ACIT, Circle-16(1), Hyderabad V. M/s. Lucuz Enterprise Solutions Ltd, Hyderabad

ITA 1964/HYD/2011

• Counselvise Citation: 196422514 RSA 2011
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 31-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 25-11-2011
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: Transfer pricing; Double taxation relief; International transaction; Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 1874/HYD/2011 2008 - 09 THE ASST. DIRECTOR OF INCOME TAX (INTL. TAXN)-I, HYDERABAD M/S. LOCUZ ENTERPRISE SOLUTIONS LTD., HYDERABAD 1964/HYD/2011 2008 - 09 THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-16(1), HYDERABAD 837/HYD/2013 2009 - 10 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-16(1), HYDERABAD FOR REVENUE : SHRI RA JAT MITRA , DR FOR ASSESSEE : S HRI A . SRINIVAS, AR DATE OF HEARING : 1 3 - 0 5 - 201 5 DATE OF PRONOUNCEMENT : 03 - 0 6 - 2015 O R D E R PER SAKTIJIT DEY, J.M. : AFORESAID APPEALS ARE BY THE DEPARTMENT AGAINST SE PARATE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERAB AD FOR THE ASSESSMENT YEARS (AYS) 2008-09 AND 2009-10. ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 2 -: ITA NO. 1874/HYD/2011 (AY. 2008-09): 2. THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT BEI NG AGGRIEVED BY THE ORDER OF LD. CIT(A) HOLDING THAT THE PAYMENT MA DE BY ASSESSEE TO THE FOREIGN COMPANY NOT BEING IN THE NATURE OF 'ROYALTY ', THERE IS NO REQUIREMENT FOR DEDUCTION OF TAX AT SOURCE U/S. 195 OF THE INCOME TAX ACT [ACT] AND CONSEQUENTIALLY DELETING THE DEMAND R AISED U/S. 201(1) AND 201(1A) OF THE ACT. 3. BRIEFLY, THE FACTS ARE THE ASSESSEE AN INDIAN CO MPANY IS BASICALLY ENGAGED IN THE BUSINESS OF TRADING OF SOFTWARE. ON VERIFICATION OF RECORD, THE AO NOTICED THAT ASSESSEE HAS MADE PAYMENT OF US $ 88,304 (RS. 1,02,34,981/-) TO A FOREIGN COMPANY NAMELY M/S . ALTIRIS SINGAPORE PTE. LTD., (ALTIRIS) WITHOUT DEDUCTION OF TAX AT SO URCE AS REQUIRED U/S. 195 OF THE ACT. WHEN THE AO CALLED UPON THE ASSESSEE T O EXPLAIN THE REASON FOR NOT DEDUCTING TAX AT SOURCE, THE ASSESSEE SUBMI TTED THAT ASSESSEE HAS BEEN APPOINTED AS A REGISTERED RE-SELLER OF SOF TWARE PRODUCTS OF ALTIRIS AND THE NATURE OF TRANSACTION IS, ASSESSEE PURCHASES PRODUCTS FROM ALTIRIS OR ITS AUTHORIZED DISTRIBUTORS AND SEL LS THEM DIRECTLY TO CUSTOMERS IN THE PRESCRIBED TERRITORY. THUS, IT WA S SUBMITTED BY THE ASSESSEE THAT IT IS MERELY A TRADER OF SOFTWARE AND THE ACTUAL USER OF THE SOFTWARE AND LICENSEE ARE THE CUSTOMERS TO WHOM THE ASSESSEE HAS SOLD THE SOFTWARE. ASSESSEE SUBMITTED, NEITHER IT USES THE SOFTWARE ITSELF NOR HAS ACQUIRED LICENSE TO USE THE SOFTWARE FOR HIS OW N BUSINESS PURPOSES. IN SUPPORT OF SUCH