DCIT CIR 3, THANE V. TECHFLOW ENGINEEERING INDIA P.LTD, NAVI MUMBAI

ITA 3099/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1210 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Department
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 22-05-2015
• Court: TRIBUNAL
• Department Lawyers: B C S NAIK
• Keywords: Business income; Salary income; Retrospective amendment
• Section: 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER ITA NO. 3099 /MUM/20 15 : (A.Y : 20 07 - 08 ) ITA NO. 3100 /MUM/20 15 : (A.Y : 20 08 - 09 ) DCIT CIRCLE - 3 R.NO.2, 6 TH FLOOR, ASHAR IT PARK B - WING, WAGLE INDL. ESTATE THANE (W) 400 604 VS. M/S TECH - FLOW ENGINEERS INDIA PVT. LTD. UNIT NO.415, BLDG. NO.2(A - 3) MILLENIUM BUSINESS PARK SECTOR - 1, MAHAPE NAVI MUMBAI 400 710 PAN : AABCT7381F ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI BCS NAIK / RESPONDENT BY : SHRI SANJIV BRAHME / DATE OF HEARING : 19 / 01 /201 7 / DATE OF PRONOUNCEMENT : 12/ 04 / 2017 / O R D E R PER C.N.PRASAD (J.M.) : THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDERS OF THE LD. CIT (APPEALS) - 2, THANE DATED 12.2.2015 FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 ARISING OUT OF THE ASSESSMENT ORDERS PASSED U/S 14 3(3) R.W.S. 14 7 OF THE ACT. 2 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . 2. THE REVENUE HAS RAISED THE FOLLOWING IDENTICAL GROUNDS , EXCEPT FOR THE FIGURES , IN BOTH THESE APPEALS FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN THE CLAIM OF EXEMPTION U/S.10 B TO TH E ASSESSEE AMOUNTING TO RS. 93.46 LACS. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U /S 10 B OF THE I. T.ACT, 1961 WITHOUT APPRECIATING THE FACT THAT THE BUSINESS ACTIVITY OF THE ASSESSEE DOES NO T FALL COMPLETELY UNDER THE ACTIVITIES ENVISAGED IN EXPLANATION 2 TO SECTION LOB OF THE L.T.ACT, 1961, BECAUSE THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF MAKING DESIGNS AND MERELY WORKS OUT THE DETAILS OF S T EEL AND OTHER MATERIALS WHICH WILL BE REQUIRE D FOR FABRICATION AS PER THE DESIGNS RECEIVED FROM ITS CLIENTS. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 10 IN ITA 3101/15 DATED 14.09.2016 AND THE HONBLE TRIBUNAL HELD THAT THE ASSESSEE IS ENGAGED IN PROVIDING IT ENABLED SERVICES BEING ENGINEERING & DESIGN , IS ELIGIBLE FOR DEDUCTION U/S 10B OF THE ACT. COPY OF THE ORDER IS PLAC ED BEFORE US. 4. THE LD. DR STRONGLY PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER IN DENYING DEDUCTION U/S 10B OF THE ACT. 3 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND WE FIND THAT SIMILAR ISSUE AROSE I N THE ASSESSMENT YEAR 2009 - 10 AND THE TRIBUNAL CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO THE REVENUE , DISMISSED THE APPEAL OF THE DEPARTMENT BY CONFIRMING THE ORDER OF THE LD. CIT (APPEALS) IN ALLOWING THE CLAIM FOR DEDUCTION U/S 10B OF THE ACT TO THE ASSESSEE ON ITS BUSINESS INCOME DERIVED FROM THE ENGINEERING SERVICES WHICH INCLUDES DRAWING , DESIGNING AND STRUCTURAL STEEL DETAILING THROUGH USE OF SOFTWARE TO HELP THE DESIGNERS AND FABRICATORS OBSERVING AS UNDER : THIS APPEAL HAS BEEN F I L ED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - I1, THANE DATED 12/02/20 15 RELATING TO ASSESSMENT YEAR 2009 - 2010 BY TAKING THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C IT ( A ) WAS JUSTIFIED IN ALLOWING THE CLAIM OF EXEMPTION U/S 10 B TO THE ASSESSEE AMOUNTING TO R S .74.66 LACS. 2. WHETHER O N THE FACTS AND C I RCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN A LL OWING DEDUCTION U/S. 10 B OF THE I.T.ACT , 1961 WITHOUT APPRECIATING THE FACT THAT THE BUSINESS ACTIVITY OF THE ASSESSEE DOES NOT FALL COMPLETELY UNDER THE ACTIVITIES ENVISAGED IN EXPLANATION 2 TO SECTION 10 B OF THE I.T . ACT, 1961, BECAUSE THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF MA KING DESIGNS AND MERELY WORKS OUT THE DETAILS OF STEEL AND OTHER MATERIALS WHICH WILL BE REQUIRED FOR FABRICATION AS PER THE DESIGNS RECEIVED FROM ITS CL IENTS. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETI NG THE ADDITIONS MADE ON ACCOUNT OF PROPORTIONATE WORKING OF SALARY INCOME IN JAL GAON PLANT AND MAHAPE PLANT, DESPITE FAILURE OF ASSESSEE TO JUST IFY EXORBITANT SALARY AT JA LG AON PLANT (WHERE DEDUCTION IS NOT CLAIMED) VIS - A - VIS MAHAPE UNIT MERELY ON THE GRO UND THAT THE SAME AMOUNT WAS NOT ADDED UNDER THIS HEAD BUYER AND POST TO THE RELEVANT ASSESSMENT YEAR.' 4 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . 2. I HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I NOTED THAT IN THIS CASE THE ASSESSEE FILED THE INCOME TAX RETURN SHOWING NIL INCOME AND CLAIMING THE DEDUCTION U/S 10 B OF THE ACT TO THE EXTENT OF RS.74,67,8521 - . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED THE NET PROFIT AT RS.24,89,289/ - AS PER THE PROFIT & LOSS ACCO UNT AND AFTER THE CLAIM OF EXEMPTION U/S 10 B, LOSS IS SHOWN IN THE COMPUTATION AT RS.46,18,570/ - . THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON AN INCOME OF RS.28,49,280/ - DISALLOWING THE EXEMPTION TO THE ASSESSEE U/S LOB BY HOLDING THAT IN THE LIGHT O F THE PROVISION OF SECTION LOB, BOARD'S NOTIFICATION AND DEFINITION OF CONCERNED TERMINOLOGY I.E. ENGINEERING AND DESIGN FOR STRUCTURAL STEEL DETAILERS, THE ASSESSEE CANNOT BE SAID TO BE ENGAGED IN PROVIDING IT - ENABLES SERVICES BEING ENGINEERING & DESIGN. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). I NOTED THAT BEFORE THE CIT(A) THE ASSESSEE CLAIMED THAT IT IS PROVIDING IT ENABLES SERVICES BEING ENGINEERING & DESIGN AND THEREF O RE, IT CLAIMED EXEMPTION U/S LOB OF THE ACT. THE CIT(A) ALLOWED THE EXEMPTION TO THE ASSESSEE U/S LOB OF THE ACT BY OBSERVING AS UNDER: 5 .1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER, CASE LAW RELIED UPON BY THE APPELLANT AND THE FACTS OF THE CASE. THEREFORE, I PROCEED TO DECIDE THE APPEAL OF THE APPELLANT. I) BASICALLY', THE UNIT AT MAHAPE IS A 100016 EXPORT ORIENTED UNIT TO CARRY ON THE WORK OF ENGINEERING SERVICES WHICH INCLUDES DRAWING, DESIGNING AND MOSTLY STRUCTURAL STEEL DETAILING THROUGH USE OF SOFTWARE TO HELP THE DESIGNERS AND FABRICATORS. THE UNIT BEING IN SOFTWARE TECHNOLOGY PARK IT IS FULLY INTO 100% EQU. THE UNIT WAS GRANTED REGISTRATION, VIDE LETTER NO. STPI/MUM/ V111(1A) (1076) 12004(04)12692, DATED 29TH AP RIL , 2004 & ALSO THE SOFTWARE TECHNOLOGY AUTHOR/TIES HAD A/SO ISSUED INFORMATION TECHNOLOGY CERTIFICATE, VIDE LETTER NO STP/MUM/VIII(1)//9812743 DATED 30TH APRIL, 2004. THE ASSESSEE ALSO PURCHASED THE PREMISES AT SOFTWARE TECHNOLOGY PARK OF INDIA MAHAPE, NAVI MUMBAI. II) AS EXPLAINED BY THE APP ELLANT, THE COMPANY(APPELLANT) RENDER SERVICES OF ENGINEERING AND DESIGNING FOR ITS CLIENTS AT MAHAPE UNIT. THE APPELLANT RECEIVES DESIGN FROM THE ARCHITECT OF THEIR CLIENTS FOR THE WORK OF STRUCTURAL ENGINEERING PARTICULARLY STRUCTURAL STEEL DETAILING AND RCC WORK THROUGH USE OF SOFTWARE, THEREFORE, THE APPELLANT DOES THE WORK OF DETA I LER AND PASS ON TO FABRICATOR AS FABRICATOR WILL NOT BE ABLE TO START 5 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . THE FABRICATION UNLESS IT IS DETAILED OUT BY EXPERT, WHERE THE ENGINEERING AND PROPER DESIGNING IS REQUI RED TO BE CARRIED OUT BY AN EXPERT, THEREFORE, THE ROLE OF THE APPE11ANT IS INVOLVED AT THE VERY CRUCIAL POINT. THIS ENGINEERING AND DESIGNING IS REQUIRED TO BE DONE THROUGH COMPUTER AND THE OUTCOME OF THE ENGINEERING AND DESIGNING WILL GIVE A FINAL SOFTWA RE FOR FINAL USE BY THE CLIENTS. THE APPELLANT IS HO/DING ABOUT 125 SOFTWARE LICENSES WHICH ARE REQUIRED IN THIS ACTIVITY. III) THE APPELLANT RECEIVES THE DRAWINGS FROM THE CLIENTS AND START PREPARING THE MODEL OF THE STRUCTURE BY USING 3D SOFTWARE. AT THE SAME TIME, THE QUANTITATIVE DETAILS ARE ALSO WORKED OUT FOR STEEL ITEM INCLUDING USING HOW TO FIX THE NUT AND BOLT IN THE BEAM OR PILLAR INCLUDING THE QUALITY OR GRADE OF THAT ITEM AND TENSILE STRENGTH OF EACH