“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

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, Circle-1(1)(1), Int. Taxn., New Delhi vs. Avaya Internaional Sales Limited, Ireland

In the result, the appeal of the assessee is allowed for statistical purposes and the appeal of the revenue is dismissed

ITA 714/DEL/2020[2016-17]Status: DisposedITAT Delhi07 Mar 2023AY 2016-17

Bench: Shri N. K. Billaiya & Shri Anubhav Sharmaavaya International Sales Ltd, Vs. Acit, C/O. Mr. Rohit Verma Ernst & Circle-International Young Llp, 1St Floor, Tower B, Taxation 1(1)(1), Dlf Centre Court Building, New Delhi Sector-42, Gold Course, Gurgaon-122002 (Assessee ) (Respondent) Pan: Aakca7138A Dcit, Vs. Avaya International Sales Ltd, Circle-1(1)(1), C/O. Mr. Rohit Verma Ernst & Young Llp, 1St Floor, Tower B, International Taxation, New Delhi Dlf Centre Court Building, Sector-42, Gold Course, Gurgaon-122002 (Assessee ) (Respondent) Pan: Aakca7138A Assessee By : Dr. Shashwat Bajpai, Adv Ms. Ananya Kapoor, Adv Revenue By: Shri Sukesh Kumar Jain, Cit-Dr Date Of Hearing 16/02/2023 Date Of Pronouncement 07/03/2023

For Appellant: Dr. Shashwat Bajpai, AdvFor Respondent: Shri Sukesh Kumar Jain, CIT-DR

Section 139(4)Section 143(2)Section 143(3)Section 144C

under:- “169. Our answer to the question posed before us, is that the amounts paid by resident Indian end-users/distributors to non- resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright ... computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer

Avaya International Sales Limited, Gurgaon vs. ACIT, Circle- Int. Taxation 1(1)(1), New Delhi

In the result, the appeal of the assessee is allowed for statistical purposes and the appeal of the revenue is dismissed

ITA 526/DEL/2020[2016-17]Status: DisposedITAT Delhi07 Mar 2023AY 2016-17

For Appellant: Dr. Shashwat Bajpai, AdvFor Respondent: Shri Sukesh Kumar Jain, CIT-DR

Section 139(4)Section 143(2)Section 143(3)Section 144C

Uptodate Inc., Gurgaon vs. DCIT, Circle-3(1)(1), Int. Taxation, New Delhi

In the result, the appeal is allowed, to the extent indicated

ITA 7347/DEL/2019[2016-17]Status: DisposedITAT Delhi28 Feb 2023AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2016-17 M/S. Uptodate Inc., Vs. Dcit, 10Th Floor, Building No. 10, Circle-3(1)(1), Intl. Taxation, Phase-Ii, Dlf Cyber City, New Delhi Gurgaon Pan :Aabcu1828Q (Appellant) (Respondent)

Section 9(1)(vi)

cases. 169 Our answer to the question posed before us, is that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for :he resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright ... computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income-tax Act were not liable to deduct any TDS under section 195 of the Income-tax Act. The answer

DCIT, Circle-5(2), New Delhi vs. Canon India Pvt. Ltd, Gurgaon

In the result, the appeal of the revenue is otios

ITA 6367/DEL/2019[2009-10]Status: DisposedITAT Delhi15 Feb 2023AY 2009-10

Bench: Sh. N. K. Billaiya & Sh. Anubhav Sharmaassessment Year: 2009-10 Canon India Pvt. Ltd. 7Th Dcit Circle – 5 (2) Vs Floor, Tower-B, Building New Delhi No.5, Dlf Epitome, Dlf Phase-3, Gurgaon Pan No.Aaacc4275D (Appellant) (Respondent)

Section 10Section 10ASection 143Section 148

under the provision of section 10 A of the Income Tax Act is available only in respect of 'export of articles or things or computer software ’. In other words amount received in the form of 'royalty' is not eligible for benefit u/s WA, by classifying the same and showing ... Assessee filed a detailed reply dated 13.02.2013 and in the notes on business activities it has been mentioned as under:- “Development and export of computer software through STP under taking supported from July 1999” 15. And further replied as under :- 7 16. It can be seen from the above that

