“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

The Greater Bombay Co-Op Bank Ltd., Mumbai vs. Pr. CIT Mumbai-1, Mumbai

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

ITA 600/MUM/2021[2015-16]Status: DisposedITAT Mumbai28 Apr 2022AY 2015-16

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadalethe Greater Bombay Vs. Pr.Cit -1 Co- Op Bank Ltd, Room No. 330, 3Rd 89 Gbcb House, Floor, Aayakar Bhavan Bhuleshwar, Mumbai – M.K. Road, Mumbai – 400002 400020. "थायी लेखा सं./जीआइआर सं./Pan/Gir No:Aabat4479N Appellant .. Respondent Appellant By : Shri Ashok Sharma.Ar Respondent By : Shri Ajit K.Shrivastava.Dr Date Of Hearing 24.03.2022 Date Of Pronouncement 11.04.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Of The Principle Commissioner Of Income Tax (Pcit) Mumbai-1 Passed U/Sec 263 Of The Act, 1961. The Assessee Has Raised The Following Grounds Of Appeal:

For Appellant: Shri Ashok Sharma.ARFor Respondent: Shri Ajit K.Shrivastava.DR

Section 143(2)Section 143(3)Section 263Section 36(1)(viia)

support of claim of deduction which includes bad debts, contingent provision for standard The Greater Bombay Co-op Bank Ltd, Mumbai. asset and computer software. The Ld.AR emphasized that the Honble ITAT and CIT(A) in earlier years of has allowed the bad debts claim. 6. The assessee has furnished

M/S. Arkema Chemicals India P. Ltd., Navi Mumbai vs. The ACIT-15(1)(1), Mumbai

ITA 1032/MUM/2021[2017-18]Status: DisposedITAT Mumbai22 Apr 2022AY 2017-18

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm M/S Arkema Chemicals India The Asst. Commissioner Of P. Ltd. Income Tax, Circle 15(1)(1), Room No.470, 4Th Floor, D043, (1), Trans Thane Creek, Midc Industrial Areal Aayakar Bhavan, M.K. Road, Vs. Shirvane Village, Navi Mumbai-400 020 Mumbai-400 706 (Appellant) (Respondent) Pan No. Aaacc6482F

For Appellant: Shri Ajay R Singh, ARFor Respondent: Shri Vinod Bhaskaran, Sr. Dr

Section 115JSection 143(3)Section 32

Schedule as New Appendix-I and submitted that in Part-A (tangible assets), serial no. 5 of plant and machinery, where ‘computers including the computer software’ are eligible for depreciation at the rate of 60%. He further referred to note No. 7 where computer softwares are defined. He submitted that ... Rule 5 of ITAT Rules in heading of machinery and plant in part A of tangible assets at serial number 5 “computers including computer software (see note 7 below this table ) entitled to depreciation at the rate of 60% or in Para B being licenses, intangible assets entitled to deprecation

M/S. Indecomm Global Services (India) Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, Circle-3(1)(1), Bengaluru

In the result, the appeals filed by the assessee for assessment years 2013-2014 and 2014-2015 are partly allowed, as indicated above

ITA 2800/BANG/2017[2014-15]Status: DisposedITAT Bangalore12 Apr 2022AY 2014-15

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm

For Appellant: Sri.K.R.Vasudevan, AdvocateFor Respondent: Smt.Priyadarshini Besaganni, Addl.CIT-DR

Section 40

pronouncement made by the Hon’ble supreme Court in the case of Tata Consultancy Services2 wherein the Court has held that canned software (i.e., computer software packages off the shelf) can be termed to be ‘goods’ and as such assessable to sales tax. c) Appellant in this regard also relied

M/S. Indecomm Global Services (India) Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, Circle-3(1)(1), Bengaluru

In the result, the appeals filed by the assessee for assessment years 2013-2014 and 2014-2015 are partly allowed, as indicated above

