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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

The Asstt. Commissioner of Income Tax, Jalandhar vs. M/S Broadway Overseas Ltd., Jalandhar

ITA 46/ASR/2016[2007-08]Status: DisposedITAT Amritsar30 May 2023AY 2007-08

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 10BSection 14A

allowed, in in which the undertaking begins to computing the total income of manufacture or produce articles or the assessee, a deduction things or computer software, as the from such profits and gains of case may be, shall be allowed from an amount equal to such the total income ... section (1), the profits derived from method of industrial undertaking shall export of articles or things or computation be twenty-five per cent (or computer software shall be the and amount thirty per cent where the amount which bears to the profits of 20 I.T.A. Nos. 477 & CO 32/Asr/2015

The Asstt. Commissioner of Income Tax, Jalandhar vs. M/S Broadways Overseas Ltd, Jalandhar

ITA 345/ASR/2016[2012-13]Status: DisposedITAT Amritsar30 May 2023AY 2012-13

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 10BSection 14A

allowed, in in which the undertaking begins to computing the total income of manufacture or produce articles or the assessee, a deduction things or computer software, as the from such profits and gains of case may be, shall be allowed from an amount equal to such the total income ... section (1), the profits derived from method of industrial undertaking shall export of articles or things or computation be twenty-five per cent (or computer software shall be the and amount thirty per cent where the amount which bears to the profits of 20 I.T.A. Nos. 477 & CO 32/Asr/2015

The Assistant Commissioner of Income Tax, Jalandhar vs. M/S Broadways Overseas Ltd, Jalandhar

ITA 477/ASR/2015[2008-09]Status: DisposedITAT Amritsar30 May 2023AY 2008-09

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 10BSection 14A

allowed, in in which the undertaking begins to computing the total income of manufacture or produce articles or the assessee, a deduction things or computer software, as the from such profits and gains of case may be, shall be allowed from an amount equal to such the total income ... section (1), the profits derived from method of industrial undertaking shall export of articles or things or computation be twenty-five per cent (or computer software shall be the and amount thirty per cent where the amount which bears to the profits of 20 I.T.A. Nos. 477 & CO 32/Asr/2015

DCIT Circle 8(2) (1), Mumbai vs. M/S. . Ogilvy and Mather Pvt. Ltd, Mumbai

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed

ITA 1638/MUM/2021[2013-14]Status: DisposedITAT Mumbai29 May 2023AY 2013-14

Bench: Shri Om Prakash Kant () & Shri Narender Kumar Choudhry ()

For Appellant: Mr. Ajit Shah/Hetal Sangani
Section 37

Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software ... 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors. (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible

DCIT, Cir 8(2) (1), Mumbai vs. M/S. Ogilvy and Mather Pvt. Ltd, Mumbai

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed

ITA 1637/MUM/2021[2012-13]Status: DisposedITAT Mumbai29 May 2023AY 2012-13

Bench: Shri Om Prakash Kant () & Shri Narender Kumar Choudhry ()

For Appellant: Mr. Ajit Shah/Hetal Sangani
Section 37

Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software ... 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors. (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible

Ogilvy and Mather P. Ltd, Mumbai vs. The Asstt. CIT-8(2)(1), Mumbai

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed

ITA 1326/MUM/2021[2016-17]Status: DisposedITAT Mumbai29 May 2023AY 2016-17

Bench: Shri Om Prakash Kant () & Shri Narender Kumar Choudhry ()

For Appellant: Mr. Ajit Shah/Hetal Sangani
Section 37

Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software ... 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors. (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible

Ogily and Mather P. Ltd., Mumbai vs. The Asst. CIT -8(2)(1), Mumbai

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed

ITA 1325/MUM/2021[2013-14]Status: DisposedITAT Mumbai29 May 2023AY 2013-14

Bench: Shri Om Prakash Kant () & Shri Narender Kumar Choudhry ()

