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2.2 Nature of Appointment. Subject to the terms and conditions set forth herein, Adobe hereby grants Distributor, and Distributor hereby accepts, a non-exclusive, non- transferable license to supply the Software Products in the Territory, and this shall include the right to license Dealers to supply the Software Products in the Territory. This Agreement is not to be interpreted or construed ns an agreement between Adobe and Distributor for the sale or license of the copyright in the Software Products. Distributor shall advise its Dealers and other customers that Distributor has a license to supply the Software Products but not the copyright in the Software Product. Distributor, its Dealers and customers are prohibited from duplicating, reverse engineering, selling or licensing the Software Product or the copyright in the Software Product, or using the Software Product, for any purpose other than of set out in this Agreement. Without prejudice to the foregoing, Adobe reserves the right to: deal directly in the Software Products in the Territory, including the right to license End Users directly, via Internet distribution or otherwise; License other distributors for the Software Products in the Territory; provide technical support in the Territory, and to enter into arrangements or agreements with third parties including but not limited to End Users, Dealers, OEMs, systems integrators or VARs in connection with the Software Products in the Territory.

15. From a bare reading of the aforesaid clauses, it is seen that, what assessee has granted to the Indian distributors is, a non- exclusive, non-transferable license to supply the software products in the Indian Territory. There is no sale or license of the copyright in the software products albeit the distributor has license to supply product, but not the copyright in the software product. Apart from that, the distributors or its dealers or the customers are prohibited from duplicating, reverse engineering, selling or licensing the Adobe Systems Software Ireland Ltd.

· In the case of the Assessee company, the licensee to whom the assessee company has sold/licensed the software were allowed to make only one copy of the software and associated support information for backup purposes with a condition that such copyright would include Infrasoft copyright and all copies of the software would be exclusive properties of Infrasoft. · Licensee was allowed to use the software only for its own business as specifically identified and was not permitted to loan/rent/sale/sub-licence or transfer the copy of software to any third party without the consent of Infrasoft. · The licensee has been prohibited from copying, decompiling, de-assembling, or reverse engineering the software without the written consent of Infrasoft. The licence agreement between the Assessee Company and its customers stipulates that all copyrights and intellectual property rights in the software and copies made by the licensee were owned by Infrasoft and only Infrasoft has the power to grant licence rights for use of the software.