ITEM. IN THIS PROCESS, THE APPELLANT DESIGN VARIOUS COLUMNS AND BEAMS AND HOW THOSE STEEL RODS WILL PASS THROUGH THE BEAMS AND PILLARS. IT ALSO WORKS OUT STEEL TRUSSES, CRIS S CROSS CONNECT/ON OF VARIOUS PILLARS. THE ENTIRE PROCESS OF ENGINEERING AND DESIGNING HAS ALREADY INCORPORATED IN THE BOOKLET. IN VIEW OF THE AFORESAID EXPLANATION, THE ARCHITECTS AND FABRICATORS DOES THE INITIAL DESIGN BUT FINALLY THE DETAI LER AS EXPLAINED ABOVE DOES THE WORK BY USING COMPUTER SOFTW ARE AND FINALLY DEVELOP SOFTWARE FOR THE STRUCTURAL STEEL DETAILING. IV) THE APPELLANT EMPLOYS ENGINEERS MOSTLY DIPLOMA CIVIL ENGINEERS, MECHANICAL DRAFTSMAN BUT HAD IT' NOT BEEN ENGINEERING TECHNICAL J OB, THE APPELLANT COULD HAVE EMPLOYED ONLY IT PROFESSIONALS. THIS ITSELF PROVES THAT THE KIND OF WORK DONE BY THE APPELLANT IS BASICALLY AN ENGINEERING ACTIVITY. FINAL L Y, BY APPLYING ITS ENGINEERING CAPABILITY, THE FINAL DEVELOPMENT OF DESIGN OCCURS. V) T HE APPELLANT HAS ALSO BROUGHT ON RECORD THE DETAILS OF FEES RECEIVED FROM THE CLIENTS. OUT OF THE SAID LIST, TRU LI NE ARE THE MAJOR DRAFTERS AND FABRICATORS, WSP ARE THE DESIGNERS WHO HAVE OFFLOA D ED THE JOB OF DETAILING TO THE COMPANY. AL NASIR IS THE WORLD BEST FABRICATOR AND COSIRA ARE ALSO THE DESIGNERS AND FABRICATORS AND THEY HAVE OFFLOADED THE JOB OF DETAILING TO THE COMPANY. THE ASSESSEE COMPANY IS ONE OF THE FEW COMPANIES IN INDIA HOLDING MAJOR LICENSES IN THE ENGINEERING DETAILING SOFTWARES. THESE L I CENCES ARE TAKEN FROM FIN L AND. THE 6 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . COMPANY'S STEEL DETAILING SOFTWARE HELPS THE FABRICATORS TO FABRICATE AND CONSTRUCT STEEL STRUCTURES. WE HAVE ALREADY KEPT THE DETAILED BROCHURE ON RECORD. FOR ONE OF THE PROJECTS FOR WHICH THE ASSESSEE COMPANY HAS DONE STEEL DETAILING HAS RECENTLY BEEN NOMINATED FOR GREEN BUILDING AWARD. VI) THE AO IN ITS ASSESSMENT ORDER HAS BROUGHT OUT THE DEFINITION AND DI S CU S SED AS FOLLOWS: - A STEEL DETAILER IS A PERSON WHO PRODUCES DETAILED DRAWINGS FOR STEEL FABRICATORS AND STEEL ERECTORS. THE DETAILE RS PREPARES DETAILED PLANS, DRAWINGS AND OTHER DOCUMENTS FOR THE MANUFACTURE AND ERECTION OF STEEL MEMBERS (COLUMNS, BEAMS, TRUSSES, STAIRS, HANDRAILS, JOISTS, METAL DECKING, ETC) USED IN THE CONSTRUCTION OF BUILDINGS, BRIDGES, INDUSTR IAL PLANTS, AND NON - BUILDING STRUCTURES. DICTIONARY MEANING OF ' D ESIGN' IS PLAN OR DRAWING PRODUCED TO SHOW THE LOOK AND FUNCTION OR WORKINGS OF A BUILDING, GARMENTS, OR OTHER OBJECT BEFORE IT IS MADE. DICT I ONARY MEANING OF ' ENGINEERING' IS THE BRANCH OF S CI ENCE AND TECHNOLOGY CONCERNED WITH THE DESIGN, BUILDING, AND