“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

ACIT(It)-4(3)(2), Mumbai vs. Wells Fargo Bank National Association, Mumbai

ITA 3795/MUM/2024[2013-14]Status: DisposedITAT Mumbai26 Sept 2025AY 2013-14

Bench: Shri Saktijit Dey, Hon'Ble & Shri Girish Agrawal

For Appellant: Shri Niraj Sheth, AdvocateFor Respondent: Shri Krishna Kumar, Sr. DR

Section 139(1)Section 143(3)Section 147

IN THE INCOME TAX APPELLATE TRIBUNAL "I" BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, HON'BLE VICE PRESIDENT AND SHRI GIRISH

ACIT(It)-4(3)(2), Mumbai vs. Wells Fargo Bank National Association, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 3794/MUM/2024[2014-15]Status: DisposedITAT Mumbai26 Sept 2025AY 2014-15

Bench: Shri Saktijit Dey, Hon'Ble & Shri Girish Agrawal

For Appellant: Shri Niraj Sheth, AdvocateFor Respondent: Shri Krishna Kumar, Sr. DR

Section 139(1)Section 143(3)Section 147

including the sub-categories of bio- engineering and aeronautical, agricultural, ceramics, chemical, civil, electrical, mechanical, metallurgical, and industrial engineering). 2. Architectural services; and 3. Computer software development. 6.7. Under paragraph 4(b), technical and consultancy services could make technology available in a variety of settings, activities

Income Tax Officer, Mumbai vs. K K Ventura, Mumbai

In the result, the appeal of the Revenue stands

ITA 5331/MUM/2024[2018-19]Status: DisposedITAT Mumbai25 Sept 2025AY 2018-19

Section 133(6)Section 143(3)Section 144BSection 260Section 68

lender company shows that it was not having any fixed asset as on 31/03/2017 and during the F.Y 2017-18 it has purchased a computer software only which is the only asset appearing in balance sheet. The lender does not have any office as not rent expenses has been claimed

DCIT(CC)-8(3), Mumbai vs. 63 Moons Technologies Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2112/MUM/2025[2013-14]Status: DisposedITAT Mumbai22 Sept 2025AY 2013-14

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Sukhsagar Syal, AdvocateFor Respondent: Shri Umashankar Prasad, CIT DR

Section 10ASection 143(3)Section 147Section 35(1)(ii)

Special Economic Zone (SEZ) for which approval was granted vide letter dated 16.08.2010 by the Development Commissioner, SEEPZ- SEZ, which began manufacture of computer software and related services, w.e.f. 17.01.2011. Assessee claimed deduction u/s.10AA in respect of export of computer software for its exchange business out of the said ... previous year relevant to any assessment year commencing on or after the Ist day of April, 2006. The assessee has begun the manufacture of computer software and related services after 17.01.2011. Copy of certificate dated 04th March 2011 issued by Superintendent of Custom (P) SEEPZ's SEZ is enclosed herewith

DCIT(CC)-8(3), Mumbai vs. 63 Moons Technologies Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2111/MUM/2025[2012-13]Status: DisposedITAT Mumbai22 Sept 2025AY 2012-13

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Sukhsagar Syal, AdvocateFor Respondent: Shri Umashankar Prasad, CIT DR

Section 10ASection 143(3)Section 147Section 35(1)(ii)

DCIT(CC)-8(3), Mumbai vs. 63 Moons Technologies Limited, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2110/MUM/2025[2011-12]Status: DisposedITAT Mumbai22 Sept 2025AY 2011-12

Bench: Shri Sandeep Gosain & Shri Girish Agrawal

For Appellant: Shri Sukhsagar Syal, AdvocateFor Respondent: Shri Umashankar Prasad, CIT DR

Section 10ASection 143(3)Section 147Section 35(1)(ii)

Siemens Aktiengesellschaft, Mumbai vs. Asstt. CIT (International Taxation)-Circle-4(2)(1), Mumbai

In the result, grounds No

ITA 2259/MUM/2022[2018-19]Status: DisposedITAT Mumbai22 Sept 2025AY 2018-19

Bench: Smt. Beena Pillai () & Smt. Renu Jauhri ()

Section 253(1)(d)Section 92C(3)

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 15 ITA No.2259& 1615/Mum/2022; A.Y. 2017-18 & 2018-19 Siemens Aktiengesellschaft manufacturers and then reselling the same to resident Indian end-users. − The third category concerns cases wherein the distribute or happens

Siemens Aktiengesellschaft, Mumbai vs. Asstt. CIT (International Taxation)-Circle-4(2)(1), Mumbai

In the result, grounds No

ITA 1615/MUM/2022[2017-18]Status: DisposedITAT Mumbai22 Sept 2025AY 2017-18

Bench: Smt. Beena Pillai () & Smt. Renu Jauhri ()

Section 253(1)(d)Section 92C(3)

Forcepoint International Technology Limited, Noida vs. ACIT, Circle Int. Taxation 1(3)(1), New Delhi