For Appellant: Mr. Ajit Shah/Hetal Sangani
Section 37

Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software ... 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors. (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible

Ogilvy and Mather P. Ltd., Mumbai vs. The Asst. CIT-8(2)(1), Mumbai

In the result, the In the result, the cross appeals of the assessee and Revenue of the assessee and Revenue are dismissed

ITA 1324/MUM/2021[2012-13]Status: DisposedITAT Mumbai29 May 2023AY 2012-13

Bench: Shri Om Prakash Kant () & Shri Narender Kumar Choudhry ()

For Appellant: Mr. Ajit Shah/Hetal Sangani
Section 37

Whether on the facts and circumstances of the case and in law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software law the Ld. CIT(A) is right in holding that a computer software ... 1638/M/2021 &Ors. ITA Nos. No. 1637 & 1638/M/2021 &Ors. (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software (a) The Ld. CIT(A) rightly held that off the shelf computer software bought were tangible

Strides Arcolab Ltd, Navi Mumbai vs. DCIT Cir 15(3)(2), Mumbai

The appeal of the assessee is allowed

ITA 1903/MUM/2015[2010-11]Status: DisposedITAT Mumbai23 May 2023AY 2010-11

Bench: Amit Shukla () & Ms. Padmavathy S. ()

Section 10BSection 115JSection 143(3)Section 144CSection 14ASection 35Section 92C

provisions of the Act is very wide and covers any product or service and includes any data processing and is not restricted to computer software. 2. Disallowance of premium payable on redemption of Foreign Currency Convertible Bonds ('FCCB') of Rs. 53,75,81,482/- 2.1. The learned AO erred ... Ld.DRP held that the findings of the Assessing Officer that assessee is not engaged in the activity of manufacture / production of computer software and the preparation of dossier does not amount to providing ITeS services, is correct, and accordingly, upheld the denial of deduction under section

M/S. Zensar Technologies Ltd, Mumbai vs. The ACIT -2(3), Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 2908/MUM/2008[2003-2004]Status: DisposedITAT Mumbai12 May 2023AY 2003-2004

Bench: Shri Aby T Varkey, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blem/S. Zensor Technologies Ltd V. Acit-2(3) Magnet House, 2Nd Floor Mumbai Narottam Morarjee Marg Ballard Estate, Mumbai- 400038 Pan: Aaacf0742K (Appellant) (Respondent) Acit- 2(3) V. M/S. Zensor Technologies Ltd Room No. 555, Aayakar Bhavan Magnet House, 2Nd Floor Mumbai Narottam Morarjee Marg Ballard Estate, Mumbai- 400038 Pan: Aaacf0742K (Appellant) (Respondent)

Section 10ASection 80HSection 92Section 92(1)Section 92CSection 94(7)

records and considered the matter carefully. Deduction under section 80HHE is allowed in respect of profit derived from the business of export of computer software. The phrase "profit derived from" has been defined in sub section 3 as the profit of business in the ratio of export turnover to total ... from India to a place outside India by any means and/or providing technical services outside India in connection with the development or production of computer software • . The term 'profits of the business' has been defined in clause (d) of Explanation to Section 80HHE as profits of the business as computed

ACIT.Commissioner of Income Tax, Range 10(1), Mumbai vs. M/S Tata Consultancy Services Ltd (Successor Company to M/S Cmc Limited), Mumbai

Accordingly the same is dismissed

ITA 6824/MUM/2011[2007-08]Status: DisposedITAT Mumbai03 May 2023AY 2007-08

Bench: Shri Aby T.Varkey, Jm & Shri Om Prakash Kant, Am आयकर अपील सं/I.T.A.No.6824/Mum/2011 (निर्धारणवर्ा/Assessment Year:2007-08) Assistant Commissioner Of बिधम M/S Tata Consultancy Income Tax-10 (1) Services Ltd (Successor Vs. 455, Aayakar Bhavan, 4Th Company To M/S Cmc Floor, M.K. Marg, Ltd.) Mumbai-400 020 9Th Floor, Nirmal Building Nariman Point, Mumbai-400 021 स्थधयीलेखधसं/.जी. आइ. आर. सं/.Pan/Gir No: .Aaacc2030K .. अपीलार्थी प्रत्यर्थी / Appellant / Respondent

For Respondent: Shri Harsh Kothari
Section 10A

accordingly the assessee claims deduction u/s 10A of the Act in respect of profits and gains derived by these undertakings from export of computer software. The entitlement of the assessee to deduction under section 10A in respect of these profits is not in dispute before us. The issue in dispute ... A.Y.2008-09) ITA No.510/MUM/2016 (A.Y.2010-11) TATA CONSULTANCY SERVICES LTD. “(3) This section applies to the undertaking if the sale proceeds of articles or things or computer software exported out of India are received in, or brought into India by the assessee in convertible foreign exchange within a period of six months

I.A.R. Systems Aktiebolag, Mumbai vs. DCIT(It)-2(2)(1), Mumbai

In the result, appeals filed by the assessee are allowed

ITA 598/MUM/2022[2018-19]Status: DisposedITAT Mumbai02 May 2023AY 2018-19

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

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

various courts submitted that Hon'ble Supreme Court held by deciding the issue of taxability of software into four different categories i.e., 1. Computer software directly purchased by Indian end-users from foreign suppliers/ manufacturers; 2. Computer software purchased by Indian distributors/ resellers from foreign suppliers; Page ... NO.598 & 1850/MUM/2022 (A.Y: 2018-19 & 2019-20) I.A.R. System Aktiebolag 3. Computer software purchased by foreign distributors/ resellers from foreign suppliers for resale/distribution in India to Indian distributors/ end-users; and 4. Computer software, embedded in the hardware and sold by foreign suppliers to Indian distributors/ end users

DCIT-2(3), Mumbai vs. M/S. Zensar Technologies Ltd., Mumbai

In the result, the appeal is partly allowed

ITA 5653/MUM/2009[2004-05]Status: DisposedITAT Mumbai19 Apr 2023AY 2004-05

Bench: Amit Shukla () & Ms. Padmavathy S. ()

Section 10ASection 80Section 92

wholly owned subsidiary of Zensar Technologies Inc, USA. The assessee provides technical services outside India in connection with development and production of computer software. The assessee filed the return of income for A.Y. 2004-05 on 28/10/2004 declaring a total income at Nil after setting off brought forward business losses ... find that provisions of Section 80HHE of the Act allows deduction of profit derived from the business of export out of India of computer software for providing all technical services outside India in connection with development or production of computer software. It is not in dispute that the assessee

M/S. Computer Science Corporation India Pvt. Ltd., Chennai vs. Deputy Commissioner of Income Tax-Circle 2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 319/IND/2018[2013-14]Status: DisposedITAT Indore10 Apr 2023AY 2013-14

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

fact, there was disclosure to significant accounting policies in the said comparable as the Company is engaged in the development and maintenance of computer software and software development consulting and also manufacturing EVM and VDB Electronic Board (Hardware Division). The production and sales of software cannot be expressed

M/S. Computer Science Corporation India Pvt. Ltd., Chennai vs. The ACIT-Circle 2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 292/IND/2017[2012-13]Status: DisposedITAT Indore10 Apr 2023AY 2012-13

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

fact, there was disclosure to significant accounting policies in the said comparable as the Company is engaged in the development and maintenance of computer software and software development consulting and also manufacturing EVM and VDB Electronic Board (Hardware Division). The production and sales of software cannot be expressed

M/S. Computer Sciences Corporation India Private Limited, Indore vs. The Asst. Commissioner of Income Tax-2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 179/IND/2016[2011-12]Status: DisposedITAT Indore10 Apr 2023AY 2011-12

