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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

Dassault Systemes Solidworks Corporation, Chennai vs. The ACIT (Int. Tax) 2(1) (2), Mumbai

ITA 2040/MUM/2021[2017-18]Status: DisposedITAT Mumbai27 May 2022AY 2017-18

Bench: Shri M. Balaganesh & Shri Kuldip Singhassessment Year: 2017-18

For Appellant: Shri Pranith Golecha, A.RFor Respondent: Shri Milind Chavan, Sr. D.R
Section 234ASection 234BSection 9

/2018) (vide order dated 02 March 2021) held that the amount paid by resident Indian end users/ distributors to non-resident computer software manufacturers/ suppliers, is not payment for royalty for the use of copyright in the computer software, and held that such income shall not taxable in the hands ... raised by the assessee AO passed draft order holding that the payment received by the assessee from the reseller in India for acquisition of computer software are held to be in the nature of royalty and chargeable to tax in India. 4. Assessee carried the matter before

M/S. Wipro Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(2), Bangalore

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

ITA 2556/BANG/2019[2015-16]Status: HeardITAT Bangalore23 May 2022AY 2015-16

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A No.2556/Bang/2019 Assessment Year : 2015-16

For Appellant: Shri S. Ganesh, Sr. ARFor Respondent: Shri T. Roumuan Paite, D.R
Section 143(3)

IT(TP)A No.2556/Bang/2019 M/s. Wipro Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI N.V

M/S Harman Connected Services Corporation India Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes

ITA 705/BANG/2016[2011-12]Status: DisposedITAT Bangalore23 May 2022AY 2011-12

Bench: Shri N. V. Vasudevan & Shri B. R. Baskaranit(Tp)A No.705/Bang/2016 Assessment Year : 2011-12 Dcit, M/S. Harman Connected Services Vs. Circle – 3(1)(2), Corporation India Private Limited, Bengaluru. (Formerly Known Symphony Teleca Corporation India Private Limited), Plot No.3 & 3A, Eoiz Industrial Area, Sy. No.85 & 86, Sadaramangala Village, Krishnarajapuram Hobli, Bengaluru – 560 066. Pan: Aabcg 5658 E Appellant Respondent Assessee By : Shri. T. Suryanarayana, Advocate Revenue By : Shri. Sumer Singh Meena, Cit(Dr)(Itat), Bengaluru. Date Of Hearing : 22.02.2022 Date Of Pronouncement : 23.05.2022 O R D E R Per B. R. Baskaran:

For Appellant: Shri. T. Suryanarayana, AdvocateFor Respondent: Shri. Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru
Section 10ASection 143(3)Section 40Section 40A

Symphony IT(TP)A No.705/Bang/2016 Page 2 of 8 Services Corporation India Pvt. Ltd. It is engaged in the business of development of computer software, training and other consultancy services. The grounds urged by the assessee give rise to the following issues: (a) Disallowance of marked to market loss ... legal and professional charges under section 40A of the Act. (c) Disallowance of depreciation under section 40(a)(ia) of the Act on computer software. (d) Computation of deduction under section 10A of the Act. (e) Alternative contention for enhancement in deduction under section 10A in respect of MTM losses

DCIT Cir. 15(3)(2), Mumbai vs. M/S Smartconnect Technologies Pvt Ltd., Navi Mumbai

In the result, the appeal filed by the revenue stands dismissed

ITA 1317/MUM/2020[2016-17]Status: DisposedITAT Mumbai19 May 2022AY 2016-17

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 1317/Mum/2020 (निर्धारणवर्ा / Assessment Year: 2016-17) M/S Smartconnect Dcit Cir – 15(3)(2), Tehcnologies Pvt. Ltd. R. No. 451, 4Th Floor, बिधम/ A-702, Harbour View, Aayakar Bhavan, M. Vs. Sector-19, Nerul, Navi K. Road, Mumbai- Mumbai-400 706 400 020 स्थायीलेखासं./जीआइआरसं./ Pan No. Aaocs87763B (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri Milind Chavan, Ld. Dr By प्रत्यथीकीओरसे/Respondent : Shri Rajesh S. Shah, Ld. Ar By सुनवाईकीतारीख/ : 12.05.2022 Date Of Hearing घोषणाकीतारीख / : 19.05.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 11.12.2019 Passed By Ld. Cit(A)-24, Mumbai For The Quantum Appeal Of Assessment Passed U/S 143(3)

For Appellant: Shri Milind ChavanFor Respondent: Shri Rajesh S. Shah
Section 143(3)Section 40Section 9Section 9(1)Section 9(1)(vi)

India for their various technology rollouts in contract- centre operations. It was stated that in the IT industry, this model of using cloud computing software was known as "Software as a service" model (Genesys Model). The AO's contention was that the assessee acted as a middleman; it took right ... Court on deciding the issue of software royalty which were classified into 4 categories viz:- i) 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. ii) The second category of cases

