PER T.R. SOOD, A.M This appeal is directed against the order dated 24.9.2013 of the Ld CIT(A), Chandigarh.

2. In this appeal the revenue has raised the following grounds:

O n t h e f a c t s a n d c i r c u m s t a n c e s o f t h e c a s e a n d i n l a w t h e L d . C I T ( A ) h a s e r r e d i n d e l e t i n g t h e a d d i t i o n m a d e b y t h e A s s e s s i n g O f f i c e r o n a c c o u n t o f d i s a l l o w a n c e o f d e d u c t i o n u / s 1 0 B b y c o n s i d e r i n g t h a t a m o u n t c l a i m e d a s e x p o r t o f s o f t w a r e i s n o t s a l e p r o c e e d s b u t i s R o y a l t y i n c o m e o n a c c o u n t o f l i c e n c e t o u s e c o m p u t e r 4 s o f t w a r e .

3 After hearing both the parties we f ind that during assessment proceedings the Assessing Officer treated the receipts f rom export of software not as sale receipts but as royalty and accordingly denied exemption u/s10B. 4 On appeal the Ld. CIT(A) decided this issue in favour of assessee by following his predecessors order. 5 Before us. the Ld. D.R. for the Revenue strongly supported the order of the Assessing Officer. 2 7 On the other hand, the Ld. Counsel for the assessee submitted that the issue raised by the revenue is squarely covered against the revenue by the order of the Tribunal in ITAs No. 1023/Chd/2008 and others (copy of the order was placed on record). 8 After considering the rival submissions we f ind that this issue was decided vide para 10 in ITAs No. 1023/Chd/2008 and others in assessees own case which are as under: 10. After considering the rival submissions, we find force in the submissions of the Ld. Counsel for the assessee. The software is generally developed by the Software Company and then the same is sold to various customers. The normal procedure for such sale is through a License agreement by which the customer get to use the software. But the source code is normally not provided because that will enable the customer to make any number of copies and the developer would loose the premium which it can receive by selling it to various customers. We are of the opinion that example of selling of a book would clarify the situation. Whenever a person buys a book, he gets the right to read but he does not get the copyright to produce the copies or any content of such books which does not mean that the books seller has not sold the books or customers has not purchased the books. Similarly it can be said about the usage of Law Journals which are being sold or purchased on license basis. The Honble Supreme Court in the case of Tata Consultancy Services v State of Andhra Pradesh (supra), wherein the question arose whether sale of intellectual property in case of software through a license would amount to sale of goods or not. In this connection, the Honble Supreme Court observed as under:- The term goods, for the purposes of sales tax, cannot be given a narrow meaning. Properties which are capable of being abstracted, consumed and used and/or transmitted, transferred, delivered, stored or possessed, etc., are goods for the purpose of sales tax. The test to ascertain whether a property is goods for the purposes of sales tax is not whether the property is tangible or intangible or incorporeal. The test is whether the concerned item is capable of abstraction, consumption and use and whether it can be transmitted, transferred, delivered, stored, possessed, etc. In the case of software, both canned and uncanned, all of these are possible. Intellectual property when it is put on a media becomes goods. A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in the programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas(in the case of painting) or computer discs or cassettes, and marketed would become goods. There is no difference between sale of a software programme on a CD/floppy disc and sale of music on a cassette/CD or sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the 3 buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing or disc or CD. A transaction of sale of computer software package off the shelf is clearly a sale of goods within the meaning of that term in section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957. The term all materials, articles and commodities in section 2(h) of the Act includes both tangible and intangible / incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed, etc. The software programmes have all these attributes. From the above it is clear that transfer of right to use the software in media form i.e. in the form of C.D. etc was held to be sale of goods. The Honble Supreme Court in the case of B. Suresh where the issue arose whether exploitation of a film right which were transferred by the assessee in India to abroad would constitute export for the purposes of deduction u/s 80HHC of the Act, it was observed as under;

Held, affirming the decision of High Court, that the telecasting rights fell in the category of articles of trade and commerce and hence within the category of merchandise and the transfer of the said rights by way of lease fell within the meaning Sale and would attract section 80HHC.

Following the above order we decide this issue against the revenue.

9. In the result, appeal of the revenue is dismissed. Order pronounced in the open court on 27.6.2014 Sd/- Sd/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27.6.2014 SURESH Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR