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6.3.Agreement with,Clarity International,a supplier of software from Australia,contains following main clauses:

2.1 Grant of License in consideration of the License Fee, Vendor hereby grants unto Reliance and its Affiliates' nonexclusive irrevocable, worldwide, and unlimited, royalty free and perpetual license for Use of the Software and all Upgrades and the Documentation. Reliance shall be entitled to Use the Software, Documentation, and all related documentation, in the course of its business operation. Vendor acknowledges that delivery of the Documentation is a material obligation of the Vendor and hereby agrees to provide, simultaneous with the delivery of the Software. I (one) complete, unabridged copy of the Documentation in printed format and / or machine-readable form as it exists at that point in time. The Vendor further agrees to provide updated copies of the documentation as and when they become available during this Agreement 2.2 Ownership Reliance hereby acknowledges that Vendor is and shall remain the sole and exclusive Owner of the rights, title and property in Software and the Source Code to the Software, save and except on the occurrence of any of the release events set out in Clause 10.1 [Source Code Escrow].

iii)the subject software had no independent value of its own,

iv)copyrights in the software were transferred to the customers,

v)access to the "source codes" in the software was granted to the assessee,

vi)the payment for software was not related to the productivity, use or number of subscribers,

vii)the customers did not have the right to commercially exploit the software,

viii)the software supply was in the nature of transfer of copyrighted article and not transfer of "a copyrighted right.

7.1.We do not have even slightest doubt in our mind that the answers to questions number four and five,at paragraph 7,are plain and simple NO,if the agreements entered in to by the assessee with the non-resident suppliers of softwares are analysed.Similarly,remaining question will have positive answers.In the earlier paragraphs,we have summarised the main characteristics of the agreements.All the agreements stipulate that the assessee would be using the software for 'operation of its wireless network only'.Thus,it is clear that it was prevented from utilising the software for commercial uses.Had the ultimate authority been with the assessee,it could have used the software in the manner it wanted.It could make copies of Software or the documentation or parts thereof for archival purposes only. Restriction on copying the software clearly establishes that the suppliers of the softwares were the sole and exclusive owner of the rights, title and property in Software and the Source Codes.Software.Agreements forbid the assessee from transferring,assigning,sub-licensing, using by outsourcing,decompiling, reverse-engineering,disassembling/decoding the software. None of the agreement talks of transferring of copyright to the assessee by the suppliers- rather it is clearly mentioned in the agreements that copyright would remain with them. Agreements provide returning of the copies of the software to the vendors upon termination or cancellation of the agreements.So,we hold that the consideration paid by the assessee to the suppliers for acquiring copy of software was not for the 'use of copyright or transfer of right to use of copyright' the payment was made for the 'copyrighted article' and that the payments made by the assessee to the vendors of software cannot be taxed as royalty.