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Showing contexts for: computer includes computer software in Reliance Industries Ltd, Mumbai vs Department Of Income Tax on 18 May, 2016Matching Fragments
(vi) the rendering of any services in connection with the activities referred to in sub- clauses (i) to (iv), (iva) and (v).
Explanation 3.--For the purposes of this clause, "computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme or any customized electronic data.
Explanation 4.--For the removal of doubts, it is hereby clarified that the transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred.
(c) which is in relation to a payment made by a non resident, even then, what the ‗royalty', under the Act, may constitute will be the income payable in respect of any ‗right', ‗property' or ‗information' used or services utilized for the purpose of business or profession by such resident to a non resident. Further, vide various explanations introduced subsequently; the above definition of the ‗royalty' has been further expanded. ‗Explanation 4' inserted by Finance Act, 2012, provides that the transfer of rights in respect of any right, property or information includes and has always included the right for use or right to use a computer software including granting of a license. We find that so far as Income Tax Act is concerned, „computer software‟ has neither been included nor is deemed to be included within the scope or definition of „literary work‟ under section 9(1)(vi) of the Act. The term 2529/M/2008 & Others M/s. Reliance Industries Ltd. & Others „literary work‟ has been separately mentioned under clause (v) to „Explanation 2‟ to include the consideration paid for the same within the scope of royalty, whereas, the „Explanation 4‟ has broadened the scope of clauses (a) (b) and (c) of section 9(1)(vi) to include „computer software‟ under the definition of „right‟, „property‟ or „information.‟ Hence, the computer software has been recognized as a separate item not only in 2nd proviso to clause (vi) but in „Explanation 4‟ also and has been included in the definition and within the scope of the words „right‟, „property‟ or „information‟ as provided under clauses (b) and (c) to section 9(1)(vi) . The term „computer software‟ has not been included in the meaning and scope of the term „literary work‟ under clause (v) to Explanation 2.
Even import of one infringed copy of the work for private and domestic work of the importer has been excluded from the scope of infringement of Copyright under the Act.
41. It is also pertinent to mention here that the Income Tax Act does not specifically include the „computer software‟ in the term „literary work‟ and under such circumstances, if we apply the provisions of Income Tax to define the scope of „Literary Work‟, then perhaps the „computer software‟ will be out of the scope of the term royalty as defined under the DTAA. However, if we apply the Copyright Act, then the „computer software‟ will have to be included in the term „literary work‟ but to constitute „royalty‟ under the treaty, the consideration should have been paid for the use of or the right to use the copyright in the „literary work‟ and not the „literary work‟ itself.
51. The Ld. A.R. of the assessee, at this stage, has raised another important argument. He has submitted that the purchase orders for the softwares were made much prior to the year 2012. The dates of purchase orders have been mentioned in the 4th column of the table drawn in initial paras of this order. He has submitted that explanation 4 to section 9(1)(vi) has been inserted by Finance Act, 2012 with retrospective effect 01.06.1976, vide which the right for use or right to use a computer software including granting of license has been included in the definition of the term right, property or information, the consideration paid for which has been deemed to be income by royalty under section 9(1)(vi) of the Act. He has stated that the said explanation though preceded with the phrase ‗it is hereby clarified' and is followed by the words ‗includes' and ‗has always included' yet the said explanation cannot be applied retrospectively. He has stated that vide said explanation, computer software has been specifically added into the definition of right, property or information. However, prior to the insertion of explanation 4 to section 9(1)(vi), no such interpretation as has ever been done by any court of law to include computer software in the definition of right, property or information under section 9(1)(vi) of the Act. He has further invited our attention to sub clause (v) to Explanation 2 (as reproduced and discussed above) under which the consideration paid for the transfer of all or any rights in respect of any copyright in literary, artistic or scientific work was to be considered in the 2529/M/2008 & Others M/s. Reliance Industries Ltd. & Others definition of royalty. He has further stated that the above clause (v) to Explanation 2 to section 9(1)(vi) as discussed above was in paramateria to the definition of royalty as provided under the treaty. He, therefore, has contended that in view of this, the assessee was not supposed to deduct TDS on the remittance made for the purchase of software prior to the bringing of amendment/insertion of Explanation 4 to the section 9(1)(vi) of the Act, as per the interpretation of the relevant provision done by various courts, the assessee was under bonafide belief that no TDS was deductable as the consideration paid for purchase off the shelf/shrink wrapped software would not fall in the definition of royalty. Even the above view of the assessee has been subsequently confirmed by the various decisions of the Tribunal in the own case of the assessee. He, bringing our attention to the orders dated 29.10.2010 (supra) and 26.11.2010 (supra) and also various other orders in the case of assessees in the earlier assessment years has contended that the different benches of the Tribunal have upheld the findings in relation to the interpretation of the provisions of section 9(1)(vi) made by the first appellate authority [CIT(A)] which has been summed up in the following points: