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Showing contexts for: customized software in Dcit, Circle 1(2) (Intl. Taxn.) , Blr, ... vs Blue Yonder Inc, Bangalore on 12 September, 2024Matching Fragments
The submission on the various grounds of appeal filed by revenue are as under :
1. The ITAT for AY 2015-15 in assessee's case has relied on Supreme Court decision of Engineering Analysis to hold that receipts from sale of software are not royalty .
2. The software sold by assessee is capable of being customised as per the requirement of the customer.
3. The assessee in his submission dated 26.09.2021 had submitted a sample agreement with Asian Paints Limited . A copy of the same is enclosed as Annexure 1. Para 5 of the agreement makes it clear that the software may also include embedded third party software or in other words, customization of software is possible.
5. A copy of assessee's submission on the issue of taxability of software receipts is enclosed as Annexure 2.
6. The assessee is into the sale of customized software and not merely a shrink wrap software . Enquiries u/s 133(6)) for AY 21-22, (which is just 2 years prior to AY 19-20 which is under consideration ) has revealed that the assessee is not selling shrink wrap software, but customized software. A copy of draft assessment order for AY 21-22 is enclosed as Annexure 3."
IT(IT)A Nos. 1412 to 1414/Bang/2024 14.5 He submitted that the Revenue, in the written submissions filed on 07.09.2023, has attempted to distinguish the above decisions alleging that the Assessee provides customized software solutions over cloud based on the specific needs of its customers and not merely shrink-wrapped software. For this purpose, the draft assessment order for assessment year 2021-22 has been relied upon.
14.6 He submitted that firstly, an assessment order for a subsequent assessment year, that too a draft one, where the Company has contested the underlying addition to total income, cannot be the basis to decide the issue for the current assessment year. Further, it is also submitted that the material/ agreements gathered as a part of assessment proceedings for a subsequent assessment year cannot be used for concluding on the taxability of underlying transactions in a prior assessment year.
14.7 Secondly, there is no customization involved. The Assessee is engaged in sale of standardized software. There are various standard modules that the Assessee has already created in the software that it licenses. Depending on the sector that the customer belongs to and the requirement laid down, the modules are provided to the customer. There is no further customization of the software codes etc. based on customer's requirements. He submitted that the Assessee does not provide any rights to the customer to exploit the software sold and the software is used by the customer in their capacity as an end/ ultimate user.