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23. Ground No. 3 relates to taxability of income from sale of shrink- wrapped software as 'Royalty'. The ld AR for the assessee submits that the assessee sold certain off-the self /shrink wrapped software to TCS for an amount of Rs. 4,05,24,300/-. The main features of contract for sale of shrink wrapped software by assessee to TCS were viz, (i) the assessee granted a personal, non-transferable and non-exclusive license to TCS,

(ii) the assessee is the owner of the patents, copyright, trade secret, trademark and any other intellectual property right which subsist in the software, (iii) the title of the software shall remain with the assessee, (iv) the TCS was not allowed to make copy or print out of the software except for reasonable number of copies but only for its own internal back-up, archival, development, training and testing purpose, (v) TCS was not allowed to reverse engineer, decompile or dissemble the software,(vi) TCS was not allowed to sell, assigned, licensing lease, rent, lend, transmit network or otherwise distribute, transfer or make available the software in any manner to the third party, (vi) the Software was to be used for internal purpose only and was not allowed to use the software to provide services through a service bureau or other arrangements,(vii) TCS was expressly prohibited from adapting, modifying merging, revising, improving, translating, upgrading, enhancing and creating derivative works of the software for any purpose, including error correction or any other type of maintenance.