ITO, Ward-30(4), New Delhi vs. Amit Mittal, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 697/DEL/2020[2011-12]Status: DisposedITAT Delhi14 Feb 2023AY 2011-12

Bench: Sh. C. M. Gargdr. B. R. R. Kumar

For Appellant: Sh. Sanjay Kumar, CAFor Respondent: Sh. Kanv Bali, Sr. DR

Section 10BSection 139(1)Section 143(3)Section 147Section 148Section 151(2)

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Sh. C. M. Garg, Judicial Member Dr. B. R. R

Kony Inc., Usa vs. ACIT, Circle- 2(1)(2), Intl. Taxation, New Delhi

In the result, appeal is allowed, as indicated above

ITA 616/DEL/2021[2017-18]Status: DisposedITAT Delhi11 Jan 2023AY 2017-18

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

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

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 for the use of copyright in the computer software, and that

Kony Inc., Usa vs. DCIT, Circle- 2(1)(2), Intl. Taxation, New Delhi

In the result, appeal is allowed, as indicated above

ITA 7462/DEL/2018[2015-16]Status: DisposedITAT Delhi11 Jan 2023AY 2015-16

Bench: Shri G.S. Pannu, Hon’Ble & Shri Saktijit Deyassessment Year: 2015-16

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

ACIT, International Taxation, Circle 3(1)(2), New Delhi vs. Sabre Decision Technologies International Llc, Usa

In the result, the appeal of the revenue is dismissed

ITA 7354/DEL/2017[2013-14]Status: DisposedITAT Delhi03 Jan 2023AY 2013-14

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR

Section 234ASection 44DSection 9Section 9(1)(vi)

also enables passage of advice to the client. It would be childish to assume that the consideration being paid is for the provision of computer software. The consideration is nothing other than Royalty and this has been further elaborated later in this order. 4.5.1 The assessee also submitted that ... acquired right to use is the underlying necessity to qualify as royalty. Again the judgment is in the context of supply of computer software which is not the assessee’s case. Therefore the payment received by the assessee for offering solutions on a login platform by using the IP protected

Sabre Decision Technologies International Llc, New Delhi vs. ACIT, International Taxation, Circle 3(1)(2), New Delhi

In the result, the appeal of the revenue is dismissed

ITA 5782/DEL/2017[2014-15]Status: DisposedITAT Delhi03 Jan 2023AY 2014-15

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Tarandeep Singh, AdvFor Respondent: Sh. Gangadhar Panda, CIT-DR

Section 234ASection 44DSection 9Section 9(1)(vi)

M/S. Ibm India Private Limited, Bangalore vs. Joint Commissioner of Income Tax, Special Range-4, Bangalore

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

ITA 2588/BANG/2019[2006-07]Status: DisposedITAT Bangalore30 Dec 2022AY 2006-07

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri Percy Pardiwala, Sr

claim for relief of tax holiday with directions to the Ld.AO to allow the claim to the extent of receipt of sale proceeds of computer software exported out of India being brought into India in convertible foreign exchange. 10.3 The Ld.AO granted relief to the extent

Edenred Pte Ltd, Mumbai vs. Dy. Comm of Income Tax International Taxation-2(2), Mumbai

In the result, the appeal by the assessee is allowed

ITA 1562/MUM/2022[2019-20]Status: DisposedITAT Mumbai29 Dec 2022AY 2019-20

Bench: Shri G.S. Pannu & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Amit Kumar Soni

Section 143(3)Section 144C(5)Section 9(1)(vi)

Edenred Pte Ltd. 13 ITA Nos. 1718/M/2014 254/M/2015& 507/M/2016 'royalty' in Article 12.3, (viii) there is no transfer of any copyright in the computer software provided by AXA ARC and it cannot be said that the applicant has been conferred any right of usages of the equipment located abroad, more

Mwh India Pvt. Ltd., Mumbai vs. I.T.O. 9(2)(3), Mumbai

In the result, the appeal of the assesse is allowed

ITA 3143/MUM/2019[2007-08]Status: DisposedITAT Mumbai29 Dec 2022AY 2007-08

Bench: Shri Vikas Awasthy & Shri Amarjit Singhmwh India Private Ltd. Vs. Income Tax Officer, 168, Udyog Bhavan, Circle-9(2)(3), Sonawala Road, Room No. 147B, Goregaon (East) Aaykar Bhavan, M.K. Mumbai-400 063 Road, Churchgate, Mumbai – 400 020 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaaca4613L Appellant .. Respondent Appellant By : Niraj Sheth Respondent By : Mahita Nair

For Appellant: Niraj ShethFor Respondent: Mahita Nair

Section 10ASection 10BSection 143(2)Section 143(3)Section 234Section 234B

undisputed fact that Pune Unit was 100% export oriented undertaking was granted permission for development/manufacture of computer software under Software Technology Park scheme by STPII vide letter dated 19.04.2002. The date of commencement of manufacture/production of the computers software was 07.06.2002. It was also explained that Pune Unit

Asst CIT 9(2)(1), Mumbai vs. Canvasm Technologies Ltd, Mumbai

In the result, the appeal filed by the revenue is treated as allowed for statistical purposes

ITA 3980/MUM/2015[2009-10]Status: DisposedITAT Mumbai27 Dec 2022AY 2009-10

Bench: Shri B.R. Basakaran & Shri Rahul Chaudharydy. Commissioner Of Vs. M/S. Tech Mahindra Income Tax 2(3)(1), Limited, R.No.552, Aayakar Bhavan, (Successor In Interest To M.K. Road, M/S. Canvasm Mumbai – 400 020 Technologies Ltd.), Gateway Building, Apollo Bunder, Mumbai-400 001 Pan Aaccc8665N (Appellant) (Respondent) Assessee By : Mr. Viral Shah. Revenue By : Mr. Samruddhi Dhyananjay Hande, Dr Date Of Hearing : 16.11.2022 Date Of Pronouncement : 27.12.2022

For Appellant: Mr. Viral ShahFor Respondent: Mr. Samruddhi Dhyananjay

joint venture company of M/s Tech Mahindra Limited and M/s Motorola Cyprus Holding Limited. It is engaged in the business of development of computer software and it also provides end to end Information Technology Services and Solutions to the telecom industry. The assessee herein has established a wholly owned subsidiary

Edenred Sa, Mumbai vs. ACIT (It) 2(2)(1), Mumbai

In the result, this appeal by the assessee is allowed

ITA 5193/MUM/2018[2015-16]Status: DisposedITAT Mumbai23 Dec 2022AY 2015-16

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash

Section 143(3)Section 144CSection 144C(13)Section 144C(5)

cannot be brought within the scope of the definition of 'royalty' in Article 12.3, (vii) there is no transfer of any copyright in the computer software provided by AXA ARC and it cannot be said that the applicant has been conferred any right of usages of the equipment located abroad

Edenred Sa, Mumbai vs. DCIT (It) 2(1)(2), Mumbai

In the result, this appeal by the assessee is allowed

ITA 7248/MUM/2017[2014-15]Status: DisposedITAT Mumbai23 Dec 2022AY 2014-15

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash

Section 143(3)Section 144CSection 144C(13)Section 144C(5)

Edenred Sa, Mumbai vs. DCIT (It) 2(1)(2), Mumbai

In the result, this appeal by the assessee is allowed

ITA 7247/MUM/2017[2013-14]Status: DisposedITAT Mumbai23 Dec 2022AY 2013-14

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash

Section 143(3)Section 144CSection 144C(13)Section 144C(5)

Edenred Sa, Mumbai vs. DCIT (It) 2(2)(1), Mumbai

In the result, this appeal by the assessee is allowed

ITA 508/MUM/2016[2012-13]Status: DisposedITAT Mumbai23 Dec 2022AY 2012-13

Bench: Shri S. Rifaur Rahman & Shri Sandeep Singh Karhail

For Appellant: Shri Jitendra SinghFor Respondent: Shri Soumendu Kumar Dash

Section 143(3)Section 144CSection 144C(13)Section 144C(5)

Amee Foster Wheeler India Pvt. Ltd., Chennai vs. ACIT, Corporate Range-1, Chennai