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

fact, there was disclosure to significant accounting policies in the said comparable as the Company is engaged in the development and maintenance of computer software and software development consulting and also manufacturing EVM and VDB Electronic Board (Hardware Division). The production and sales of software cannot be expressed

Picric Ltd vs. ITO Ward 14 (4)

In the result, the appeal of the assessee is allowed with directions contained in para 22 above

ITA 4115/DEL/2007[2004-2005]Status: DisposedITAT Delhi06 Apr 2023AY 2004-2005

Bench: Shri G.S. Pannu, Hon’Ble & Ms. Astha Chandra

For Appellant: Shri Neeraj Jain,AdvocateFor Respondent: Shri H.K. Chaudhary, CIT(DR)
Section 10BSection 143(1)Section 143(3)Section 80H

deduction of such profits and gains as are derived by a hundred percent export oriented undertaking from the export of articles or things or computer software for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins ... manufacture or produce articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: ” 10.1 Sub-section (1) of section 10B is a general provision and identifies the income which is exempt. Sub-section (4) of section 10B lays down

Oriental Bank of Commerce, Gurgaon vs. ACIT, Spl. Range-07, New Delhi

In the result, the appeal filed by the Assessee stands allowed

ITA 740/DEL/2020[2016-17]Status: DisposedITAT Delhi31 Mar 2023AY 2016-17

Bench: Shri Anil Chaturvedi & Shri N.K. Choudhryassessment Year: 2016-17

For Appellant: Sh. KVSR Krishna, Ld. CA &For Respondent: Ms. Sarita Kumar, Ld. CIT/DR
Section 115JSection 14ASection 250Section 36

expenditure and whether it resulted an enduring advantage to a particular assessee. It is nobody’s case that assessee is dealing with computer softwares or is in the business of any related services. Rather 9 it uses specific customized software, which is specific to its banking activities

Mesers State Electricity Board, Raipur vs. Assistant Commissioner of Income Tax, Circle 4(1), Raipur

In the result Ground no

ITA 58/RPR/2020[2008-09]Status: DisposedITAT Raipur27 Mar 2023AY 2008-09

Bench: Shri Ravish Sood, Jm & Shri Arun Khodpia, Am आयकर अऩीऱ सं./Ita No.58/Rpr/2020 (ननधाारण वषा / Assessment Year :2008-2009) Chhattisgarh State Electricity Board, Vs Acit-1(1), Raipur Through Chhattisgarh State Power Transmission Co. Limited (Earlier Cg State Power Holding Co Ltd.), O/O. Executive Director Finance- Cgsptcl, Ground Floor, Vidyut Seva Bhavan, Dangania, Raipur Pan No. :Aabcc 7876 Q (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

For Appellant: Shri Madhur Agrawal, Adv. & Shri PraveenFor Respondent: Shri Debashish Lahiri, CIT-DR
Section 80I

allowed deduction as a revenue expenditure. The Assessing Officer also noted that another voucher of Rs 7,50,000 was for purchase of 'computer software' which is also a capital expenditure. It was thus noted by the .Assessing Officer that out of three vouchers produced by the assessee, two vouchers ... assessee not availing the opportunities of hearing afforded by the Assessing Officer in remand proceedings. The CIT(A) did note that the expense on computer software was not even claimed as revenue expenditure, but declined any relief on the ground that the assessee has not submitted item wise components

Upaid Systems Ltd., New Delhi vs. DCIT, Circle- 3(1)(2), Intl. Taxation, New Delhi

In the result, the appeal is partly allowed

ITA 3460/DEL/2018[2012-13]Status: FixedITAT Delhi24 Mar 2023AY 2012-13

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2012-13

Section 9(1)(vi)

rights in respect of any right, property or information includes transfer of all or any right for use or right to use a computer software including grant of a 7 | P a g e AY: 2012-13 licence was inserted to the Statute by Finance Act, 2012 with retrospective effect