M/S. Zensar Technologies Ltd ( Formerly International Computers (India) Ltd ), Mumbai vs. The CIT -2

In the result, the appeal of the assessee is partly allowed

ITA 4137/MUM/2007[2002-2003]Status: HeardITAT Mumbai17 May 2022AY 2002-2003
Section 10ASection 115JSection 14ASection 263Section 28Section 80H

having unit at SEEPZ, Noida, Ashok Plaza and Mohali, Chandigarh. It provides technical services outside India in connection with the development and production of computer software in respect thereto. The return of income for the A.Y.2002-03 was filed by the assessee company on 24/10/2002 declaring book profit of Rs.23 ... 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

Additional Commissioner of Income Tax (Ltu), Bangalore vs. M/S Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 606/BANG/2019[2014-15]Status: DisposedITAT Bangalore17 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

M/S Texas Instruments India Pvt Ltd, Bangalore vs. Additional Commissioner of Income Tax Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 365/BANG/2019[2014-15]Status: DisposedITAT Bangalore17 May 2022AY 2014-15

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

Joint Commissioner of Income Tax, Ltu, Bangalore vs. M/S. Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1447/BANG/2019[2013-14]Status: DisposedITAT Bangalore17 May 2022AY 2013-14

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

Joint Commissioner of Income Tax, Ltu, Bangalore vs. M/S. Texas Instruments (India) Private Limited, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1446/BANG/2019[2012-13]Status: DisposedITAT Bangalore17 May 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

M/S. Texas Instruments (India) Private Limited, Bangalore vs. Joint Commissioner of Income Tax, Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1076/BANG/2019[2013-14]Status: DisposedITAT Bangalore17 May 2022AY 2013-14

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

M/S. Texas Instruments (India) Private Limited, Bangalore vs. Joint Commissioner of Income Tax, Ltu, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1075/BANG/2019[2012-13]Status: DisposedITAT Bangalore17 May 2022AY 2012-13

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

Joint Commissioner of Income-Tax(Ltu), Bangalore vs. M/S. Texas Instruments(India) Pvt. Ltd, Bangalore

In the result, appeal by the Revenue is dismissed

ITA 1967/BANG/2018[2010-11]Status: DisposedITAT Bangalore17 May 2022AY 2010-11

Bench: Shri N. V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year Acit (Ltu)

For Appellant: Shri. Sharath Rao, CAFor Respondent: Mrs. Susan D. George, CIT (DR) (ITAT), Bengaluru

ground No.2 raised by the Revenue is concerned, the facts are that the assessee is in the business of design, manufacture and export of computer software. The assessee while computing its business income, claimed deduction of a sum of Rs.1,62,24,40,373/- under the head “Data Automation Software ... expenditure. The following were the relevant observations of the AO:- “5.3 The assessee's submission is carefully considered. The Data Automation Software is a computer software which is being used by the assessee for designing its products. Electronic design automation (EDA) is a category of software tools for designing electronic

M/S. Solitaire Diamond, Mumbai vs. ITO 19(3) (4), Mumbai

In the result, appeal of assessee is partly allowed

ITA 1737/MUM/2021[2013-14]Status: DisposedITAT Mumbai13 May 2022AY 2013-14

Bench: Shri Aby T Varkey & Shri Gagan Goyalm/S Solitaire Diamond, Room No. 2, First Floor, A. Wing, Nagindas Mansion Building, Opera House, Mumbai-400004 Pan: Abxfs1928F ...... Appellant Vs. Ito-19(3)(4), Second Floor, Matru Mandir, Tardeo Road, Mumbai-400007. ..... Respondent

For Appellant: Sh. Dharmesh Shah, C.AFor Respondent: Sh. Anil S. Sant, Sr. DR
Section 10ASection 2

services” for the purposes of [1] [clause] (z) of section 2 shall be the following, namely:- Trading, warehousing, research and development services, computer software services, including information enabled services such as back- office operations, call centres, content development or animation, data processing, engineering and design, graphic information system services, human

Capgemini India P.Ltd, Bhiwandi vs. DCIT Cir 10(2), Mumbai

In the result ground number 12 of the appeal of the assessee is allowed with above directions

ITA 4727/MUM/2016[2010-11]Status: DisposedITAT Mumbai12 May 2022AY 2010-11

Bench: Shri Vikas Awasthy, Jm & Shri Prashant Maharishi, Am Capgemini India Pvt. Ltd. The Dy. Commissioner Of C/O Kalyaniwalla & Mistry, Income Tax, Army & Navy Bldg, Circle 10(2), 3Rd Floor, R. No. 475, Vs. 148, M.G. Road, Ayakar Bhavan, Fort, M.K. Road, Mumbai-400 001 Mumbai-400 020 (Appellant) (Respondent) Pan No. Aaack2632B Appellant By : Shri M M Golvala, Ar Respondent By : Ms. Vatsalaa Jha, Cit Dr Date Of Hearing: 15.02.2022 Date Of Pronouncement : 12.05.2022