In the result, appeal of assessee in ITA No

ITA 976/DEL/2023[2020-21]Status: DisposedITAT Delhi22 Sept 2025AY 2020-21

Bench: Shri Anubhav Sharma & Shri Naveen Chandra

For Appellant: Shri Anil Bhalla, CAFor Respondent: Shri Vijay B. Basanta CIT- DR

Section 139(1)Section 9(1)(vii)

ignoring the fact that nature of product assessee company is selling is an email security program and apart from a right to use the computer software programme by the end-user himself, there is no further right to sub-licence or transfer, nor is there any right to reverse- engineer ... ignoring the fact that what is granted to the distributor is only a non- exclusive, non- transferable licence to resell computer software, and no copyright in the computer programme is transferred either to the distributor or to the ultimate end user. Page 2 of 19 ITA No. 976/DEL/2023

ITO, Kolkata vs. Ajit Kumar Minda, Kolkata

ITA 2668/KOL/2024[2015-16]Status: DisposedITAT Kolkata17 Sept 2025AY 2015-16

Bench: Shri Manunatha G & Shri Sonjoy Sarmaι.Τ.Α. No.2668/Kol/2024

Section 10(38)Section 142(1)Section 143(3)Section 147Section 148Section 250Section 68Section 69C

आयकर अपीलीय अधिकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH KOLKATA Before Shri Manunatha G, Accountant

Factive Limited, Mumbai vs. Assistant Commissioner of Income Tax, (International Taxation )-2(3)(1), Mumbai

In the result, both the appeals are partly allowed

ITA 4706/MUM/2023[2021-22]Status: DisposedITAT Mumbai15 Sept 2025AY 2021-22

Bench: Shri Saktijit Dey & Shri Girish Agrawal & Factive Limited Asst. Cit(It)-2(3)(1) C/O. Price Waterhouse & Co. Llp 609, 6Th Floor, Kautilya Bhavan, 252, Veer Savarkar Marg, C-41, C-43, G Block, Vs. Shivaji Park, Dadar, Bandra Kurla Complex, Mumbai-400 028 Bandra (E), Mumbai Pan/Gir No. Aaccf 5745 J (Appellant) : (Respondent) : Shri Dhanesh Bafna A/W Appellant By Shri Yogesh Malpani & Ms. Kinjal Patel Respondent By : Shri Krishna Kumar (Sr. Dr) Date Of Hearing : 21.08.2025 Date Of Pronouncement : 15.09.2025 O R D E R Per Saktijit Dey: Captioned Appeals By The Assessee Are Against The Final Assessment Orders Passed U/S. 143(3) R.W.S 144C(13) Of The Income Tax Act, 1961 (‘The Act’ For Short), In Pursuance To The Directions Of Learned Dispute Resolution Panel (‘Ld. Drp' For Short) & Pertains To The Assessment Years (A.Y.) 2021-22 & 2022-23. 2. Since The Substantive Issue On Merits, Arising In The Appeals Are More Or Less Common In Both The Appeals, We Propose To Take Up Ita No. 4706/Mum/2023, Pertaining To A.Y. 2021-22, As The Lead Appeal. (A.Ys. 2021-22 & 2022-23) Factive Limited Vs. Asst. Cit(It) 3. Ground Nos. 1, 2 & 3 Are Basically On Legal Issues, Challenging The Validity Of The Final Assessment Order. At The Outset, Ld. Counsel Appearing For The Assessee Submitted That He Would Prefer To Address The Issues On Merits And, If Warranted, May Press The Legal Grounds.

For Respondent: Shri Krishna Kumar (Sr. DR)

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

also relevant. A person can be said to have acquired a copyright or the right to use the copyright in a computer software or database (as described by the Assessing Officer), where he is authorized to do all or any of the acts as per the definition of the term

ACIT, New Delhi vs. M/S Nuwave E Solutions (P) Ltd., New Delhi

In the result, appeal of the Revenue is dismissed

ITA 3676/DEL/2011[2007-08]Status: DisposedITAT Delhi12 Sept 2025AY 2007-08

Bench: Shri Sudhir Kumar & Shri Manish Agarwal[Assessment Year : 2007-08] Acit, Vs M/S. Nuwave E Solutions (P) Circle-13(1), Ltd., 3Rd Floor, District Centre, New Delhi Dda Building, Nehru Place, New Delhi. Pan-Aabcn5790Q Appellant Respondent Appellant By Shri Pravin Rawal, Cit Dr Respondent By Dr. Rakesh Gutpa, Adv., Shri Saksham Agarwal, Ca, Shri Somil Agarwal, Adv. & Shri Deepesh Garg, Adv. Date Of Hearing 26.06.2025 Date Of Pronouncement 12.09.2025 Order Per Manish Agarwal, Am : The Captioned Appeal Is Filed By The Revenue Against The Order Dated 15.03.2011 Passed By Ld. Commissioner Of Income Tax (Appeal)-Xvi, New Delhi [“Cit(A)”, In Short] Passed U/S 250 Of The Income Tax Act, 1961 [“The Act”] Arising From The Assessment Order Dated 31.12.2010 Passed U/S 143(3) Of The Act Pertaining To Assessment Year 2007-08. 2. Brief Facts Of The Case Are That Assessee Is A Company & E- Filed Its Return Of Income On 30.08.2007, Declaring Total Income Of Inr 1,45,48,453/-. The Said Return Was Revised On 20.08.2008, Declaring The Same Income As Was Declared The Return Of Income Filed U/S 139(1). The Case Of The Assessee Was Selected For Scrutiny & Various Queries Were Raised Which Were Replied By The Assessee. The Assessee Is Engaged In The Business Of Development & Export Of Software & 100% Eou Registered With Director Software Technology Park Of India In Terms Of Registration Certificate Dated 31.03.1999. The Major Shareholder In The Assessee Company Is Shri Anil Gutpa Who Is Having 99% Shareholding & Is Taking Substantial Interest In Day-To-Day Affairs Of The Assessee & Also In Its Associate Enterprises (“Ae”) At Us Who Is The Sole Buyer Of The Software Developed By The Assessee.