SUBMISSION, ASSESSEE PRODUCED TH E RE-SELLER AGREEMENT WITH ALTIRIS AS WELL AS INVOICES. THE AO ON GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE, HOWEVER, DID NOT FIND MERIT IN THEM. THE AO OBSERVED THAT WHAT THE ASSESSEE HAS ACQUIRED IS THE USER LICENSES IN RESPECT OF COMPUTER PROGRAMMES/SOFTWARES AND FOR TH E SAME, ASSESSEE HAD ACQUIRED THE RIGHT TO SALE OR DISTRIBUTE TO THE CUSTOMERS IN INDIA. ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 3 -: THE AO OBSERVED, AS THE RIGHT TO SALE OR DISTRIBUTE ANY COPY OF THE COMPUTER PROGRAMME IS AN EXCLUSIVE RIGHT OF THE COP YRIGHT OWNER, WHICH IN THE PRESENT CASE IS THE FOREIGN COMPANY, THE ACT OF SELLING/DISTRIBUTING THE COPY OF THE COMPUTER PROGRAMME OR THE USER LICE NSE THEREOF WITHOUT BEING AUTHORIZED TO DO SO WOULD INFRINGE THE COPYRI GHT. THE AO OBSERVED AS THE ASSESSEE-COMPANY WAS AUTHORIZED BY THE FOREI GN SUPPLIER TO DO AN ACT PROTECTED UNDER THE COPYRIGHT AND THE CONSIDERA TION FOR THE RIGHT TO SALE/DISTRIBUTE WAS PAID BY ASSESSEE TO THE SAID FO REIGN COMPANY ON THE BASIS OF THE NUMBER OF COPIES OF THE COMPUTER SOFTW ARE/PROGRAMME OR NUMBER OF SUCH LICENSES OR THE DURATION OF SUCH LIC ENSES, IT AMOUNTS TO RIGHT TO USE THE COPYRIGHT. HENCE, IS IN THE NATUR E OF 'ROYALTY'. THE AO OBSERVED AS THE PAYMENT BY WAY OF 'ROYALTY' TO A NO N-RESIDENT IN INDIA IS TAXABLE UNDER THE INCOME TAX ACT, THE QUANTUM OF SU CH TAX HAS TO BE DETERMINED AS PER THE PROVISIONS OF THE DTAA BETWEE N INDIAN AND SINGAPORE. ON THE BASIS OF THE ABOVE REASONING, TH E AO PROCEEDED TO COMPUTE THE TAX AND INTEREST U/S. 201(1) AND 201(1A ) FOR ASSESSEE'S DEFAULT IN DEDUCTING TAX U/S. 195 ON THE PAYMENTS M ADE TO ALTIRIS AT RS. 11,37,220/- AND RS. 1,64,608/- RESPECTIVELY. 4. BEING AGGRIEVED OF THE ORDER PASSED U/S. 201(1) AND 201(1A) OF THE ACT, ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT (A). IN THE COURSE OF HEARING OF APPEAL BEFORE THE FIRST APPELLATE AUTHOR ITY, ASSESSEE REITERATED THAT THE TRANSACTIONS BETWEEN ASSESSEE A ND THE FOREIGN COMPANY BEING PURELY IN THE NATURE OF PURCHASE AND SALE OF SOFTWARE PRODUCTS, THE PAYMENTS MADE CANNOT BE TREATED AS 'R OYALTY'. IN SUPPORT OF HIS CONTENTION, ASSESSEE ALSO PRODUCED THE AGREE MENT WITH THE FOREIGN COMPANY AND OTHER RELEVANT DOCUMENTS. LD.CIT(A) AF TER GOING THROUGH THE REGISTERED RESELLER AGREEMENT BETWEEN THE ASSES SEE AND ALTIRIS AND OTHER RELEVANT DOCUMENTS, ACCEPTED ASSESSEE'S CLAIM THAT IT IS PURELY A PURCHASE AND SALE OF GOODS AND THERE IS NO RIGHT TO USE OF ANY ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 4 -: COPYRIGHTED ARTICLES OR THINGS CONFERRED ON THE ASS ESSEE BY THE FOREIGN COMPANY. THE LD.CIT(A) ON REFERRING TO THE PRINCIP LES LAID DOWN IN VARIOUS JUDICIAL PRECEDENTS FINALLY CONCLUDED THAT AS THE ASSESSEE IS MERELY ACTING AS A RESELLER FOR STANDARD SOFTWARE P RODUCTS OF THE FOREIGN COMPANY AND NO OWNERSHIP RIGHTS IN THE PATENTS, COP YRIGHTS OR INTERNATIONAL TRANSACTIONS RELATING TO PRODUCTS HAV E BEEN TRANSFERRED BY THE FOREIGN COMPANY TO THE ASSESSEE, THE PAYMENT MA DE TOWARDS PURCHASE OF SOFTWARE CANNOT BE TREATED AS 'ROYALTY' . LD.CIT(A) AFTER CAREFULLY ANALYZING THE TERMS OF THE RESELLER AGREE MENT FOUND THAT THE FOREIGN COMPANY I.E., M/S. ALTIRIS SINGAPORE PTE. L TD., (ALTIRIS) DOES NOT PROVIDE THE ASSESSEE OR THE END USER ANY RIGHT TO M AKE COPIES OR TO RE- PRODUCE THE SOFTWARE. THE ASSESSEE OR THE END USER S DO NOT DERIVE ANY VALUE FROM THE ACTUAL EFFORTS PUT IN BY THE DEVELOP ER. THE ASSESSEE UNDER THE TERMS OF THE AGREEMENT IS ONLY ALLOWED TO SELL AS MANY NUMBER OF SOFTWARE COPIES AS ARE IMPORTED FROM THE FOREIGN COMPANY. WHAT IS BEING SOLD BY THE ASSESSEE TO THE END USERS IS THE COPYRIGHTED ARTICLE. THE COPYRIGHT ITSELF IS NOT BEING SOLD OR BEING ALL OWED TO BE USED FOR MAKING ANY PROFIT. THUS, ON THE AFORESAID CONSIDER ATION, LD.CIT(A) HELD THAT AS THE PAYMENT MADE BY THE ASSESSEE DOES NOT F ALL WITHIN THE PURVIEW OF 'ROYALTY' AS DEFINED U/S. 9(1)(VI) OF TH E ACT, THERE IS NO NEED TO DEDUCT TAX U/S. 195 OF THE ACT. ACCORDINGLY, HE DE LETED THE DEMAND RAISED BY THE AO. BEING AGGRIEVED WITH THE DECISIO N OF THE LD.CIT(A), DEPARTMENT IS BEFORE US. 5. THE LD. DR SUBMITTED BEFORE US THAT WHAT THE ASS ESSEE HAS PAID TO THE FOREIGN COMPANY IS TOWARDS RIGHT TO USE OF C OPYRIGHT. HENCE, THE PAYMENT MADE IS IN THE NATURE OF 'ROYALTY' AS PROVI DED UNDER EXPLANATION-2 TO SECTION 9(1)(VI). IN SUPPORT OF S UCH CONTENTION, LD. DR RELIED UPON THE FOLLOWING DECISIONS: ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 5 -: I) CITRIX SYSTEMS ASIA PACIFIC PTY. LTD., IN RE (AAR) 343 ITR 0001; II) M/S. GRACEMAC CORPORATION V. ASSTT. DIRECTOR OF INC OME TAX 134 TTJ 257. 6. LD. AR ON THE OTHER HAND STRONGLY RELYING UPON T HE REASONING OF THE LD.CIT(A) SUBMITTED BEFORE US THAT ROLE OF ASSE SSEE IS NOTHING MORE THAN A RE-SELLER OF GOODS. EXPLAINING THE ACTIVITY OF THE ASSESSEE BY REFERRING TO THE REGISTERED RE-SELLER AGREEMENT. L D. AR SUBMITTED, ASSESSEE HAS BEEN APPOINTED AS NON-EXCLUSIVE REGIST ERED RE-SELLER BY THE FOREIGN COMPANY M/S. ALTIRIS SINGAPORE PTE. LTD., ( ALTIRIS) FOR A PARTICULAR TERRITORY IN INDIA AND IT IS SELLING THE PRODUCTS O F ALTIRIS TO THE END USERS FOR A PRICE. THE LD. AR SUBMITTED AS THE ACTIVITY IS PURELY IN THE NATURE OF A TRADING ACTIVITY, THERE BEING NO INVOLVEMENT O F THE ASSESSEE EITHER AS USER OF THE SOFTWARE PRODUCTS OR LICENSES THEREOF, THE