ITA 2799/BANG/2017[2013-14]Status: DisposedITAT Bangalore12 Apr 2022AY 2013-14

Bench: Shri Chandra Poojari, Am & Shri George George K, Jm

For Appellant: Sri.K.R.Vasudevan, AdvocateFor Respondent: Smt.Priyadarshini Besaganni, Addl.CIT-DR

Section 40

Tata Consultancy Services Ltd, Mumbai vs. ACIT Large Tax Payer Unit-1, Mumbai

797/Mum/2018

ITA 1769/MUM/2018[2013-14]Status: DisposedITAT Mumbai11 Apr 2022AY 2013-14

Section 143(3)Section 2Section 2(43)Section 37Section 40Section 90

section 52(1)(aa) of the 1957 Act. There is an important difference between the right to reproduce and the right to use computer software. Whereas the former would amount to parting with a copyright by the owner thereof, the latter would not. When, under a non-exclusive licence ... user gets the right to use computer software in the form of a compact disk, the end-user only receives a right to use the soft- ware and nothing mare. The end-user does not get any of the rights that the owner continues to retain under section

Tata Consultancy Services Ltd, Mumbai vs. Asst CIT Ltu-1, Mumbai

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

ITA 1650/MUM/2016[2011-12]Status: DisposedITAT Mumbai06 Apr 2022AY 2011-12

Bench: Shri Prashant Maharishi & Shri Sandeep Singh Karhail

For Appellant: Shri Porus Kaka, Sr. AdvocateFor Respondent: Ms. Vatsalaa Jha, CIT–DR

Section 115JSection 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 2(43)Section 37Section 40Section 90Section 91

./2011 ITA no.1650/Mum./2016 ITA no.1054/Mum./2016 4. The assessee is a Public Limited Company and is engaged in the business of export of computer software providing e–solutions, BPO activities and other management consultancy activities. During the relevant assessment year, the assessee company filed its return of income electronically ... outsourcing company having worldwide presence. Assessee provides consultancy services, develops and implements products for customers covering on all matters pertaining to implementation of computer software and hardware system, management of data processing and information systems and data communication systems. During the relevant assessment year, assessee entered into following international transactions

M/S. Infineon Technologies India Pvt Ltd, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-3(1)(1), Bengaluru

In the result the appeal filed by assessee stands allowed partly

ITA 2870/BANG/2017[2013-14]Status: DisposedITAT Bangalore31 Mar 2022AY 2013-14

Bench: Shri B. R. Baskaran & Smt. Beena Pillaiit(Tp)A No.2870/Bang/2017 Assessment Year: 2013-14 M/S. Infineon Technologies India Pvt. Ltd. Deputy Commissioner 9Th Floor Prestige Of Income-Tax Thirulakshmi Vs. Circle-3(1)(1) No.11 M.G. Road Bengaluru Bengaluru 560 001 Pan No : Aabcs6967N Appellant Respondent Appellant By : Shri K.R. Vasudevan, A.R. Shri Sumer Singh Meena, Respondent By : D.R. Date Of Hearing : 13.01.2022 Date Of Pronouncement : 31.03.2022 O R D E R Per Beena Pillai: Present Appeal Is Filed By Assessee Against The Order Dated 16/10/2017 Passed By The Ld.Dcit Under Section 143(3) R.W. Section 144C(13) For Assessment Year 2013-14 On Following Grounds Of Appeal: “The Grounds Mentioned Hereinafter Are Without Prejudice To One Another.

For Appellant: Shri K.R. Vasudevan, A.R

Section 133(6)Section 143(3)Section 144C(13)Section 40Section 92C

that the assessee is not producing any product, however, we find that CG-Vak Software and Exports Limited is not only into computer software but it is a product manufacturer too. Since assessee is not into product manufacturing and the segmental details cannot be bifurcated from the financial details ... return of income. He submitted that the software purchased was capitalise and depreciation was claimed at the rate specified for the block computers including computer software. 40. The Ld.AO restricted the depreciation on software purchased at 25% as against 60% as claimed for the reason that, the intangible asset

