2007 (5) TMI 204

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ugh three issues arose before the Tribunal, we are really concerned with two issues that have been urged by the Revenue. 3. The assessee is a 100 per cent. subsidiary of Oracle Corporation, USA and was incorporated with the object of developing, designing, improving, producing, marketing, distributing, buying, selling and importing of computer software. The assessee is entitled to sub-licence the software developed by Oracle Corporation, USA to its local clients. 4. The assessee imports master copies of the software from Oracle Corporation, USA. These are then duplicated on blank discs, packed and sold in the market along with the relevant brochures and information by way of a sub-licence. The assessee pays a lumpsum amount to Oracle ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is pay able outside India, on which tax has not been paid or deducted under Chapter XVII-B : Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII-B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted." 7. The interpretation given by the Assessing Officer to the above provision was that tax must not only be deducted but also actually paid within the relevant previous year. 8. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) (CIT(A)) who reli....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... 11. As noted above, the assessee duplicates the software from the imported master copies by formatting a blank disc and copying the software onto it. The duly formatted disc with the software is then packed and sold in the market along with the relevant brochures. According to the Assessing Officer, this did not amount to manufacture and this view was affirmed by the Commissioner of Income-tax (Appeals). 12. The Tribunal made a note that in fact the assessee converted blank discs (which are raw material for it) into software loaded discs with the help of the imported master copy. This by itself amounted to a change or a conversion of the blank disc into a different and distinct commercial product which was then marketed after labelli....