricted depreciation on Computer Software to 25 percent as against 60 percent leading to addition of Rs.368,100. The said computer software licenses are only application software ... regarding the action of the AO in restricting claim of depreciation of the assesse to 25% against 60% claimed on computer software and the action of CIT(A) in deleting the same. The Ld.CIT(A) accorded relief to the assesse, inter-alia holding that accounting a standard

Kony Inc, United States of America vs. Deputy Commissioner of Income-Tax, Chennai

In the result, appeal filed by the assessee is allowed

ITA 1572/CHNY/2023[AY 2021-22]Status: DisposedITAT Chennai30 May 2024

Bench: Shri Mahavir Singh, Hon’Ble & Shri S. R. Ragunatha, Hon’Bleआयकर अपील सं./Ita No.: 1572/Chny/2023 िनधा"रण वष" / Assessment Year: 2021-22 Kony Inc., Deputy Commissioner Of 5301, Southwest Parkway, V. Income Tax, Suite 250, International Taxation -1(2), Austin, Texas, Chennai. Usa - 5301 [Pan: Aaeck-4771-D] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri. R. Sivaraman, Advocate : Shri. D. Hema Bhupal, Jcit ""यथ" क" ओर से/Respondent By सुनवाई क" तारीख/Date Of Hearing : 24.04.2024 घोषणा क" तारीख/Date Of Pronouncement : 30.05.2024

For Appellant: Shri. R. Sivaraman, Advocate
Section 143(2)Section 143(3)Section 144C

Income-tax in Civil Appeal Nos.8733-8734 of 2018. In this case, Hon'ble Apex Court expounded that consideration for the resale of the computer software through End User License Agreement (EULA)/distribution agreements, is not the payment of royalty :-7-: ITA. No: 1572/Chny/2023 for the use of copyright ... computer software, and that the same does not give rise to any income taxable in India. Ld. counsel submitted that the facts in the assessee's case are identical. He further submitted that ITAT in assessee's own case earlier also has decided the issue in favour of the assessee

Joint Commissioner of Income -Tax, Special Range - 6, Bangalore vs. M/S. Samsung R & D Institute India-Bangalore Private Limited, Bangalore

In the result, the appeals filed by the assessee as per revised grounds stands allowed and the appeals filed by the revenue stands dismissed for the years under consideration

ITA 978/BANG/2019[2014-15]Status: DisposedITAT Bangalore30 May 2024AY 2014-15

Bench: Smt Beena Pillai & Shri Waseem Ahmed

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty’ and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed ... assessee is not entitled to claim deduction u/s 32 while computing the income under the head 'profits & gains of business & profession' in respect of computer software, i.e., royalty paid, for use of computer software since it had failed to deduct tax at source as required u/s 194J. Accordingly, the disallowance

Joint Commissioner of Income-Tax, Special Range-6, Bangalore vs. M/S. Samsung R & D Institute India-Bangalore Private Limited, Bangalore

In the result, the appeals filed by the assessee as per revised grounds stands allowed and the appeals filed by the revenue stands dismissed for the years under consideration

ITA 958/BANG/2019[2011-12]Status: DisposedITAT Bangalore30 May 2024AY 2011-12

Bench: Smt Beena Pillai & Shri Waseem Ahmed

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty’ and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed ... assessee is not entitled to claim deduction u/s 32 while computing the income under the head 'profits & gains of business & profession' in respect of computer software, i.e., royalty paid, for use of computer software since it had failed to deduct tax at source as required u/s 194J. Accordingly, the disallowance

M/S Samsung R & D Institute India Bangalore Private Limited, Bangalore vs. Joint Commissioner of Income Tax Circle-6(1)(1), Bangalore

ITA 484/BANG/2019[2014-15]Status: DisposedITAT Bangalore30 May 2024AY 2014-15

Bench: Smt Beena Pillai & Shri Waseem Ahmedappeal No. Appellant Respondent Assessment Year

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty' and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed

M/S. Samsung R & D Institute India Bangalore Private Limited, Bangalore vs. Deputy Commissioner of Income- Tax, Circle - 6(1)(1), Bangalore

In the result, the appeals filed by the assessee as per revised grounds stands allowed and the appeals filed by the revenue stands dismissed for the years under consideration

ITA 1166/BANG/2019[2013-14]Status: DisposedITAT Bangalore30 May 2024AY 2013-14

Bench: Smt Beena Pillai & Shri Waseem Ahmed

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty’ and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed ... assessee is not entitled to claim deduction u/s 32 while computing the income under the head 'profits & gains of business & profession' in respect of computer software, i.e., royalty paid, for use of computer software since it had failed to deduct tax at source as required u/s 194J. Accordingly, the disallowance

M/S. Samsung R & D Institute India Bangalore Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 6(1)(1), Bangalore

In the result, the appeals filed by the assessee as per revised grounds stands allowed and the appeals filed by the revenue stands dismissed for the years under consideration

ITA 1092/BANG/2019[2012-13]Status: DisposedITAT Bangalore30 May 2024AY 2012-13

Bench: Smt Beena Pillai & Shri Waseem Ahmed

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty’ and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed ... assessee is not entitled to claim deduction u/s 32 while computing the income under the head 'profits & gains of business & profession' in respect of computer software, i.e., royalty paid, for use of computer software since it had failed to deduct tax at source as required u/s 194J. Accordingly, the disallowance

Joint Commissioner of Income Tax, Special Range - 6, Bangalore vs. M/S. Samsung R &D Institute India- Bangalore Private Limited, Bangalore

In the result, the appeals filed by the assessee as per revised grounds stands allowed and the appeals filed by the revenue stands dismissed for the years under consideration

ITA 1046/BANG/2019[2013-14]Status: DisposedITAT Bangalore30 May 2024AY 2013-14

Bench: Smt Beena Pillai & Shri Waseem Ahmed

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty’ and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed ... assessee is not entitled to claim deduction u/s 32 while computing the income under the head 'profits & gains of business & profession' in respect of computer software, i.e., royalty paid, for use of computer software since it had failed to deduct tax at source as required u/s 194J. Accordingly, the disallowance

Joint Commissioner of Income Tax, Special Range - 6, Bangalore vs. M/S. Samsung R & D Institute India -Bangalore Private Limited, Bangalore

ITA 1045/BANG/2019[2012-13]Status: DisposedITAT Bangalore30 May 2024AY 2012-13

Bench: Smt Beena Pillai & Shri Waseem Ahmedappeal No. Appellant Respondent Assessment Year

For Appellant: Smt. Tanmayee RajkumarFor Respondent: Shri D.K. Mishra, CIT-DR
Section 234ASection 234BSection 234CSection 32Section 40

regard to definition of ‘royalty' and to apply the same for the purpose of section 194J. Accordingly, the depreciation claimed by the assessee on computer software is considered for disallowance for non-deduction of TDS on payment made towards such purchase. In this regard, a doubt has been expressed

Novartis India Ltd, Mumbai vs. Asst CIT 7(1), Mumbai

ITA 2308/MUM/2012[2003-04]Status: DisposedITAT Mumbai28 May 2024AY 2003-04

Bench: Pavan Kumar Gadale & Shri Girish Agrawal

Section 37(1)Section 41(3)Section 80H

during the year. The net relief to the assessee is Rs.66,22,000/-.” 7. The fifth disputed issue is with respect to purchase of computer software and software development cost. The A.O found that the assessee has incurred an expenditure of Rs.1,37,60,267/- under computer software and supplies ... found that out of the above details Rs.1,32,45,017/- has been stated to be on account of off the shelf computer software packages and treated as revenue expenditure. The AO has dealt on the facts and submissions of the assessee and is of the opinion that the claim

ACIT Cir 7(1), Mumbai vs. Novartis India ( Formelry Known As Hindustan Ciba Giegy Ltd), Mumbai

In the result, (i) the appeal filed by the assessee is partly allowed for statistical purpose (ii) the appeal filed by the revenue is dismissed and (iii) the Cross Objections filed by the assessee ...