Edunxt Global Sdn Bhd, Malaysia vs. The Deputy Commissioner of Income Tax, Circle- 1(1), International Taxation, Bengaluru

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

ITA 2496/BANG/2017[2014-15]Status: DisposedITAT Bangalore30 Mar 2022AY 2014-15

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(It)A No. 2496/Bang/2017 Assessment Year : 2014-15 M/S. Edunxt Global Sdn Bhd, The Deputy Unit A(Ii) Level 5. Commissioner Of Income Menara Shell, Tax, 211 Jalan Tun Circle 1(1), Sambathan, International Taxation, Kuala Lumpur, Vs. Bangalore. My – 50470, Malaysia. Appellant Respondent Assessee By : Shri Padamchand Khincha, Ca : Shri K.V. Aravind, Advocate & Revenue By Standing Counsel For Revenue Date Of Hearing : 23-03-2022 Date Of Pronouncement : 30-03-2022 Order Per Beena Pillaipresent Appeal By Non Resident Assessee Arises Out Of Final Assessment Order Dated 26.09.2017 Passed By The Ld.Dcit(It), Circle -1(1), Bangalore For Assessment Year 2014-15 On Following Grounds Of Appeal: “General & Legal Grounds 1. The Order Passed By The Learned Assessing Officer & The Directions Of Hon'Ble Drp To The Extent Prejudicial To The Appellant Is Had In Law & Liable To Be Quashed.

For Appellant: Shri Padamchand Khincha, CA

Section 143(3)Section 144Section 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 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

DCIT, Bangalore vs. M/S Apotex Pharmachem India Pvt. Ltd., Bangalore

In the result, the appeal filed by revenue stands partly allowed for statistical purposes as indicated hereinabove

ITA 1227/BANG/2016[2010-11]Status: DisposedITAT Bangalore28 Mar 2022AY 2010-11

For Respondent: Shri Padam Chand Khincha

Section 10B

explicit from the provisions that such a deduction is only for the newly, export-oriented undertakings that manufactures or produces any items / computer software. By no stretch of imagination can R&1) services tantamount to manufacture or production of an article. But in zeal to claim the maximum possible deduction ... view that what was sought to be covered by clause (b) of Explanation 2 to section 1011 is in the context of 'computer software" and in view of the nile of ejusdein generis, they cannot mean anything else than "computer software". Hence, the assessee's reliance upon clause

M/S. Transworld Ict Solutions (P) Ltd., Bangalore vs. DCIT, Bangalore

In the result, both the appeals are partly allowed

ITA 1310/BANG/2010[2007-08]Status: DisposedITAT Bangalore22 Mar 2022AY 2007-08

Bench: Shri N. V. Vasudevan & Shri B. R. Baskaranit(Tp)A Nos.1309 & 1310/Bang/2010 Assessment Years : 2006-07 & 2007-08 M/S. Transworld Ict Solutions Pvt. Ltd., Vs. Dcit, Innovator, No.15, Hoody, Whitefield Road, Circle – 2(1), Mahadevapura Post, Bengaluru. Bengaluru – 560 048. Pan : Aabct 3824 F Assessee Respondent Assessee By : Shri. G. S. Prashanth, Ca Revenue By : Shri. Dilip, Advocate, Standing Counsel For Department Date Of Hearing : 17.03.2022 Date Of Pronouncement : 22.03.2022 O R D E R Per N V Vasudevan

For Appellant: Shri. G. S. Prashanth, CAFor Respondent: Shri. Dilip, Advocate, Standing Counsel for Department

Section 132Section 143(3)Section 153ASection 92Section 92(1)Section 92B(1)

with the objective of providing excellence services mainly in the field of Banking, Finance and Commercial applications. The assessee also designs, develops and maintains computer software and programming for commercial products and services including internal business information systems. The various services provided by the assessee includes design, develop, maintain, sell ... distribute, market and license computer software including programs, systems and products in the above mentioned areas. The assessee also provides business and productivity solutions utilizing electronic commerce and other network based information and other services including licensing of related computer software and programs. Services like customer support, education, training