PAYMENT MADE IS NOT IN THE NATURE OF 'ROYALTY' BUT MERELY TOWARDS T HE COST OF THE GOODS PURCHASED FOR RE-SALE. IN SUPPORT OF SUCH CONTENTI ON, HE RELIED UPON THE FOLLOWING DECISIONS: I) 94 ITD 91 SAMSUNG ELECTRONICS COMPANY LTD., VS. ITO (ITAT, BANGALORE BENCH); II) 95 ITD 269 MOTOROLA INC. VS. DCIT (ITAT, DELHI SPECIAL BENCH); III) 43 SOT 506 DDIT (INTERNATIONAL TAXATION) VS. RELIANCE INDUSTRIES LTD., (ITAT, MUMBAI BENCH); IV) 271 ITR 401 TATA CONSULTANCY SERVICES VS. SATE OF ANDHRA PRADESH (SUPREME COURT); AND V) DECISION OF THE ITAT, HYDERABAD IN THE CASE OF ADI T VS. M/S. BARTRONICS INDIA LTD. ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 6 -: 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. WE HAVE CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES BEFORE US. AS CAN BE SEEN, THE AO HAS TREATED THE PAYMENT MADE BY THE ASSESSEE TO ALT IRIS AS 'ROYALTY' ON THE REASONING THAT AS THE ASSESSEE IS AUTHORIZED BY THE FOREIGN COMPANY TO SELL A PRODUCT WHICH IS PROTECTED UNDER THE COPY RIGHT, THE CONSIDERATION FOR THE RIGHT TO SALE/DISTRIBUTE IS T O BE TREATED AS 'ROYALTY'. ACCORDING TO THE AO AS THE PAYMENT MADE BY THE ASSE SSEE TO THE FOREIGN COMPANY IS TOWARDS ACQUIRING A RIGHT TO DISTRIBUTE THE COMPUTER PROGRAMME TO CLIENTS IN INDIA IS AN EXCLUSIVE RIGHT UNDER THE COPYRIGHT ACT, THE PAYMENT MADE AMOUNTS TO 'ROYALTY'. IN OUR VIEW, THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER ARE CONFLICTING. TH OUGH THE AO ON GOING THROUGH THE TERMS OF THE AGREEMENT ACCEPTS THE FACT THAT ASSESSEE IS NOT THE USER OF THE SOFTWARE PRODUCTS AND SELLS THEM TO END USERS, BUT HE NEVERTHELESS CONTRADICTED HIMSELF BY OBSERVING THAT ASSESSEE HAS ACQUIRED THE RIGHT TO USE A COPYRIGHTED ARTICLE WHI LE RE-SELLING THEM TO THE CLIENTS IN INDIA. IN OUR VIEW, THE CONCLUSION DRAWN BY THE AO IS NOT ACCEPTABLE. ON GOING THROUGH THE ORDER OF THE LD.C IT(A), WE FIND THAT HE HAS EXHAUSTIVELY DEALT WITH THE TERMS OF THE RE-SEL LER AGREEMENT BETWEEN THE ASSESSEE AND THE FOREIGN COMPANY AND OTHER MATE RIALS ON RECORD AND HAS PASSED A WELL REASONED ORDER BRINGING ON RECORD THE FACT THAT ASSESSEE IS PURELY A TRADER IN SOFTWARE AND NOT THE USER OF THE SOFTWARE. IN VIEW OF SUCH ELABORATE DISCUSSIONS MADE BY THE L D.CIT(A), THOUGH IT IS NOT NECESSARY TO DISCUSS THEM OVER AGAIN IN THIS OR DER, BUT SUFFICE TO SAY ON GOING THROUGH THE TERMS OF THE REGISTERED RE-SEL LER AGREEMENT BETWEEN THE ASSESSEE AND THE FOREIGN COMPANY I.E., M/S. ALT IRIS AS A WHOLE AND MORE SPECIFICALLY CLAUSE-2, 6, 10 AND 11 OF SAID AG REEMENT IT IS VERY MUCH CLEAR THAT THE ASSESSEE HAS BEEN APPOINTED AS A NON-EXCLUSIVE DISTRIBUTER/RE-SELLER OF THE SOFTWARE PRODUCTS OF T HE FOREIGN COMPANY