Section 10Section 10ASection 139(1)Section 143(3)Section 250Section 40Section 801A

Arbitration award represents value of source code supplied by company to its associate enterprise and source code is nothing but part and parcel of computer software as defined in Sec 10A. (Pg 32) * AO disallowed the deduction without any corroborative evidence. (Pg 33) Conclusion: Decision of CIT(A),deleting ... return alongwith letter dated 23.08.2008 copy at (PB 26) treating the same as part and parcel of net profit derived from export of computer software and claimed deduction u/s 10A of the Act. It goes without saying that the revised return of income stood accepted by Ld. AO and that

Brightcom Group Limited, Hyderabad vs. Asst. Commissioner of Income Tax, Circle-1(2), Hyderabad

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

ITA 1747/HYD/2019[2015-16]Status: DisposedITAT Hyderabad10 Sept 2025AY 2015-16

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri P. Murali Mohan Rao, C.AFor Respondent: Dr. Narendra Kumar Naik

Section 115JSection 143(2)Section 143(3)Section 144C(5)Section 14ASection 37Section 92C

paper book, wherein under quantitative details, the assessee has again mentioned that it is engaged in providing digital marketing services, development of computer software, and related services, which is to the following effect : “ Note No.24 : Quantitative Details The company is engaged in providing digital marketing services, development of computer software

Netradyne Technology India Private Limited, Bengaluru vs. Income Tax Officer, Ward-5(1)(1), Bengaluru

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

ITA 2258/BANG/2024[2021-22]Status: DisposedITAT Bangalore10 Sept 2025AY 2021-22

Bench: Shri Prashant Maharishi & Shri Keshav Dubeyassessment Year : 2021-22

For Appellant: Shri Suresh Muthukrishnan, ARFor Respondent: Dr. Divya K J, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 144Section 92C

Great Software Labs Pvt. Ltd. and CG VAK Software Exports Ltd. In the new search process the TPO used Prowess Database using keywords of ‘computer software, software services and consultancy’. It reached at a set of 18 comparables and issued show cause notice. The assessee objected that Page

DCIT Intl. Tax Circle-1(2)(2), New Delhi vs. Everest Global Inc., Usa

Appeal is allowed

ITA 1272/DEL/2023[2020-21]Status: DisposedITAT Delhi10 Sept 2025AY 2020-21

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Ms. Vandana Bhandri, CAFor Respondent: Shri Vikram Singh Sharma, Sr. DR

Section 143(2)

ceramics, chemical, civil, electrical, mechanical, metallurgical, and industrial engineering) ; 2. Architectural services ; and ITA Nos. 2469, 6137/Del/2015 2355/Del/2017 Everest Global Inc. vs DDIT 3. Computer software development. Under paragraph 4(b), technical and consultancy services could make technology available in a variety of settings, activities and industries. Such services

DCIT Intl. Tax Circle-1(2)(2), New Delhi vs. Everest Global Inc., Usa

Appeal is allowed

ITA 1271/DEL/2023[2019-20]Status: DisposedITAT Delhi10 Sept 2025AY 2019-20

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Ms. Vandana Bhandri, CAFor Respondent: Shri Vikram Singh Sharma, Sr. DR

Section 143(2)

DCIT Intl. Tax Circle-1(2)(2), New Delhi vs. Everest Global Inc., Usa

Appeal is allowed

ITA 1270/DEL/2023[2018-19]Status: DisposedITAT Delhi10 Sept 2025AY 2018-19

Bench: Shri Challa Nagendra Prasad & Shri Naveen Chandra

For Appellant: Ms. Vandana Bhandri, CAFor Respondent: Shri Vikram Singh Sharma, Sr. DR

Section 143(2)

agricultural, ceramics, chemical, civil, electrical, mechanical, metallurgical, and industrial engineering); 2. Architectural services ; and ITA Nos.2469, 6137/Del/2015 2355/Del/2017 Everest Global Inc. vs DDIT 3. Computer software development. Under paragraph 4(b), technical and consultancy services could make technology available in a variety of settings, activities and industries. Such services