M/S. Transworld Ict Solutions (P) Ltd., Bangalore vs. DCIT, Bangalore

In the result, both the appeals are partly allowed

ITA 1309/BANG/2010[2006-07]Status: DisposedITAT Bangalore22 Mar 2022AY 2006-07

For Appellant: Shri. G. S. Prashanth, CAFor Respondent: Shri. Dilip, Advocate, Standing Counsel for Department

Section 132Section 143(3)Section 153ASection 92Section 92(1)Section 92B(1)

Reliance Payment Solutions Ltd, Mumbai vs. Pr. CIT -8, Mumbai

In the result, this appeal is allowed

ITA 1010/MUM/2021[2015-16]Status: DisposedITAT Mumbai21 Mar 2022AY 2015-16

Section 143(3)Section 263Section 32

excess of and/or in want of jurisdiction and otherwise void; Assessment Year: 2015-16 Page 2 of 6 Claim of depreciation on Computer including Computer software 4. failed to appreciate that the addition / classification of assets by the Appellant for Income-tax purpose is as per Section ... verified this aspect. For the purpose of the Income Tax Act, the Company has correctly capitalized hardware and software under “Computers including computer software” which forms part of the "Plant and Machinery" block. There are no provisions under the Act requiring the Company to follow the classification of assets

Tech Mahindra Ltd., Mumbai vs. ACIT, Circle - 2(3)(1), Mumbai

In the result, appeal by the assessee is allowed

ITA 6573/MUM/2019[2012-13]Status: DisposedITAT Mumbai17 Mar 2022AY 2012-13

Bench: Shri Vikas Awasthy & Shri Prashant Maharishiआअसं. 6573/मुं/2019 ("न. व. 2012-13 ) Tech Mahindra Limited, Gateway Building, Apollo Bunder, Mumbai – 400 001 Pan: Aaacm-3484-F ...... अपीलाथ" /Appellant बनाम Vs. Acit, Cir. 2(3)(1), Aaykar Bhavan, M.K.Road, Mumbai 400 020 ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : Shri J.D.Mistri, Sr. Advocate ""तवाद" "वारा/Respondent By : Shri Rajesh Damor सुनवाई क" "त"थ/ Date Of Hearing : 20/12/2021 घोषणा क" "त"थ/ Date Of Pronouncement : 17/03/2022 आदेश/ Order Per Vikas Awasthy, Jm: 6573/Mum/2019 This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax(Appeals)-6, Mumbai [In Short 'The Cit(A)’] Dated 04/09/2019 For The Assessment Year 2012-13. 2. Shri J.D.Mistri, Sr.Advocate Appearing On Behalf Of The Assessee Submitted At The Outset That The Assessee Has Raised Additional Grounds Of 2 Appeal Assailing Jurisdiction Assumed By The Assessing Officer U/S. 147 Of The Income Tax Act,1961 ( In Short 'The Act') & Validity Of The Order Passed U/S. 143(3) R.W.S. 147 Of The Act. At This Stage He Would Be Confirning His Submissions On The Additional Grounds Raised.

For Appellant: Shri J.D.Mistri, Sr. AdvocateFor Respondent: Shri Rajesh Damor

Section 115JSection 143(3)Section 147Section 148Section 68

reopen u/s. 147 of the I. T. Act, 1961 if approved." 7. The assessee is engaged in the business of development and export of computer software. The units of the assessee from where the assessee is providing services is locate in Special Economic Zone and hence, the assessee is availing

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

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

ITA 525/BANG/2019[2011-12]Status: FixedITAT Bangalore11 Mar 2022AY 2011-12

Bench: Shri B. R. Baskaran & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, A.RFor Respondent: Shri Sumer Singh Meena, D.R

Section 115Section 115QSection 143(3)Section 246A

facts relating to the case are stated in brief. The assessee company is engaged in the business of designing, manufacture and export of computer software. The assessment was completed by the AO for the year under consideration u/s 143(3) of the Act making certain additions including transfer pricing adjustment

