Indian Kanoon - Search engine for Indian Law

3. The assessee is a company incorporated in the USA and a tax resident of USA. The assessee filed tax resident certificate before the Assessing Officer and is therefore entitled to the benefit of the Double Taxation Avoidance Agreement between India and USA (DTAA). The assessee develops and markets 3D mechanical design solution in various countries. The shrink-wrap application software developed and sold by assessee is called 'Solidworks 2003' which is used for 3D modeling. The software creates 3D models either from scratch or from existing 2D data. The designed data prepared by Solidworks 2003 software provides data which is 100% editable. The software is provided in a packed form to the customers in India alongwith and pursuant to an end user license agreement (EULA). The agreement is not physically signed but built in as part of the installation process. The license agreement pops up on computer screen and must be accepted by the user before the user can operate the software. The software provided to the user is a single user license whereby the software can be loaded in one computer or can be used many times (called multiple user license) which can be loaded on several computers. Solidwork owns and will retain all copyright, trade mark, trade secrete and other proprietary rights. The end user is not permitted to make any modification or make works derivative of the software and user is not entitle to reverse engineer, decompile, disassemble or otherwise discover the source code of the software.

• Samsung Electronics Co. Ltd. Vs. ITO, 93 TTJ 658 • Motorola Incorporation, 270 ITR (AT) 62 • Sonata Information Technologies Ltd., ITA No. 1561 to 1580/Bang/2004 dated 31.1.2006.

9. Computer programme cannot also be treated as patent and invention. Computer programne cannot said to be an invention and therefore cannot be said to be covered by the Patient Act. Computer software cannot also be treated as process. End user of the software in the case of shrink-wrap software does not have any access to source code. He has only right to use the software for his personal or business use. For all the above reasons, we are of the view that learned CIT(A) was right in concluding that payment received by the assessee was not in the nature of royalty and cannot therefore be brought to tax. We uphold the order of learned CIT(A) on this issue and dismiss Ground No. 1&2 raised by the revenue.