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

ITA 680/CHNY/2020[2014-15]Status: DisposedITAT Chennai22 Dec 2022AY 2014-15

Bench: Shri Mahavir Singhand Shri Manoj Kumar Aggarwalआयकर अपील सं./Ita No.: 680/Chny/2020 िनधा"रण वष"/Assessment Year: 2014-15 Amec Foster Wheeler India Pvt. The Acit (Osd), Ltd., Vs. Corporate Range -1, Zenith Building, 6Th Floor, Chennai Ascendas It Park, Csir Road, Taramani, Chennai – 600 113. Pan : Aaacf 3204C (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Ms. K.Amulya, Ca & Ms. V. Rajeswari, Ca ""यथ" क" ओर से/Respondent By : Shri S. Marudhu Pandyan, Cit सुनवाई क" तार"ख/Date Of Hearing : 22.12.2022 घोषणा क" तार"ख/Date Of Pronouncement : 22.12.2022 आदेश /O R D E R Per Mahavir Singh: This Appeal By Assessee Is Arising Out Of The Order Of The Commissioner Of Income Tax (Appeals)-4, Chennai In Ita No.479/16-17/Cit(A)-4/A.Y.2014-15 Dated 06.02.2020. The Assessment Was Framed By The Acit(Osd), Corporate Range-1, Chennai For The Assessment Year 2014-15, U/S.143(3) Of The Income Tax Act, 1961 (Hereinafter The ‘Act’), Vide Order Dated 29.12.2016. 2. The First Issue In This Appeal Of Assessee Is As Regards To The Order Of Cit(A) Confirming The Action Of Ao In Making Disallowance Of Cost Incurred In Connection With Off The Shelf Software Products Treating The Same As Royalty Under The Provisions Of The Act Read With Relevant Treaties. For This, Assessee Raised Ground Nos. 2 To 4 But The Relevant Ground Is Ground No.2, Which Reads As Under:- “2. The Ld. Cit(A) & Ld. Ao Erred In Non-Consideration Of The Fact That The Said Expenditure Merely Represents Cost To Cost Reimbursement Of Expenditure Incurred On Behalf Of The Appellant By Afwg Overseas Entities & Therefore, No Income Arises In The Hands Of Afwg Entities Necessitating The Obligation To Withhold Taxes On The Part Of The Appellant Under The Provisions Of The Act.”

For Appellant: Ms. K.Amulya, CA &For Respondent: Shri S. Marudhu Pandyan, CIT

Section 143(3)Section 40Section 9(1)(vi)Section 9(1)(vii)

wherein the Hon’ble Supreme Court has held that “the amount paid by resident Indian and end-user / distributors to non-resident computer software manufacturers / suppliers , as consideration for resale / use of computer software through EULAs / distribution agreement, is not payment of royalty for use of copyright in computer software

M/S Google India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-1(1) (International Taxation), Bangalore

In the result, the appeals of the assessee are allowed and the appeal filed by the revenue is dismissed

ITA 97/BANG/2019[2016-17]Status: DisposedITAT Bangalore15 Dec 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariit(It)A No.1190/Bang/2014 Assessment Year: 2013-14

For Appellant: Shri Percy Pardiwala, Senior CounselFor Respondent: Smt. Susan D. George, D.R

trademarks of Google for the purpose of marketing and distribution of AdWords program. 4 Erred in holding that the AdWords program is complex computer software. the right to use has been granted to the Appellant without appreciating the fact that AdWords program is a standard advertisement service through which ... tapes for radio or television broadcasting as royalty. The computerised advertising program i.e., "Google AdWords Program" is essentially a computer program i.e., a computer software. As per Explanation 3 to section 9(l)(vi), a computer software means any computer programme recorded on any disc, tape, perforated media or other

Google India Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax (International Taxation), Circle - 1(1), Bangalore

In the result, the appeals of the assessee are allowed and the appeal filed by the revenue is dismissed

ITA 950/BANG/2017[2015 - 16]Status: DisposedITAT Bangalore15 Dec 2022

Bench: Shri N.V. Vasudevan & Shri Chandra Poojariit(It)A No.1190/Bang/2014 Assessment Year: 2013-14

For Appellant: Shri Percy Pardiwala, Senior CounselFor Respondent: Smt. Susan D. George, D.R