IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH - ITAT
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH - ITAT IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH - ITAT
14(ii) to communicate the work to the public;(iii) to issue copies of the work to the public not beingcopies already in circulation;(iv) to include the work in any cinematograph film;(v) to make any adaptation of the work;(vi) to do in relation to an adaptation of the work any ofthe acts specified in relation to the work in sub-clause (i)to (iv);(d) in the case of cinematograph film,-(i) to make a copy of the film, including a photograph ofany image forming part thereof;(ii) to sell or give on hire, or offer for sale or hire, anycopy of the film, regardless of whether such copy hasbeen sold or given on hire on earlier occasions;(iii) to communicate the film to the public;(e) in the case of a sound recording,-(i) to make any other sound recording embodying it;(ii) to sell or give on hire, or offer for sale or hire, anycopy of the sound recording regardless of whether suchcopy has been sold or given on hire on earlier occasions;(iii) to communicate the sound recording to the public.Explanation – For the purposes of this section, a copy which has been soldonce shall be deemed to be a copy already in circulation.”
15It is clear from the above definition that a computer programme mentionedin clause (b) of the section has all the rights mentioned in clause (a) and inaddition also the right to sell or give on commercial rental or offer for sale orfor commercial rental any copy of the computer programme. This additionalright was substituted w.e.f. 15.1.2000. The difference between the earlierprovision and the present one is not of any relevance. What is to be noted isthat the right mentioned in sub-clause (ii) of clause (b) of Section 14 isavailable only to the owner of the computer programme. It follows that ifany of the cellular operators does not have any of the rights mentioned inclauses (a) and (b) of section 14, it would mean that it does not have anyright in a copyright. In that case, the payment made by the cellular operatorcannot be characterized as royalty either under the Income-tax Act or underthe DTAA. The question, therefore, to be answered is whether any of theoperators can exercise any of the rights mentioned in the above provisionswith reference to the software supplied by the assessee.Further, the Delhi Special Bench of ITAT in paras 162, 168 and 169 held asfollows:162. A conjoint reading of the terms of the supply contract and theprovisions of the Copyright Act, 1957 clearly shows that the cellularoperator cannot exploit the computer software commercially which is thevery essence of a copyright. In other words a holder of a copyright ispermitted to exploit the copyright commercially and if he is not permitted todo so then what he has acquired cannot be considered as a copyright. In thatcase, it can only be said that he has acquired a copyrighted article. A smallexample may clarify the position. The purchaser of a book on income-taxacquires only a copyrighted article. On the other hand, a recording companywhich has recorded a vocalist has acquired the copyright in the musicrendered and is, therefore, permitted to exploit the recording commercially.In this case the music recording company has not merely acquired acopyrighted article in the form of a recording, but has actually acquired acopyright to reproduce the music and exploit the same commercially. In the
- Page 5: 54. Aggrieved, the Revenue is in ap
- Page 8 and 9: 8iv) The assessee cannot provide ac
- Page 10: 103. Limited WarrantiesTIBCO warran
- Page 13: 13(i) to reproduce the work in any
- Page 17 and 18: 17The tests laid down in para 168 o
- Page 19 and 20: 19copyright, does not amount to use
- Page 21: 2114. In the result, all the appeal
15It is clear from the above definition that a computer programme mentionedin clause (b) of the section has all the rights mentioned in clause (a) and inaddition also the right to sell or give on commercial rental or offer for sale orfor commercial rental any copy of the computer programme. This additionalright was substituted w.e.f. 15.1.2000. The difference between the earlierprovision and the present one is not of any relevance. What is to be noted isthat the right mentioned in sub-clause (ii) of clause (b) of Section 14 isavailable only to the owner of the computer programme. It follows that ifany of the cellular operators does not have any of the rights mentioned inclauses (a) and (b) of section 14, it would mean that it does not have anyright in a copyright. In that case, the payment made by the cellular operatorcannot be characterized as royalty either under the Income-tax Act or underthe DTAA. The question, therefore, to be answered is whether any of theoperators can exercise any of the rights mentioned in the above provisionswith reference to the software supplied by the assessee.Further, the Delhi Special Bench of <strong>ITAT</strong> in paras 162, 168 and 169 held asfollows:162. A conjoint reading of the terms of the supply contract and theprovisions of the Copyright Act, 1957 clearly shows that the cellularoperator cannot exploit the computer software commercially which is thevery essence of a copyright. In other words a holder of a copyright ispermitted to exploit the copyright commercially and if he is not permitted todo so then what he has acquired cannot be considered as a copyright. In thatcase, it can only be said that he has acquired a copyrighted article. A smallexample may clarify the position. The purchaser of a book on income-taxacquires only a copyrighted article. On the other hand, a recording companywhich has recorded a vocalist has acquired the copyright in the musicrendered and is, therefore, permitted to exploit the recording commercially.In this case the music recording company has not merely acquired acopyrighted article in the form of a recording, but has actually acquired acopyright to reproduce the music and exploit the same commercially. In the
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