ITA 2188/MUM/2012[2003-04]Status: DisposedITAT Mumbai28 May 2024AY 2003-04

Bench: Pavan Kumar Gadale & Shri Girish Agrawal & Co 76/Mum/2013 (A.Y 2003-04) Novartis India Limited Vs. Deputy Commissioner Of Income–Tax–14(1)(1) Inspire Bkc, 7Th Floor, Room No 432, Bandra Kurla Complex, Aaykar Bhawan, Bandra (E) M.K. Marg, Mumbai-400051. Mumbai-400020. Pan/Gir No. Aaach2914F (अपीलाथ"/Appellant) (""यथ"/Respondent) Deputy Commissioner Vs. Novartis India Limited Of Income–Tax–14(1)(1) Inspire Bkc, 7Th Floor, Room No 432, Bandra Kurla Complex, Aaykar Bhawan, Bandra (E) M.K. Marg, Mumbai-400051 Mumbai-400020 Pan/Gir No. Aaach2914F (अपीलाथ"/Appellant (""यथ"/Respondent)

Section 37(1)Section 41(3)Section 80H

during the year. The net relief to the assessee is Rs.66,22,000/-.” 7. The fifth disputed issue is with respect to purchase of computer software and software development cost. The A.O found that the assessee has incurred an expenditure of Rs.1,37,60,267/- under computer software and supplies ... found that out of the above details Rs.1,32,45,017/- has been stated to be on account of off the shelf computer software packages and treated as revenue expenditure. The AO has dealt on the facts and submissions of the assessee and is of the opinion that the claim

The Dy.CIT (Int.-Taxa.)-1, Ahmedabad vs. Zydus Lifscience Ltd. (Formerly Known As Cadila Healthcare Ltd.), Ahmedabad

In the result, the appeal of the revenue is hereby dismissed

ITA 36/AHD/2021[2012-13]Status: DisposedITAT Ahmedabad17 May 2024AY 2012-13

Bench: Ms. Suchitra Kamble & Shri Waseem Ahmed

For Appellant: Shri Jigar Patel, A.RFor Respondent: Shri Sudhakar Verma, Sr. D.R
Section 9(1)(vi)Section 9(1)(vii)

definition of royalty under section 9(1)(vi) of the Act while it was paid for the use or right to use of computer software. 6. Whether on the fact and circumstances of the case, Ld. CIT (A) was right in law in holding that the payments made

Salesforce.Com Singapore Pte Ltd, Singapore vs. Assistant Commissioner of Income-Tax, International Taxation Circle-3(1)(2), Delhi, New Delhi

Appeal is partly allowed

ITA 3347/DEL/2023[2021-22]Status: DisposedITAT Delhi17 May 2024AY 2021-22

Bench: Shri Saktijit Dey & Shri Brajesh Kumar Singh: A.Y. 2018-19 : A.Y. 2019-20 : A.Y. 2020-21

Section 143(3)Section 144C(13)Section 9(1)(vii)

right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred." 17. It becomes pertinent to observe that Explanation 4 in essence ... introduces a deeming fiction and includes transfer of all or any rights "for use" or "to use" a computer software including by way of a license irrespective of the medium through which such right is transferred. Significantly, the DTAA does not bring within its sweep a right

Saleforce.Com Singapore Pte Ltd, Singapore vs. ACIT, Circle-3(1)(2) Int, Taxation, New Delhi

Appeal is partly allowed

ITA 1789/DEL/2023[2020-21]Status: DisposedITAT Delhi17 May 2024AY 2020-21

Bench: Shri Saktijit Dey & Shri Brajesh Kumar Singh: A.Y. 2018-19 : A.Y. 2019-20 : A.Y. 2020-21

Section 143(3)Section 144C(13)Section 9(1)(vii)

right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred." 17. It becomes pertinent to observe that Explanation 4 in essence ... introduces a deeming fiction and includes transfer of all or any rights "for use" or "to use" a computer software including by way of a license irrespective of the medium through which such right is transferred. Significantly, the DTAA does not bring within its sweep a right

Selesforce.Com Singapure Pte Ltd., Singapure vs. ACIT International Taxation, Circle-3(1)(2), New Delhi

Appeal is partly allowed

ITA 1924/DEL/2022[2019-20]Status: DisposedITAT Delhi17 May 2024AY 2019-20

Bench: Shri Saktijit Dey & Shri Brajesh Kumar Singh: A.Y. 2018-19 : A.Y. 2019-20 : A.Y. 2020-21

Section 143(3)Section 144C(13)Section 9(1)(vii)

right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred." 17. It becomes pertinent to observe that Explanation 4 in essence ... introduces a deeming fiction and includes transfer of all or any rights "for use" or "to use" a computer software including by way of a license irrespective of the medium through which such right is transferred. Significantly, the DTAA does not bring within its sweep a right