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TMI Blog2016 (6) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that if an explanation added to a provision changes the law, then it is not to be presumed to be retrospective irrespective of the fact that the phrase used are ‘it is declared‘ or ‘for the removal of doubts‘. As it is an admitted position that in the earlier years, not only the various High Courts but also the Tribunal in the cases of the assessee has taken a view that the consideration paid for the purchase of the software cannot be treated as royalty; the assessee was, thus, under the bonafide belief that no TDS/withholding of tax was required to be done in respect to said purchases. The assessee had no reason to believe or to foresee a subsequent event vide which the definition of royalty has been extended to include the consideration for the use of or right to use the software has been included in the definition of royalty under the Act. As per the existing law which was in operation at the time of purchase of software, the assessee was under the bonafide belief that there was no liability to deduct tax in respect of the consideration paid for the said purchase of software. It may be further observed that as the definition as was in existence before the insertion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the remittance made by the Indian residents-assessee companies to the foreign parties/residents of Foreign States on account of consideration for the purchase of certain software for internal use in the business of the assessee is liable to tax in India as Royalties under the provisions of section 9(1)(vi) of the Income Tax Act or the same is to be treated as business income of the foreign company-recipient/supplier of the software, not taxable in India as per the provisions of DTAA with that respective country. It is pertinent to mention here that the facts in ITA No. 5829/M/2009 and 5264/M/2009 are a bit different on the aspect that the software in these cases had been purchased by the assessee from the resident of Hong Kong with which India has no tax treaty/ DTAA. We will discuss the effect of absence of DTAA in the above stated two appeals in the latter part of this order. 3. The assessees herein purchased different type of software from residents of different countries such as Australia, Canada, Singapore, Netherlands, Germany, USA, UK, and France etc.; Undisputedly, India has a tax treaty/Double Taxation Avoidance Agreement (hereinafter referred to as DTAA) with all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the software was transferred to the payer/assessee, hence, there was no question of sale of software per se. He, further, observed that if at all there was an element of sale, it was only in respect of career media i.e. the CD (Compact Disk) in which the software was transacted/loaded. He, therefore, observed that there was enormous difference in the values of the career media i.e. the CD and the software loaded on it. He ignored the sale price of the career media being very low, but, held that what the assessee was given was the license to use software and that the payments made for the import of software were in the shape of royalty and as per the provisions of section 9(1)(vi) of the Act, the income in respect of the same was deemed to have accrued in India and thus the assessee was liable to deduct the tax at source under section (40)(a)(i) of the Act in respect of such payments. He, accordingly, vide order dated 16.08.04 directed the assessee to deduct TDS at the rate of 17.65% on the gross amount of license fees payable to M/s. Paradigm Geophysical Pvt. Ltd. (foreign resident). He therefore rejected the petition of the assessee moved under section 195(2) of the Act. 8. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere that the identical grounds have been taken by the Revenue in all the appeals of the Revenue. However in the two appeals preferred by the assessee i.e. ITA No.2728/M/2012 and ITA No.3219/M/2012, the Ld. CIT(A) has upheld the findings of the AO rejecting the application of the assessee under section 195(2) of the Act and hence, the assessee has come in appeal in the said cases. 11. We have heard the rival contentions of the ld. Representatives of the parties. We note that both the lower authorities have relied upon the following clauses of the license agreement in arriving out at their respective conclusions. 1.1. Software SELLER'S Proprietary software tool/products for application in Processing/ Interpretation of Seismic data in Oil and Gas Exploration industry. 1.2 Copy of Software agreement Under each Software Copy, SELLER supplies Software Users Kit that comprises a) a CD with executable code and documentation for the Software b) Installation manual and User manuals in one softcopy (on CD) and Two Hard copies and c) One Security key. The Security key allows the software tools to be installed on Network server and any number of clien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law in view of the recent decisions of the Hon ble Karnataka High Court in the case of CIT vs. Samsung Electronics Co. Ltd. and others (2012) 345 ITR 494 and in the case of CIT vs. Synopsis International Old Ltd. (2013) 212 taxman 454. The Ld. D.R. has further relied upon the decision of the co-ordinate bench of the Tribunal in the case of Reliance Infocom Ltd. dated 06.09.13 reported in (2013) 37 CCH 0069 (Mum-Trib) to