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

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

ITA 275/BANG/2019[2011-12]Status: FixedITAT Bangalore11 Mar 2022AY 2011-12

Bench: Shri B. R. Baskaran & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, A.RFor Respondent: Shri Sumer Singh Meena, D.R

Section 115Section 115QSection 143(3)Section 246A

M/S Playsimple Games Private Limited, Bangalore vs. Assistant Commissioner of Income Tax Circle - 5(1)(2), Bangalore

In the result, the appeal is allowed for statistical purposes

ITA 1125/BANG/2019[2016/17]Status: DisposedITAT Bangalore09 Mar 2022

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2016-17

For Appellant: Shri Deepak Kumar Jain, CAFor Respondent: Shri Priyadarshi Mishra, Addl.CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 195Section 234BSection 234DSection 40Section 9(1)(vi)

been narrated as under:- 4. The appeals before us may be grouped into four categories: (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.3 (ii) 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.4 (iii) The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor

Reliance Industries Ltd, Mumbai vs. Deputy Commissioner of Income Tax Large Taxpayer Unit-2, Mumbai

In the result, the ITA No

ITA 2876/MUM/2019[2015-16]Status: DisposedITAT Mumbai08 Mar 2022AY 2015-16

Section 143(3)Section 28

regard to the deduction claimed u/s. 10A/10AA and u/s 80HHE of the Act. Both these deductions are related to income derived on export of computer software. The question that was considered was - whether the "export turnover" considered for deduction u/s. 10A/10AA can be included in the total turnover for computing

DCIT (Ltu)-2, Mumbai vs. M/S Reliance Industries Ltd., Mumbai

In the result, the ITA No

ITA 2344/MUM/2019[2014-15]Status: DisposedITAT Mumbai08 Mar 2022AY 2014-15

Section 143(3)Section 28

Reliance Industries Limited, Mumbai vs. ACIT, Mumbai

In the result, the ITA No

ITA 1645/MUM/2019[2014-15]Status: DisposedITAT Mumbai08 Mar 2022AY 2014-15

Section 143(3)Section 28

M/S. Vantage Agora Marketing Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 12(5), Bangalore

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

ITA 373/BANG/2020[2009-10]Status: DisposedITAT Bangalore07 Mar 2022AY 2009-10

Bench: Shri. B.R. Baskaran & Smt. Beena Pillaiassessment Year : 2009-10 M/S. Vantage Agora Marketing Pvt. Ltd., # Pixel Park-A, 4Th Floor, The Deputy Pes Institute Of Commissioner Of Technology, Income Tax, Vs. Hosur Road, Electronic Circle – 12(5), City, Bangalore. Bangalore – 560 100. Pan: Aaccv1443P Appellant Respondent : Shri V. Chandrashekar, Assessee By Advocate : Smt. Priyadarshini Revenue By Basaganni, Jcit (Dr) Date Of Hearing : 30-12-2021 Date Of Pronouncement : 07-03-2022 Order Per Beena Pillaipresent Appeal Has Been Filed By Assessee Against Order Dated 30/03/2016 Passed By The Ld.Cit(A), Mysore For Assessment Year 2009-10 On Following Grounds Of Appeal: “1. The Order Of The Hon'Ble Commissioner Of Income Tax (Appeals), Mysuru, Insofar As It Is Against The Appellant, Is Opposed To Law, Weight Of Evidence, Natural Justice, Probabilities, Facts & Circumstances Of The Appellant'S Case.

For Respondent: Shri V. Chandrashekar

Section 10ASection 234CSection 72

reads as follows : "10A(4) For the purposes of sub-section (1) and (1A), the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect ... such articles or things or computer software bears to the total turnover of the business carried on by the undertaking." He submitted before us that the deduction u/s.10A(4) is computed on the basis of a formula and there is no scope for setting off of brought forward losses. Secondly