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TMI Blog2016 (1) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of law:- "2.1 Whether in the facts and circumstances of the case, ITAT was justified in law in overlooking explanation 2, 4, 5 to section 9(1)(iv) of the Income Tax Act, 1961? 2.2 Whether in facts and circumstances of the case, the ITAT, was justified in law in deleting disallowance of Rs. 72,23,496/- and Rs. 13,78,496/- made by the Assessing officer under section 40(a)(i) and 40(a)(ia) of the Act respectively by without considering that payments were in nature of royalty subject to TDS under section 195 and 194J of the Act respectively? 2.3 Whether in the facts and circumstances of the case, the ITAT was justified in law in deleting the disallowance of Rs. 61,342/- under section 40(a)(ia) of the Act by overlooking provision of 194C which specifically include passenger transport as a work? 2.4 Whether in facts and circumstances of the case, the ITAT was justified in law in holding that no TDS was required on the payments of Rs. 61,342/- to the contractor for hiring taxi which was contrary to the law laid down by Hon'ble Supreme Court in case of Associated Cement Co. Ltd. v. CIT - (1993) 2011 ITR 435 (SC)" However, the learned counsel for the Revenue has restricted h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee claimed that similar purchases made in the preceding years had been considered as purchases and allowed as a deduction in computing its taxable income. However, the AO had sought to treat such payments as royalty in the AY 2008-09. The Assessee contended that being a reseller of products, the payments made by the Assessee for acquiring the products could not be considered as royalty. The Assessee relied on the decision of this Court in CIT v. Dynamic Vertical Software India P. Ltd .: (2011) 332 ITR 222 (Del) and also sought to distinguish the Tribunal's earlier decision in M/s Microsoft Corporation and Ors. v. ADIT: 2011 (8) ITR (Trib) 522 (Delhi), which was relied upon by the AO. 4.4 The CIT(A) took note of the Assessee's submission that while the AO had treated similar payments to M/s Data Innovation Asia Limited as made for the purchase of software, it had treated the payments made to THPL and M/s Speed Miners as royalty and, thus, the decision of the AO was selfcontradictory. The CIT(A) accordingly accepted the Assessee's contention that the payments made by it for the purchase of software from THPL and M/s Speed Miners were not royalty. With regard to the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght Act, 1957 ('CR Act') and contended that the definition of 'Copyright' would mean an exclusive right to do or authorise any of the acts listed in clause (a) of Section 14 of the CR Act including the right to reproduce the work in any material form; storing of it in any medium by electronic means; and/or to make any adaptation of the work. He argued that by virtue of Section 14(b)(i) of the CR Act, all of the acts specified in Section 14(a) would also be applicable in the case of a computer programme. Mr. Chaudhary then referred to the decision of the Karnataka High Court in CIT v. Samsung Electronics Co. Ltd.: (2012) 345 ITR 494 (Kar.) in support of his contention that computer software is recognised as a copyright work and the payments made by an Assessee for import of the software would be payments for transfer of copyright and the same would fall within the definition of the term 'royalty'. He then referred to the decisions of Authority for Advance Ruling (AAR) in Citrix Systems Asia Pacific Pty Ltd., In Re: (2012) 343 ITR 1 (AAR) and Skillsoft Ireland Ltd., In Re: (2015) 376 ITR 371 (AAR) in support of his contentions. 7. Mr Ved Jain, learned advocate appearing for the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question to be that of purchase of software. The limited issue to be addressed is whether in view of these findings the amount paid by the Assessee could be taxed as royalty. 12. In the cases where an Assessee acquires the right to use a software, the payment so made would amount to royalty. However in cases where the payments are made for purchase of software as a product, the consideration paid cannot be considered to be for use or the right to use the software. It is well settled that where software is sold as a product it would amount to sale of goods. In the case of Tata Consultancy Services v. State of Andhra Pradesh: (2004) 271 ITR 401 (SC), the Supreme Court examined the transactions relating to the purchase and sale of software recorded on a CD in the context of the Andhra Pradesh General Sales Tax Act. The court held the same to be goods within the meaning of Section 2(b) of the said Act and consequently exigible to sales tax under the said Act. Clearly, the consideration paid for purchase of goods cannot be considered as 'royalty'. Thus, it is necessary to make a distinction between the cases where consideration is paid to acquire the right to use a patent or a copyrigh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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