USE OF ENGINES, MACHINES, AND STRUCTURES. THEREFORE, THE KIND OF ENGINEERING WORK DONE AS DETA ILE R BY THE APPELLANT COVERS ALL THESE ASPECTS AS DETAILED BY THE AO. VII) IN FACT, IF ONE SEE TH E KIND OF WORK CARRIED OUT BY THE APPELLANT FOR THEIR CLIENTS, THEY ARE CATERING THE SERVICES AS A STEEL DETA ILE R, DES I GNER BY APPLYI N G ITS ENGINEERING THROUGH COMPUTER. THE KIND OF WORK DONE BY THE APPELLANT IS BASICALLY ASSISTING THE ARCHITECT AND FABRIC ATOR TO GIVE A FINAL STRUCTURE, W ITHOUT THE INVOLVEMENT OF THE APPELLANT, THE STRUCTURE WOULD BE IN COMPLETE. THEREFORE, SUCH ACTIVITY OF THE A P PELLANT IS NOT ASSEMBLING BUT IT REQUIRES ENGINEERING SK I L L AND ACCORDINGLY DESIGN HIGH TECH STRUCTURE OF CLIENT S AROUND THE WORLD. VI I I) THE APPELLANT HAS ALSO REFERRED TO THE INTRODUCTION OF SECTION 1OBB WITH RETROSPECTIVE EFFECT FROM 01.04.1994. WITH THIS INTRODUCTION, IT HAS ENLARGED THE SCOPE OF COMPUTER PROGRAMMING IN SECTION LOB AND IT STANDS SUBSTITUTED WIT HIN THE EXPRESSION COMPUTER PROGRAMMER OR PROCESSING, OR MANAGEMENT OF ELECTRONIC DATA. IX) WITHOUT PREJUDICE TO APPELLANTS' CONTENTION THAT THEIR ACTIVITY IS ENGINEER I NG, EVEN PRESUMING THAT IT IS NOT SO IT STILL CONTINUE TO ENJOY THE - BENEFIT EVEN UNDER EXTENDED MEANING 7 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . CONSIDERING IT AS TRANSFERRING OF ELECTRONIC DATA WHERE AN ASSESSEE DEVELOPS DESIGN, DRAWINGS AND LAYOUTS, WHICH ARE GENERATED BY ASSESSEE'S ENGINEERS B Y USING COMPUTER SOFTWARE FROM THE DATA FURNISHED BY OVERSEAS CLIENTS, IT FALLS UNDER ONE OF THE IT ENABLED SERVICES BEING 'MANAGEMENT OF ELECTRONIC DATA' ENTITLING THE ASSESSEE TO THE EXEMPTION. THIS IS BASED ON PROVISIONS OF SECTION 1058 OF INCOME TAX AC T, 1961 AND THE JUDGMENT OF JURISDICTIONAL MUMBA I TRIBUNAL IN THE CASE OF DY. CIT VS, TECHN IC B (P) LTD. 25 SOT 0133(2009) SUPPORT THE APPELLANTS' CASE. X) IN THE CASE OF THE APPELLANT, THE CLAIM OF DEDUCTION U/S. LOB IS ELIGIBLE AS IT CARRIED ON THE SER VICES OF ENGINEERING AND DESIGNING FOR ITS CLIENTS, AS NOTIFIED, VIDE CBDVS NOTIFICATION NO SO 890(L), DATED 26.09.2000. XI) THE AR FURTHER RELIED ON THE JUDGMENT OF JURISDICTIONAL MUMBAI TRIBUNAL JUDGMENT IN THE CASE OF DY. CIT V. TECNIMONT IC B (P) LT D. 002 ITR (TRIB) 0480 (2010), 25 SOT 0133 (2009). THE FACTS OF THE CASE ARE ALMOST IDENTICAL WITH THAT OF THE APPELLANT AND THEREFORE THE JUDGMENT IS SQUARELY APPLICABLE /N THE CASE OF THE APPELLANT. 5.2 IN VIEW OF THE ABOVE STATED FACTS, THE DISALLOWAN CE OF DEDUCTION CLAIMED U/S. 10 B OF THE ACT BY THE AO IS NOT JUSTIFIED AND ACCORDINGLY, THE CLAIM OF THE APPELLANT IS A//OWED. IN FACT, WITH THE INTRODUCTION OF SECTION LOB B RETROSPECTIVELY WITH EFFECT FROM 1. 