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computer software or computer programme could also be considered a scientific work because the set of instructions which defined a computer programme enabled the computer to perform particular task or carry out particulars functions. The said task was not simple and involved lot of skill, time, labour and considerable experimentation. Therefore, computer software or a computer programme may be included under scientific work. The payment for right to use software was therefore, as per the Assessing Officer, in the nature of royalty and taxable as 'royalty' as per clause (v) of Explanation 2 of section 9(1)(vi) of the Act. He, then referred to amendment made by Finance Act, 2012, which according to him, had clarified that right to use computer software, (including granting of license) was 'royalty'. He referred to Explanation 4 under section 9(1)(vi) of the Act. He also referred to Memorandum to the Finance Bill, 2012 introducing the said amendment and held that in view of said Explanation the payment was in the nature of 'royalty' and taxable as 'royalty' under section 9(1)(vi) of the Act. The next view of the Assessing Officer was that computer programmes were copyrightable subject matter, just like any other literary work. However, copyright protection applied to software, which would protect only the intellectual property embodied in the software as a mode of expression i.e. the source code and object code of computer programme were entitled to copyright protection. He further observed that only in the case of an outright sale of software, the source code could be modified, tampered, changed according to the discretion of the buyer. In the case of license agreement, the licensee was not supposed to make any changes in the source code and source code could be kept confidential, which gives rise to another meaning to a licensed software that is of a secret formula or process. He was of the view that in such scenario, where the source code was to be kept confidential, then software invariably be included under the category of secret formula or process. He further observed that since the source code or the object code of ITA Nos.905 to 908/PUN/2015 John Deere India P. Ltd.

8. The next issue which was taken up by Assessing Officer was taxability of license fees as 'royalty' under DTAA. He referred to the definition of 'royalty' under DTAA and observed that literary or scientific work obviously included software and there was no requirement of transfer of copyright. Considering the payment as 'royalty' under the DTAA, he reiterated that as source code or the object code of software had been protected under the Copyright Act, the software could even qualify as secret formula or secret process and even by this meaning the payment received for granting software license came under the heading of 'royalty'. The Assessing Officer thus, observed that character of above payments received for right to use software and for support services clearly was 'royalty' as defined in Article 12 of the respective DTAA as well as Explanation 2 to section 9(1)(vi) of the ITA Nos.905 to 908/PUN/2015 John Deere India P. Ltd.

under which Dakota being the owner of certain softwares and provider of services, had provided Deera & Company, access and use software and services. As per clause 2.1, software and any user manuals or on-line help functions relating to the software could be used only by an authorized user. As per clause 2.2 it was clarified that there was no right to copy, modify the said software. Clause 4 further provides that no rights are conveyed while using software. He then referred to another agreement entered into by Deere & Co. with Altair Engineering Inc., copy of which is placed at pages 14 to 17 of factual Paper Book and pointed out that as per clause 2, a limited, non-exclusive, non transferrable license was granted and as per clause 3, there were restrictions on use, installation, copy, modify, etc., except as expressly authorized in the agreement. As per clause 4, the ownership rights in patents, copyrights, trademarks, etc. were owned by M/s. Altair Engineering Inc. and would remain sole and exclusive property of Altair Engineering Inc. He then referred to another agreement entered into by Deere & Co. with ANSYS, Inc., placed at pages 18 to 28 of factual Paper Book, under which also similar conditions were imposed while using software. The assessee also referred to agreement between SAP America Inc. and Deere & Co., placed at pages 166 to 176 of additional Paper Book, which was for the use of SAP, under which also software, source code for the software and documentation, even concept and techniques, ideas, etc. were sole property of licensor. Similar are the terms of agreement with Parametric Technology Corporation (in short 'PTC') and Deere & Co., copy of which is placed at pages 177 to 187 of additional Paper Book, wherein also PTC remains the owner of all software that it develops.

ITA Nos.905 to 908/PUN/2015 John Deere India P. Ltd.

44. The learned Authorized Representative for the assessee again explained that when any person operates the tally, then you download the software and use it and there is no question of paying royalty for using such programme. However, the learned Departmental Representative for the Revenue on the other hand, argued that in case CTR CD is being used, then it is case of royalty; but when any person purchases CTR and ITR CDs or any products, then there is no question of paying any royalty and interest was only to read the decisions and how the said CD is being operated, is of no concern to the purchaser. The person reading books or CD, have no interest, so even for CTR CD, the same principle applies and hence, the contention of learned Departmental Representative for the Revenue in this regard fails. He stressed that how tally CD programme is developed was not concern of the person purchasing the said CD. It is only use / application which is of interest to the user. The object code is provided but same is only for translating the software into readable product. The source code was needed to the person operating it. The learned Authorized Representative for the assessee in this regard placed heavy reliance on the decision of Mumbai Bench of Tribunal in ADIT (IT) Vs. TII Team Telecom International (P) Ltd. (supra) and pointed out that while dealing with DTAA between India and Israel on identical facts, the issue has been considered in paras 15 to 17 of the said decision. He stressed that by grant of non- exclusive license, no exclusive rights over the product were given to the assessee. He countered the contention of learned Departmental Representative for the Revenue that if it is handing over of exclusive rights, then it is case of business or capital gain but all the decisions of various Benches of Tribunal hold otherwise. In case any exclusive right for geographical location and / or period of use are given then the same would amount to 'royalty' and not is the question. He further stressed that the AAR was binding only on the entity in the case of which decision was given and not on others. He in this regard, placed reliance on Hon'ble ITA Nos.905 to 908/PUN/2015 John Deere India P. Ltd.