For Appellant: Shri M M Golvala, ARFor Respondent: Ms. Vatsalaa Jha, CIT DR
Section 10ASection 1O

under section 10A of the Act would be as follows : i. If the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under section 10A of the Act were allowed only in the export turnover but not from the total turnover, it would give rise

Xchanging Solutions Limited, Bangalore vs. The Assistant Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, grounds 20 to 23 are allowed for statistical purposes

ITA 294/BANG/2021[2016-17]Status: DisposedITAT Bangalore12 May 2022AY 2016-17
For Appellant: Sri.Padamchand Kincha, CAFor Respondent: Dr.Manjunath Karkaihalli, CIT-DR
Section 139(1)Section 143(3)Section 144BSection 144C(13)Section 144C(5)Section 40

Excellence (P.) Ltd. v. CIT reported in 432 ITR 471 had clearly held that amounts paid by the resident end users to non-resident computer software manufacturer / suppliers for use of computer 33 IT(TP)A No.294/Bang/20201 M/s.Xchanging Solutions Limited software through EULA is not payment of royalty ... copyright in computer software and the same does not give rise to any income taxable in India as a result of which the payer is not liable for TDS u/s 195 of the I.T.Act. In light of the judgment of the Hon’ble Apex Court in the case of Engineering

Larsen & Toubro Ltd, Mumbai vs. DCIT 2(2), Mumbai

In the result, appeals filed by the assessee are partly allowed and the appeals filed by the Revenue are dismissed

ITA 6908/MUM/2012[2001-02]Status: DisposedITAT Mumbai29 Apr 2022AY 2001-02

Bench: Shri S.Rifaur Rahman () & Shri Amarjit Singh ()

dismiss the ground raised by the assessee. 15 Larsen & Toubro Asstt.Yrs 2001-02 & 2001-02 22. Ground 5 pertains to disallowance of expenditure on computer software. “16. After hearing the rival parties and perusing the material on record, we observe that the issue is squarely coved in favour ... expenditure. Facts being identical, we follow the ratio laid down in the above decisions and hold that the expenditure incurred by the assessee on computer software is revenue in nature. Thus the 7thand 8th grounds of appeal are allowed. 19. Since, the facts before us are materially same, therefore

Lemnisk Private Limited (Formerly Known As 'Vizury Interactive Solutions Private Limited'), Bangalore vs. Deputy Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result appeal filed by assessee for assessment year

ITA 2129/BANG/2018[2013-14]Status: DisposedITAT Bangalore29 Apr 2022AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri K.R. Vasudevan

Software payment: This issue is relevant for assessment year 2013-14 only. 19.1 The assessee claimed depreciation of ₹ 3,61,107 on purchase of computer software amounting to ₹ 10,29,822/-. The Ld.AO disallowed the depreciation under section 40(a)(ia) of the Act, by holding that the computer software

Lemnisk Private Limited (Formerly Known As 'Vizury Interactive Solutions Pvt Ltd'), Bangalore vs. Deputy Commissioner of Income Tax Circle-7(1)(2), Bangalore

In the result appeal filed by assessee for assessment year

ITA 1851/BANG/2017[2012-13]Status: DisposedITAT Bangalore29 Apr 2022AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri K.R. Vasudevan

Software payment: This issue is relevant for assessment year 2013-14 only. 19.1 The assessee claimed depreciation of ₹ 3,61,107 on purchase of computer software amounting to ₹ 10,29,822/-. The Ld.AO disallowed the depreciation under section 40(a)(ia) of the Act, by holding that the computer software

M/S on Mobile Global Ltd., Bangalore vs. DCIT, Bangalore

In the result appeal filed by assessee stands allowed for statistical purposes and appeal filed by revenue stands dismissed

ITA 535/BANG/2016[2011-12]Status: DisposedITAT Bangalore29 Apr 2022AY 2011-12
Section 143(3)Section 144C

this section, a deduction of such profits and gains as are derived by an 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 to manufacture ... produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee." Thus, from perusal of the relevant extract of Section 10A(1), it is evident that the deduction under Section 10A of the Act is available

DCIT, Bangalore vs. Onmobile Global Ltd., Bangalore

In the result appeal filed by assessee stands allowed for statistical purposes and appeal filed by revenue stands dismissed

ITA 523/BANG/2016[2011-12]Status: DisposedITAT Bangalore29 Apr 2022AY 2011-12
Section 143(3)Section 144C

this section, a deduction of such profits and gains as are derived by an 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 to manufacture ... produce such articles or things or computer software, as the case may be, shall be allowed from the total income of the assessee." Thus, from perusal of the relevant extract of Section 10A(1), it is evident that the deduction under Section 10A of the Act is available