4.1994 THUS HAS FURTHER STRENGTHENED THE CLAIM OF THE APPELLANT. 3. BEFORE ME, LEARNED D. R. EVEN THOUGH VEHEMENTLY RELIED O N THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT ADDUCE ANY COGENT MATERI AL OR EVIDENCE WHICH MAY PROVE THAT THE ASSESSEE IS NOT ENGAGED IN ENGINE ERING & DESIGN THROUGH COMPU TER SOFTWARE. I NOTED THAT THE WORD COMP UTER SOFTWARE HAS BEEN DEFINED IN EXPLANATION 2 TO SECTION 10 B OF THE I.T. WHICH READS AS UNDER: 'COMPUTER SOFT W ARE MEANS: - (A) ANY COMPUTER PROGRAMME RECORDED ON ANY DISC, TAPE, PERFORATED MEDIA OTHER INFORMATION STORAGE DEVICE OR (B) ANY CUSTOMIZED ELECTRONIC DATA OR ANY PRODUCT OR SERVICE OF SIMILAR NATURE AS MAY BE NOTIFIED BY THE BOARD WHICH 8 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . IS TRANSMITTED OR EXPORTED FROM INDIA TO ANY PLACE OUTS IDE INDIA BY ANY MEANS. CWT VIDE ITS NOTIFICATION: NO. SO 890('E,), DATED 2610912000, NOTIFIED FOLLOWING SERVICES.' (I) BANK OFFICE OPERATIONS; (II) CALL CENTRES (III) CONTE N T DEVELOPMENT OR ANIMATION; (IV) DATA PROCESSING; (V) ENGINEERING AND DESIGN (V I) GEOGRAPHIC INFORMATION SYSTEM SERVICES (VII) HUMAN RESOURCES SERVICES (VII I) INSURANCE CLAIM PROCESSING; (IX) LEGAL DATABASES; (X) MEDICAL TRANSCRIPTION (XI) PAYROLL ( XII) REMOTE MAINTENANCE; (XIII ) REVENUE ACCOUNTING (XIV) SUPPORT CENTRES AND WEBSITE SERVICES 3. 1 IT IS NOT DENIED THAT THE ASSESSEE COMPANY IS ENGAGED IN STRUCTURAL STEEL DETAILING AND ENGINEERING AND DESIGN ALSO. EVEN NO EVIDENCE TO THE CONTRARY HAS BEEN PLACED BY LEARNED D. R. BEFORE ME. I ALSO NOTED THAT IN THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 IN THE ASSESSMENT FRAMED U/S 143(3), THE ASSESSING OFFICER HAS ACCE PT ED THE CLAIM OF THE ASSE SSEE U/S 10 B AND ALLOWED THE EXEMPTION IN EACH OF THE ASSESSMENT YEAR. THE COPY OF THE ASSESSMENT ORDER IS AVAILABLE AT PAGE NO. 52 - 60 O F THE PAPER BOOK. SINCE THERE IS NO CHANGE IN THE FACTS OF THE CASE AS COMPARED TO THE EARLIER ASSESSMENT YEAR AND THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXEMPTION U/S 10 B OF THE ACT HAS BEEN ACCEPTED IN THE EARL I ER ASSESSMENT YEAR, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT(A) ALLOWING THE EXEMPTION TO THE ASSESSEE U/S LOB OF THE ACT. 6. WE ALSO FIND THAT THE LD. CIT (APPEALS) AFTER ELABORATE EXAMINATION OF THE ISSUE AND BY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH IN THE C ASE OF DCIT VS. TECNIMONT ICB (P) LTD. [2 ITR (TRIB) 480] HELD THAT THE ASSESSEE IS JUSTIFIED IN CLAIMING DEDUCTION U/S 10B OBSERVING AS UNDER : 5. 