2015 (5) TMI 431

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....3230/2015, 3232/2015, 3234/2015, 3236/2015, 3481/2015, 3483/2015, 3485/2015, 3487/2015, 3489/2015 and 3536/2015 Exemption is allowed subject to all just exceptions. The applications are disposed of. CM Nos.3049/2015, 3051/2015, 3053/2015, 3055/2015, 3182/2015, 3184/2015, 3186/2015, 3188/2015, 3190/2015, 3192/2015, 3194/2015, 3196/2015, 3198/2015, 3200/2015, 3202/2015, 3204/2015, 3206/2015, 3208/2015, 3210/2015, 3212/2015, 3214/2015, 3216/2015, 3218/2015, 3220/2015, 3223/2015, 3225/2015, 3227/2015, 3229/2015, 3231/2015, 3233/2015, 3235/2015, 3480/2015, 3482/2015, 3484/2015, 3486/2015, 3488/2015, 3490/2015 and 3535/2015 Delay is condoned. Applications are disposed of. ITA Nos.119/2015, 120/2015, 121/2015, 122/2015, 123/2015, 124/2015, 125....

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....ies in India. Software licenced by the assessee embodies the process which is required to control and manage the specific set of activities involved in the business use of its customers. Software also made available the process to its customers, who used it to carry out their business activities. In this view of the matter, the AO felt that the consideration of supply of software amounted to royalty under Section 9(1)(vi) of the Income Tax Act. The CIT(Appeals) - to whom the assessee appealed and later the ITAT to whom the Revenue appealed concurrently held that the supply of embedded software (which was part of the hardware supplied to the assessee's customers by it) under consideration did not constitute royalty and, therefore, Section 9(....

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....the Revenue to assess the same under two different articles. The software that was loaded on the hardware did not have any independent existence. The software supply is an integral part of the GSM mobile telephone system and is used by the cellular operator for providing the cellular services to its customers. There could not be any independent use of such software. The software is embodied in the system and the revenue accepts that it could not be used independently. This software merely facilitates the functioning of the equipment and is an integral part thereof. On these facts, it would be useful to refer to the judgment of the Supreme Court in TATA Consultancy Services Vs. State of Andhra Pradesh (2004) 271 ITR 401 (SC), wherein the Ape....

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....lms the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of "goods" within the meaning of the term as defined in the said Act. The term "all materials, articles and commodities" includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. The software programmes have all these attributes... In Advent Systems Ltd. v. Unisys Corpn, (925 F. 2d 670 (3rd Cir. 1991)), relied on by Mr. Sorabjee, the court was concerned with interpretation of uniform civil code which "applied to transactions in goods". T....