contend that the software purchased by the assessee was a separate software and the same was neither supplied along with the equipment nor the same was an embedded software in the computer/equipment. That the assessee was not the owner of the software, the ownership of the software had remained with the seller; that the assessee was just given a license to use the software, which was only the right to use of copyright in the software. He has further contended that the Tribunal in the case of Reliance Infocom Ltd. (supra) has relied upon the decision of the Hon ble Karnataka High Court in the case of CIT vs. Samsung Electronics Company Ltd. Others (2012) 345 ITR 494 and upon another decision of the Hon ble Karnataka High Court in the case of CIT vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir view/stand in a subsequent year, for the sake of consistency and avoidance of uncertainty and confusion. He has further submitted that even otherwise, where, there are two views possible regarding the interpretation of a provision, the construction which favours the assessee is to be taken. He has further submitted that the amendment brought in the Income Tax Act, 1961 cannot be read into the treaty. He has also submitted that at the time of the purchase of the alleged software, no such Explanation 4 was introduced in the Income Tax Act and there was no intuition to the assessee that such an amendment will be brought into relevant provision. The assessee thus relying upon the interpretation of the relevant provision, as was in operation at the time of transaction, was rightly of the view that no TDS was required to be deducted in relation to the remittance made to the foreign resident for the purchase of software. The assessee s above action/view was justified as per the provisions that were subsisting/in operation at the time of transaction and which view has also been affirmed by the higher authorities including the different benches of the Tribunal in the own case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of the Income Tax Act as provided under section 90 of the Income Tax Act. He, in this respect, has relied upon the decision of the Hon ble Supreme Court in the case of Union of India vs. Azadi Bachao Andolan (2003) 263 ITR 607. 17. We have considered the rival contentions of the Ld. Representatives in this respect. We have also gone through the relevant definitions of royalty as provided under the DTAA and under the Income Tax Act. So far as the definition of royalty as provided under section 9(1)(vi) of The Income Tax Act is concerned, the relevant part of the said provision is reproduced as under: Section 9(1) (vi) income by way of royalty payable by- (a) the Government ; or (b) a person who is a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person who is a non-resident, where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains ) for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cret formula or process, or for information concerning industrial, commercial or scientific experience including gains derived from the alienation of any such right or property which are contingent on the productivity, use or disposition thereof; and b. payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of article 8. 2. Israel: Article 12(3) The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 3. China: Article 12(3) The term royalties as used in this Article means payment of any kind received as a consideration for the use of or the right to use, any copyright of literary, artistic or scientific work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or right; b. the use of, or the right to use, any industrial, commercial or scientific equipment; c. the supply of scientific, technical, industrial or commercial knowledge or information; d. the rendering of any technical or consultancy services (including those of technical or other personnel) which are ancillary and subsidiary to the application or enjoyment of any such property or right as is mentioned in sub-paragraph (a), any such equipment as is mentioned in sub-paragraph (b) or any such knowledge or information as is mentioned in sub-paragraph (c); e. the use of, or the right to use: i. motion picture films; ii. films or video tapes for use in connection with television; or iii. tapes for use in connection with radio broadcasting; f. total or partial forbearance in respect of the use or supply of any property or right referred to in sub-paragraphs (a) to (e); or g. the rendering of any services (including those of technical or other personnel) which make available technical knowledge, experience, skill, know-how or processes or consist of the development and transfer of a technical plan or design; but that term does not include payments or credits re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et formula or process, or for information concerning industrial, commercial or scientific experience; and b. payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic. 10. Netherlands: Chapter III Article 12(4) The term royalties as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. 19. A perusal of the above definitions in treaties with different countries reveal that in all the treaties, the Article 12 therein, generally, deals with the payments in respect of royalties and almost identical/similarly worded definition of royalty has been provided in the treaties of India with various countries. This fact has also been noticed by the Hon'ble Karnataka High c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what the royalty , under the Act, may constitute will be the income payable in respect of any right , property or information used or services utilized for the purpose of business or profession by such resident to a non resident. Further, vide various explanations introduced subsequently; the above definition of the royalty has been further expanded. Explanation 4 inserted by Finance Act, 2012, provides that the transfer of rights in respect of any right, property or information includes and has always included the right for use or right to use a computer software including granting of a license. We find that so far as Income Tax Act is concerned, computer software has neither been included nor is deemed to be included within the scope or definition of literary work under section 9(1)(vi) of the Act. The term literary work has been separately mentioned under clause (v) to Explanation 2 to include the consideration paid for the same within the scope of royalty, whereas, the Explanation 4 has broadened the scope of clauses (a) (b) and (c) of section 9(1)(vi) to include computer software under the definition of right , property or information. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration cannot be assessed as royalty despite the retrospective amendments to the Act. The relevant findings of the Hon ble Delhi High Court as given in para 23 of the said decision, for the sake of convenience are reproduced as under: However, the above argument misses the vital point namely the assessee has opted to be governed by the treaty and the language of the said treaty differs from the amended Section 9 of the Act. It is categorically held in CIT Vs. Siemens Aktiongesellschaft, 310 ITR 320 (Bom) that the amendments cannot be read into the treaty. On the wording of the treaty, we have already held in Ericsson (supra) that a copyrighted article does not fall within the purview of Royalty. Further, in a recent judgment in the case of DIT Vs New Skies Satellite BV, (ITA 473/2012 vide order dated 08.02.2016), the Hon ble Delhi High Court has observed that no amendment to the Act, whether retrospective or prospective can be read in a manner so as to extend its operation to the terms of an international treaty. In other words, a clarificatory or declaratory amendment, much less one which may seek to overcome an unwelcome judicial interpretation of law, cannot be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of Reliance Infocom Ltd. (supra), the different Benches of the High Courts and the Tribunal have been unanimous to hold that as per the law laid down by the Hon ble Supreme Court in the case of Union of India vs. Azadi Bachao Andolan (2003) 263 ITR 607, that where a specific provision is made in the DTAA, that provision will prevail over the general provisions contained in the Income Tax Act if, the same is more beneficial to the assessee as provided under section 90(2) of the Income tax Act. All the Hon ble High Courts (supra) have also been unanimous to further hold that the definition of royalty is restrictive in DTAA whereas the definition of royalty under the Income Tax Act is broader in its content; Therefore, the definition of royalty in DTAA is more beneficial to the assessee and hence the case of the assessee is to be examined in the light of the definition of royalty as provided in the DTAA and that the provisions of the DTAA will, in such an event, override the provisions of the Income Tax Act. Since, in the cases in hand also, the Ld. AR of the assessee has stated that the definition of treaty in the DTAA is more beneficial to the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the first question before us, at this stage, is as to whether the term literary work as mentioned in the definition of royalty in the treaty would include software or not? We note that the term 'Literary work' covers work, which is expressed in print or writing irrespective of the question of its literary merit or quality. It must be expressed in some material form, i.e. writing or print or in some form of notation or symbols, which means in a form capable of either visually or audibly recreating the representation of the original work. As per the provisions of section 2(o) of the Indian Copyright Act, 1957, the term literary work includes computer programs, tables and compilations including computer data base. Therefore, the computer software has been recognized as a literary work in India, if they are original intellectual creations. 26. The next controversy that has been raised before us as to whether the sale of software can be said to be sale of Goods or grant of License to use the same. In the past, software were often sold as an integral part of the computer system, but now a days, software products are sold or licensed in the form of computer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opyright. The Ld. DR has also relied upon another decision of the Hon ble Karnataka High Court in the case of CIT vs. Synopsis International Old Ltd. (2013) 212 taxman 454, wherein, the Hon ble Karnataka High Court has observed that even in case of end-user software license agreement granted for a non exclusive, non transferable, without right of sub license of use of the licensed software and design techniques, that does not take away the software out of the definition of the copyright. Even if it is not