1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT, THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER, CASE LAW RELIED UPON BY THE 9 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . APPELLANT AND THE FACTS OF THE CASE. THEREFORE, I PROCEED TO DECIDE THE APPEAL OF THE APPELLANT. (I) BASICALLY, THE UNIT AT MAHAPE IS A 100% EXPORT ORIENTED UNIT TO CARRY ON THE, WORK OF ENGINEERING SERVICES WHICH INCLU DES DRAWING, DESIGNING AND MOSTLY STRUCTURAL STEEL DETAILING THROUGH USE OF SOFTWARE TO HELP THE DESIGNERS AND FABRICATORS. THE UNIT BEING IN SOFTWARE TECHNOLOGY PARK IT IS FULLY INTO 100% EOU. THE UNIT WAS GRANTED REGISTRATION, VIDE LETTER NO. STPI/MUM/VI II(A)(1076)/2004(04)/2692, DATED 29TH APRIL, 2004 & ALSO THE SOFTWARE TECHNOLOGY PARK OF INDIA AUTHORITIES HAD ALSO ISSUED INFORMATION TECHNOLOGY CERTIFICATE, VIDE LETTER NO. STPI/MUM/VIII(1)/98/2743 DATED 30TH APRIL, 2004. THE ASSESSEE ALSO PURCHASED THE PREMISES AT SOFTWARE TECHNOLOGY PARK OF INDIA MAHAPE, NAVI MUMBAI. (II) AS EXPLAINED BY THE APPELLANT, THE COMPANY (APPELLANT) RENDER SERVICES OF ENGINEERING AND DESIGNING FOR ITS CLIENTS AT MAHAPE UNIT. THE APPELLANT RECEIVES DESIGN FROM THE ARCHITECT OF THEIR CLIENTS FOR THE WORK OF STRUCTURAL ENGINEERING PARTICULARLY STRUCTURAL STEEL DETAILING AND RCC WORK THROUGH USE OF SOFTWARE, THEREFORE, THE APPELLANT DOES THE WORK OF DETAILER AND PASS ON TO FABRICATOR AS FABRICATOR WILL NOT BE ABLE TO START THE FAB RICATION UNLESS IT IS DETAILED OUT BY EXPERT, WHERE THE ENGINEERING AND PROPER DESIGNING IS REQUIRED TO BE CARRIED OUT BY AN EXPERT, THEREFORE, THE ROLE OF THE APPELLANT IS INVOLVED AT THE VERY CRUCIAL POINT. THIS ENGINEERING AND DESIGNING IS REQUIRED TO B E DONE THROUGH COMPUTER AND THE OUTCOME OF THE ENGINEERING AND DESIGNING WILL GIVE A FINAL SOFTWARE FOR FINAL USE BY THE CLIENTS. THE APPELLANT IS HOLDING ABOUT 125 SOFTWARE LICENSES WHICH ARE REQUIRED IN THIS ACTIVITY. (III) THE APPELLANT RECEIVES THE D RAWINGS FROM THE CLIENTS AND START PREPARING THE MODEL OF THE STRUCTURE BY USING 3D SOFTWARE. AT THE SAME TIME, THE QUANTITATIVE DETAILS ARE ALSO WORKED OUT FOR STEEL ITEM INCLUDING USING HOW TO FIX THE NUT AND BOLT IN THE BEAM OR PILLAR INCLUDING THE QUAL ITY OR GRADE OF THAT ITEM AND TENSILE STRENGTH OF EACH ITEM. IN THIS PROCESS, THE APPELLANT DESIGN VARIOUS COLUMNS AND BEAMS AND HOW THOSE STEEL RODS WILL PASS THROUGH THE BEAMS AND PILLARS. IT ALSO WORKS OUT STEEL TRUSSES, CROSS CROSS CONNECTION OF VARIOU S PILLARS. THE ENTIRE PROCESS OF ENGINEERING AND DESIGNING HAS ALREADY INCORPORATED IN THE BOOKLET. IN VIEW OF THE AFORESAID EXPLANATION, THE ARCHITECTS AND FABRICATORS DOES THE INITIAL DESIGN BUT FINALLY THE DETAILERS AS EXPLAINED ABOVE DOES THE WORK BY USING COMPUTER SOFTWARE AND FINALLY DEVELOP SOFTWARE FOR THE STRUCTURAL STEEL DETAILING. 