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4 QAD Inc., USA is a software development company and is the owner of the source code of ERP software MFG/PRO. The software is Gauri Gaekwad 3/34 MVXA-21-2015.doc purchased by the users/customers directly from QAD Inc., USA. QAD has full control and maintains the core software and has outsourced only the bug fixing to appellant. Appellant's employees work on the QAD servers located in USA through remote access as per the work statement. The employees of appellant assigned to QAD were performing services as per the instructions and under the supervision and control of QAD. 5 QAD has not delivered its software to appellant and only QAD possessed all rights of ownership in respect of MFG/PRO software. The software was supposed to function in a pre-determined manner. In case the software did not provide the desired results (in case of a bug/error) appellant would resolve only the error/bug.

There is nothing to even indicate that QAD Inc., USA has outsourced or entrusted appellant with any work which involves any development of the said ERP, or work that results in a different commercial commodity, i.e., something other than MFG/PRO. QAD Inc., USA is a software development company and has full control over the core software (source code) itself and gives low-cost bug fixing services to companies like appellant. Even for such bug fixing there is complete control by QAD Inc. in that they have a full-time program manager working in appellant's office. 



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14                Therefore, assuming that any software has been developed or

there is some change in the source code, no new or saleable software comes into existence. Appellant's employees had merely worked on the old software remotely as the same is located on QAD USA's server situated in the USA. The alteration in such software is to meet the requirements of the QAD India's customer, which at all times belonged to the QAD India. There is no sale to QAD India, and no sale was involved in the contract. In fact, the terms of the contract makes it clear that the contract was one for rendering service. In fact, even before rendering any service, appellant had given up their right to any development to the software. The consideration involved is not for the sale of any software but for the services rendered by appellant's employees. All IT property rests with QAD India. 15 In Sasken Communication Technologies Limited V/s. Joint Commissioner of Commercial Taxes (Appeals)-3 Bangalore and Anr. 12 paragraphs 39 to 50 read as under :

40. The assessee agrees, that all patentable and unpatentable, inventions, discoveries and ideas which are made or conceived as a direct or indirect result of the programming or other services performed under the agreement shall be considered as works made for hire and shall remain exclusive property of the client and the assessee shall have no ownership interest therein.

Promptly; upon conception of such an invention, discovery, or idea the assessee agrees to disclose the same to the client and the client shall have full power and authority to file and prosecute patent applications thereon and maintain patents thereon. At the request of the client, the assessee agrees to execute the documents including but not limited to copyright assignment documents, take all rightful oaths and to perform such acts as may be deemed necessary or advisable to confirm on the client all right, title and interest in and to such inventions, discoveries or ideas, and all patent applications, patents, and copyrights thereon. Both the source code of developed software and hardware projects of worldwide Intellectual Property in and each shall be owned by the client. The assessee acknowledges that all deliverables shall be considered as works made for hire and the client will have all right, title including worldwide ownership of Intellectual Property Rights in and each deliverable and all copies made from it. If acceptable to the client, the client may reuse all or any of the components developed by the assessee outside the scope of the those contracts for the execution of the projects under this agreement.