WITHIN THE TERRITORY OF INDIA. THE ROLE OF THE ASS ESSEE, TO PUT IT SIMPLY, IS ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 7 -: TO PURCHASE THE SOFTWARE PRODUCTS FROM ALTIRIS AND SELL IT TO CUSTOMERS IN INDIA. THEREFORE, THE END USER OF THE SOFTWARE PRO DUCTS PROCURED/OBTAINED FROM THE FOREIGN COMPANY IS NOT T HE ASSESSEE BUT THE CUSTOMERS IN INDIA, TO WHOM THE ASSESSEE HAS SOLD T HE PRODUCTS. IT IS FURTHER EVIDENT FROM THE FACTS ON RECORD, THE NATUR E OF ACTIVITY OF THE ASSESSEE UNDER THE REGISTERED RE-SELLER AGREEMENT I S TO BOOK ORDERS WITH ALTIRIS ON BEHALF OF CUSTOMERS, COLLECT PAYMENT AND DELIVER SOFTWARE TO THE END USERS OR CUSTOMERS. AS FOUND BY THE LD.CIT (A), MOST OF THE TIME, THE DELIVERY IS ACTUALLY MADE VIA E-MAIL OR VIA INT ERNET DOWN LOAD. IT IS ALSO ESTABLISHED THAT NO OWNERSHIP RIGHTS IN THE PA TENTS, COPYRIGHTS OR INTERNATIONAL TRANSACTIONS RELATING TO THE PRODUCTS HAVE BEEN TRANSFERRED BY THE FOREIGN COMPANY TO THE ASSESSEE. IN FACT TH E ASSESSEE IS NOT PERMITTED TO MAKE COPIES OR DUPLICATE THE SOFTWARE. TO SOME EXTENT, THE AO HAS ALSO ACCEPTED AFORESAID FACTUAL POSITION. I N THESE CIRCUMSTANCES, WHEN THE DEPARTMENT HAS NOT BEEN ABLE TO BRING ANY MATERIAL ON RECORD TO CONTROVERT THE FACTUAL FINDINGS, ARRIVED AT BY T HE LD.CIT(A), WE DO NOT SEE ANY MERIT IN THE CONTENTION OF THE DEPARTMENT T HAT THE PAYMENT MADE IS IN THE NATURE OF 'ROYALTY'. ON GOING THROU GH THE FACTS AND MATERIALS ON RECORD, WE ARE OF THE FIRM OPINION THA T THE PAYMENTS MADE BY THE ASSESSEE TO M/S. ALTIRIS DO NOT COME WITHIN THE PURVIEW OF 'ROYALTY' AS FINDS PLACE U/S. 9(1)(VI) OF THE ACT. AS FAR AS THE DECISIONS RELIED UPON BY THE PARTIES, WE ARE OF THE VIEW THAT THEY HAVE NO RELEVANCE TO THE FACTS OF THE PRESENT CASE SINCE, ON THE BASI S OF FACTS ON RECORD, IT IS PROVED THAT ASSESSEE IS MERELY A TRADER OF SOFTWARE PRODUCTS OF THE FOREIGN COMPANY. IN THE AFORESAID FACTS AND CIRCUM STANCES, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) WHICH IS ACCORDINGLY UPHELD. THE GROUNDS RAISED ARE THEREFORE, DISMISSE D. ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 8 -: ITA NO. 1964/HYD/2011 (AY. 2008-09) & ITA NO. 837/HYD/2013 (AY. 2009-10): 8. THESE APPEALS BY THE DEPARTMENT ARE AGAINST THE DECISION OF LD.CIT(A) IN DELETING THE ADDITIONS MADE BY THE AO ON ACCOUNT OF DISALLOWANCE MADE U/S. 40(A)(I) OF THE ACT FOR ALLE GED NON-DEDUCTION OF TAX AT SOURCE U/S. 195 OF THE ACT ON PAYMENTS MADE TO M/S. ALTIRIS FOR THE AYS. 2008-09 AND 2009-10. FACTS IN THESE APPEAL S ARE MORE OR LESS IDENTICAL, EXCEPT THE FACT THAT IN AY. 2009-10, AO HAS NOT PASSED ANY ORDER U/S. 201(1) OF THE ACT DECLARING THE ASSESSEE AS AN ASSESSEE IN DEFAULT. BE THAT AS IT MAY, AS