TMI Blog2015 (5) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to the Indian customers was a GSM which consisted both of the hardware as well as the software, therefore, the Tribunal is right in holding that it was not permissible for 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 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, 125/2015, 126/2015, 127/2015, 128/2015, 129/2015, 130/2015, 131/2015, 132/2015, 133/2015, 134/2015, 135/2015, 136/2015, 137/2015, 138/2015, 139/2015, 140/2015, 141/2015, 142/2015, 144/2015, 145/2015, 146/2015, 147/2015, 148/2015, 149/2015, 150/2015, 151/2015, 152/2015, 153/2015, 154/2015, 155/2015, 156/2015 and 157/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(1)(vi) was not attracted and for the same reasons, Article 13(3) of the DTAA was not involved. 5. We have noticed, at the outset, that the ITAT had relied upon the ruling of this Court in Director of Income Tax V. Ericsson A.B. (2012) 343 ITR 470 wherein identical argument with respect to whether consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. 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 Apex Court held that software which is incorporated on a media would be goods and,therefore, liable to sales tax. Following discussion in this behalf is required to be noted:- In our view, the term goods as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . The goods therein were defined as all things (including specially manufactured goods) which are moveable at the time of the identification for sale . It was held : Computer programs are the product of an intellectual process, but once implanted in a medium are widely distributed to computer owners. An ..... X X X X Extracts X X X X X X X X Extracts X X X X
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