No royalty on payment for hardware supplied with software forming inseparable part

DCIT Vs Park Air Systems Ltd. (ITAT Mumbai)

In the present case, assessee is engaged in design, manufacture and installation of ground-based systems for use in air traffic control and air defence applications in the implementation of advanced air traffic control systems. Under the purchase order issued by Airport Authority of India, assessee supplied transmitters and receivers with accessories, during the year under consideration. The purchase order involves

(a) supply of hardware (including embedded software);

(b) FAT, training and installation consultancy charges;

(c) customs clearance charges; and

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