ELABORATELY DISCUSS ED IN APPEAL NO. 1874/HYD/2011, IN THE EARLIER PART OF THE ORDER, TH E AO BEING OF THE VIEW THAT THE AMOUNTS PAID BY THE ASSESSEE TO M/S. ALTIR IS TOWARDS PURCHASE OF SOFTWARE PRODUCTS IS 'ROYALTY' HE HELD THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX AT SOURCE U/S. 195 OF THE ACT. HOWEVER , SINCE THE ASSESSEE HAD NOT DEDUCTED ANY TAX ON SUCH PAYMENTS, THE AO I NVOKING THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT, DISALLOW ED THE AMOUNT PAID TO M/S. ALTIRIS. WHILE DECIDING DEPARTMENT'S APPEAL I N ITA NO. 1874/HYD/2011, AS WE HAVE ALREADY HELD THAT THE PAY MENT MADE BY THE ASSESSEE TO M/S. ALTIRIS IS NOT IN THE NATURE OF 'R OYALTY', HENCE NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE U/S. 195 AND ACCO RDINGLY, UPHELD THE ORDER OF LD.CIT(A), THESE APPEALS OF THE DEPARTMEN T HAVE BECOME INFRUCTUOUS. ACCORDINGLY, THEY DESERVED TO BE DISM ISSED. 9. BEFORE PARTING, IT NEEDS TO BE MENTIONED AT THE TIME OF HEARING, THE LD. AR WHILE CHALLENGING THE DISALLOWANCES U/S. 40( A)(I) SUBMITTED THAT EVEN ASSUMING THAT THE PAYMENT MADE BY THE ASSESSEE TO M/S. ALTIRIS IS IN THE NATURE OF 'ROYALTY', SINCE SUCH 'ROYALTY' FO R TRANSFER OF RIGHT TO USE OF COMPUTER SOFTWARE DOES NOT FALL UNDER EXPLANATIO N2 TO SECTION 9(1)(VI) BUT UNDER EXPLANATION-4, THE PROVISIONS OF SECTION 40(A)(I) WOULD ITA NOS. 1874 & 1964/HYD/11 837/HYD/13 M/S. LOCUZ ENTERPRISE SOLUTIONS LTD :- 9 -: NOT BE ATTRACTED. IN THIS CONTEXT, HE RELIED UPON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF SKOL BREWERIES LTD., VS . ACIT [142 ITD 49]. THOUGH IN PRINCIPLE, WE AGREE WITH THE CONTENTION R AISED BY THE LD. AR, BUT SINCE IT IS OF MERE ACADEMIC INTEREST, IN VIEW OF OUR DECISION IN FOREGOING PARAGRAPHS, THERE IS NO NECESSITY TO ADJU DICATE THIS ISSUE. 10. IN THE RESULT, ALL THE THREE APPEALS OF THE DEP ARTMENT I.E., 1874/HYD/2011, 1964/HYD/2011 AND 837/HYD/2013 ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2015 SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 3 RD JUNE, 2015 TNMM COPY TO : 1. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-16(1), ROOM NO. 612, 6 TH FLOOR, AAYAKR BHAVAN, BASHEERBAGH, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-16(1), ROOM NO. 612, 6 TH FLOOR, AAYAKR BHAVAN, BASHEERBAGH, HYDERABAD. 3. ASST. DIRECTOR OF INCOME TAX (INTL. TAXN), UNIT- I, 6 TH FLOOR, 'C' BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 4. M/S. LOCUZ ENTERPRISE SOLUTIONS LTD., 4-1-938/31 , SUDHA HOUSE, 3, TILAK ROAD, HYDERABAD. 5. CIT(APPEALS)-V, HYDERABAD. 6. THE COMMISSIONER OF INCOME TAX-IV, HYDERABAD. 7. THE DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATI ON), HYDERABAD. 8. D.R. ITAT, HYDERABAD.