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3 The ld. CIT(A) has erred in facts and law by holding that software and source code are two separate items of transactions whereas the source code is highly critical to any software having higher intrinsic value compared to a software application as a whole.
4. The ld. CIT(A) has erred in laws treating the transaction as business income, whereas the transaction is actually in the nature of royalties and fees for technical services.

d) AO's observations of failure on the part of the respondent here in to bring on record the original developer of the source code have no merit.

The AR submitted that vide Para No. 4.11 at page No. 14 of his order, the AO observed, among other things, that the respondent here in having obtained the "Source Code(s)" from INTRA/GAMMA (the non resident company) a mere trading house, which is neither a developer nor a business house expertised in development of software/computer programme, failed to bring on record the original developer, who developed the 'Source Code' for operating systems and that it was unable to bring on record on what terms and conditions the "Source Code"

M/s Bartronics India Ltd.

e) "Software" and "Source code" are two separate items of transaction The AR submitted that the observation of the AO that "Software" and "Source code" are not two separate items, the AO has not taken into consideration the supplementary agreements filed before him during the course of assessment proceedings. The supplementary agreements clearly show the bifurcation of the payments towards "Software" and the "Source code". The reasons for rejecting the plea of the assessee herein on the bifurcation of the payments as given by the AO have no basis. Merely because there is no bifurcation shown in the invoices and there is no reference to the bifurcation in the statements of the key managerial/technical personnel, the bifurcation in the nature of payments cannot be denied especially in view of the Agreements and Supplementary agreements existing in support of the bifurcation. Also, merely because the assessee herein failed to make available to the Department any communication (e-mail, etc) on the price negotiated, it cannot be inferred that there is no bifurcation in the payments.