a transfer of exclusive right in the copyright, the right to use the confidential information embedded in the software in terms of the license makes it abundantly clear that there is transfer of certain rights which the owner of a copyright possesses in the said computer software/programme in respect of the copyright. The Hon ble Karnataka High Court while analyzing the provisions of the DTAA held that the consideration paid for the use or right to use the said confidential information in the form of computer programme software itself constitutes royalty and attracts tax. 28. However, different benches of the Hon ble Delhi High Court in the case of DIT vs. Infrasoft Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an actionable claims and money, and includes stock and shares, growing crops, grass....' This definition of 'goods' thus includes all types of movable properties, whether tangible or intangible. The Hon ble Supreme Court in the case of Tata Consultancy Services vs State of Andhra Pradesh 271 ITR 401 (2004), has considered computer software as 'goods' and stated that notwithstanding the fact that computer software is intellectual property, whether it is conveyed in diskettes, floppy, magnetic tapes or CD ROMs, whether canned (shrink-wrapped) or uncanned (customized), whether it comes as part of the computer or independently, whether it is branded or unbranded, tangible or intangible; is a commodity capable of' being transmitted, transferred, delivered, stored, processed, etc., and therefore, as a 'good' liable to sales tax. The Hon ble Supreme Court held that, 'it would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computer software means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme or any customized electronic data. Hence, like any other literary work, computer programme can not be read or utilized without downloading on a media like hard disk, CD, floppy or any other such device. An author of a literary work may be having some ideas in his mind in an intangible form but the copyright in those ideas is created only when they are expressed in a particular manner in the shape of some impressions, symbols or language or visuals etc. on a media such as book, film or CD or screen etc. Now a days, not only the computer programmes, but also, the other literary work can be transmitted over the internet from one media/computer to the other media /computer. But these expressions of ideas called literary work including computer programmes cannot be read or utilized without downloading or writing them on a media. Hence, though the same as a result of advancement in technology can be transmitted in an intangible form, but to constitute a literary work, these have to be transformed into a tangible form. Compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercises power over not only the software itself, but also, over people who may wish to use the software and that the owner of the software decides who will use his work. It has therefore been strongly contended on behalf of the Revenue that it is the right given to use the copyright in the software. We, however, are not convinced with the above argument of the revenue. Even if, the owner of a software makes a contract for sale/supply of such software to a specific person/persons as it may not be of use to general customers, because the same being Industry/ task specific, that, itself, doesn t in any way may mean or infer that the owner has transferred or sold the copy right in the work. One has to understand the difference between the term use of copy right in software and use of software itself. To constitute royalty under DTAA, it is the consideration for transfer of use of copyright in the work and not the use of work itself. In our view, the sale of a CD ROM/diskette containing software is not a license but it is a sale of a product which of course is a copyrighted product and the owner of the copyright by way of agreement puts the conditions and restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under some circumstances, the whole contract can be held to be void. Further the condition in the agreement that the ownership of each copy of software would remain with the software publisher and that the user will have only right to use the software is to be looked in terms of the Indian Contract Act to arrive at a conclusion whether such a condition is reasonable and is not against the public policy or whether it is restricting the fair use of right of the user/purchaser of the product. It is also a determinative factor as to whether the property in the goods after buying the product/ software CD has passed on to the purchaser or not as per the provisions of Sale Of Goods Act 1930 . So what the buyer buys is the copyrighted product and he is entitled to fair use of the product as is provided under section 52 of the Copyright Act. He is also entitled to perform all or any of the activities which is essentially required for the fair use and for the purpose for which the product is purchased by the buyer. Even as discussed above, even if we assume that such licenses may be legally enforceable in relation to all the terms mentioned therein, even then, what at the most can be assum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copyright means the exclusive right subject to the provisions of this Act, to do or authorize the doing of ay of the following acts in respect of a work or any substantial part thereof, namely: (a) in the case of a literary, dramatic or musical work, not being a computer programme, - (i) to reproduce the work in any material from including the storing of it in any medium by electronic means; (ii) to issue copies the work to the public not being copies already in circulation; (iii) to perform the work in public, or communicate it to the public; (iv) to make any cinematograph film or sound recording in respect of the work; (v) to make any translation of the work; (vi) to make any adaptation of the work; (vii) to do, in relation to a translation or an adaptation of the work, any of the acts specified in relation to the work in sub-cls. (i) to (vi); (b) in the case of a computer programme,- (i) to do any of the acts specified in cl. (a); (ii) to sell or give on commercial rental or offer for sale or for commercial rental any copy of the computer programme: Provided that such commercial rental does not apply in respect of computer programmes where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a literary, dramatic, musical or artistic work in the form of a cinematograph film shall be deemed to be an infringing copy 38. Certain provisions of section 52 of the Copyright Act which are relevant are also reproduced as under: 52. Certain acts not to be infringement of copyright.-(1) The following acts shall not constitute an infringement of copyright, namely: (a) a fair dealing with a literary, dramatic, musical or artistic work 104 [not being a computer programme] for the purposes of- private use, including research; criticism or review, whether of that work or of any other work; (aa) the making of copies or adaptation of a computer programme by the lawful possessor of a copy of such computer programme, from such copy- in order to utilize the computer programme for the purposes for which it was supplied; or to make back-up copies purely as a temporary protection against loss, destruction or damage in order only to utilise the computer programme for the purpose for which it was supplied; (ab) the doing of any act necessary to obtain information essential for operating inter-operability of an independently created computer programme with other programmes by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned under section 52 is not considered as infringement of the copyright as per the statute. In case of software, it has been provided that making of copies or adaptation of a computer programme by the lawful possessor of a copy of such computer programme from such copy in order to utilize the computer programme for the purpose of which it was supplied or to make back-up copies purely as a temporary protection against loss, destruction or damage and in order to utilize the computer programme and further the doing of any act necessary to obtain information essential for operating inter operatability of an independently created computer programme with other programmes in case such information is not otherwise readily available, the observation, study or test of functioning of computer programme with determination, the ideas and principles necessary for the functions for which the computer programme was supplied and the making of copies or adaptation of computer programme from a personally and legally obtained copy from non-commercial personal use, have been excluded from the definition of infringement of copyright. Even import of one infringed copy of the work for private and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory outside India. Such a right is extended in relation to countries which have entered into a treaty or which are a party to a convention relating to rights of the copyright owners and have undertaken to make such provisions in their laws in relation to the Indian authors for protection of their rights in their country. Sections 40, 40A and section 41of the Copyright Act, 1957 are relevant in this respect. Section 42 of the Copyright Act, however, put certain restrictions on the rights in works of foreign authors first published in India wherein it has been provided that if a foreign country does not give adequate protection to the works of the Indian authors, the Central Government may direct that such of the provisions of the Act as confer copyright on works first published in India of the foreign authors shall not apply. So if a foreign country recognizes the copyrights of the Indian authors in their copyrighted work, the India also allows the copyright to the foreign authors on reciprocal basis. So a foreign author can claim the copyright in a product, if India has a treaty with that country or if India and that other country are signatories of the certain international treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the tax treaties with other countries, has held that any term not defined in the convention shall, unless the context otherwise requires, have the meaning which it is under the laws of that State concerning the tax to which the convention applies. In view of above, when we see the definition as per the statutory provisions/domestic law of the country i.e. Copyright Act,1957 of India (the taxing State in this case), it is apparent that the fair use of the work for the purpose of which it is being purchased and doing of such other acts including making of copy for protection from damage or loss cannot, in any case, said to be any infringement of copyright whether or not any license in this respect has been granted by the author/owner of the work. The right to use or for use of the product accrues to the purchaser by the operation of the statute and as held by the Hon ble Delhi High Court in the case of Infrasoft Ltd. (supra), the same would amount to the sale of a goods and the acts done such as downloading of the same to the computer or making backup copies etc. would be the necessary acts for enabling the use of the product and would not amount to the transfer of copyright t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puter software programme, secret formula or process ..' Similarly, the DTAA between India and Kazakhstan defines the term 'royalties' in Article 12(3)(a) to mean : 'payments of any kind received as a consideration for the use of or the right to use any copyright of literary, artistic or scientific work including software, cinematograph films '. Similarly, the DTAA with Turkmenistan also defines 'Royalties' in Article 12 to mean : 'payments of any kind received as consideration for the use of or the right to use any copyright of literary, artistic or scientific work, .. computer software, any patent, trademark '. It is thus clear that wherever the Government of India intended to include consideration for the use of software as 'Royalties', it explicitly provided so in the DTAA with the concerned country. Since Article 13(3)(a) of the DTAA with UK does not contain any consideration for the use of or the right to use any 'computer software', the same cannot be imported into it. 47. The above analysis made by the Tribunal (supra) of various tax treaties of India with other countries clinches the issue. Even at the cost of repetit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even otherwise, the Revenue has not cited any direct case law of the jurisdictional High Court of Bombay before us. In the case laws cited by the Revenue of the Hon ble Karanatka High Court in the matter of CIT vs. Samsung Electronics Company Ltd. (supra) and CIT vs. Synopsis International Old Ltd. (supra ), though, a view in favour of the Revenue has been taken, but the Hon ble Delhi High Court in the case of DIT vs. Infrasoft Ltd. (supra), which is a latter decision, has discussed the Samsung case also and has taken the view in favour of the assessee. The Hon ble Delhi High court has taken the identical view favouring the assessee in the case of DIT vs Nokia Network (supra) and in the case of DIT vs. Ericson A.B. (supra) also. The Hon ble Bombay High Court in the case of The Addl. Commissioner of Sales Tax vs. M/s Ankit International, Sales Tax Appeal No.9 of 2011 vide order dated 15 September, 2011 while relying upon the decisions of the Hon ble Supreme Court in The Commissioner of Income Tax V. Vegetable Product Ltd. (1973) 88 ITR 192 and in Mauri Yeast India Pvt. Ltd. V. State of U.P. (2008) 14 VST 259(SC) : (2008) 5 S.C.C. 680 has held that, if two views in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment/insertion of Explanation 4 to the section 9(1)(vi) of the Act, as per the interpretation of the relevant provision done by various courts, the assessee was under bonafide belief that no TDS was deductable as the consideration paid for purchase off the shelf/shrink wrapped software would not fall in the definition of royalty. Even the above view of the assessee has been subsequently confirmed by the various decisions of the Tribunal in the own case of the assessee. He, bringing our attention to the orders dated 29.10.2010 (supra) and 26.11.2010 (supra) and also various other orders in the case of assessees in the earlier assessment years has contended that the different benches of the Tribunal have upheld the findings in relation to the interpretation of the provisions of section 9(1)(vi) made by the first appellate authority [CIT(A)] which has been summed up in the following points: (a) It is now established law that Computer software after being put on to a media then sold, becomes goods like any other Audio Cassette or painting on canvas or a book and that the Assessing Officer is wrong in holding that Computer software media, continues to be an intellectual property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de with retrospective effect from 01.06.1976. However, we find that the said amendment vide which the Explanation 4 has been inserted to section 9(1)(vi) has the effect of change in the law as was existing and even interpreted by the various higher courts of the country prior to the insertion of Explanation 4 in the said provision. By the introduction of the said Explanation 4, computer software has been specifically included in the definition of right, property or information which was never assumed to have been included by any court of law prior to the insertion of Explanation 4 vide amendment of Act of 2012. The Hon ble Supreme Court in the case of Sedco Forex International Drill INC. Others vs. Commissioner of Income Tax another (supra) has held that if an explanation added to a provision changes the law, then it is not to be presumed to be retrospective irrespective of the fact that the phrase used are it is declared or for the removal of doubts . As it is an admitted position that in the earlier years, not only the various High Courts but also the Tribunal in the cases of the assessee has taken a view that the consideration paid for the purchase of the software can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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