10 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . (IV) THE APPELLANT EMPLOYS ENGINEERS MOSTLY DIPLOMA CIVIL ENGINEERS, MECHANICAL DRAFTSMAN BUT HAD IT NOT BEEN ENGINEERING TECHNICAL JOB, THE APPELLANT COULD HAVE EMPL OYED ONLY IT PROFESSIONALS. THIS ITSELF PROVES THAT THE KIND OF WORK DONE BY THE APPELLANT IS BASICALLY AN ENGINEERING ACTIVITY. FINALLY, BY APPLYING ITS ENGINEERING CAPABILITY, THE FINAL DEVELOPMENT OF DESIGN OCCURS. (V) THE APPELLANT HAS ALSO BROUGHT ON RECORD THE DETAILS OF FEES RECEIVED FROM THE CLIENTS. OUT OF THE SAID LIST, TRULINE ARE THE MAJOR DRAFTERS AND FABRICATORS, WSP ARE THE DESIGNERS WHO HAVE OFFLOADED THE JOB OF DETAILING TO THE COMPANY. AL NASIR IS THE WORLD BEST FABRICATOR AND COSIRA ARE ALSO THE DESIGNERS AND FABRICATORS AND THEY HAVE OFFLOADED THE JOB OF DETAILING TO THE COMPANY. THE ASSESSEE COMPANY IS ONE OF THE FEW COMPANIES IN INDIA HOLDING MAJOR LICENSES IN THE ENGINEERING DETAILING SOFTWARES. THESE LICENCES ARE TAKEN FROM FINLAND. THE COMPANY'S STEEL DETAILING SOFTWARE HELPS THE FABRICATORS TO FABRICATE AND CONSTRUCT STEEL STRUCTURES. WE HAVE ALREADY KEPT THE DETAILED BROCHURE ON RECORD. FOR ONE OF THE PROJECTS FOR WHICH THE ASSESSEE COMPANY HAS DONE STEEL DETAILING HAS RECENTLY BEE N NOMINATED FOR GREEN BUILDING AWARD. (VI) THE AO IN ITS ASSESSMENT ORDER HAS BROUGHT OUT THE DEFINITION AND DISCUSSED AS FOLLOWS: - A STEEL DETAILER IS A PERSON WHO PRODUCES DETAILED DRAWINGS FOR STEEL FABRICATORS AND STEEL ERECTORS. THE DETAILERS PREPAR ES DETAILED PLANS, DRAWINGS AND OTHER DOCUMENTS FOR THE MANUFACTURE AND ERECTION OF STEEL MEMBERS (COLUMNS, BEAMS, TRUSSES, STAIRS, HANDRAILS, JOISTS, METAL DECKING, ETC) USED IN THE CONSTRUCTION OF BUILDINGS. BRIDGES, INDUSTRIAL PLANTS, AND NON - BUILDING STRUCTURES. DICTIONARY MEANING OF 'DESIGN' IS PLAN OR DRAWING PRODUCED TO SHOW THE LOOK AND FUNCTION OR WORKINGS OF A BUILDING, GARMENTS, OR OTHER OBJECT BEFORE IT IS MADE. DICTIONARY MEANING OF 'ENGINEERING' IS THE BRANCH OF SCIENCE AND TECHNOLOGY CONCERN ED WITH THE DESIGN, BUILDING, AND USE OF ENGINES, MACHINES, AND STRUCTURES. THEREFORE, THE KIND OF ENGINEERING WORK DONE AS DETAILER BY THE APPELLANT COVERS ALL THESE ASPECTS AS DETAILED BY THE AO. (VII) IN FACT, IF ONE SEE THE KIND OF WORK CARRIED OUT BY THE APPELLANT FOR THEIR CLIENTS, THEY ARE CATERING THE SERVICES AS A STEEL DETAILER, DESIGNER BY APPLYING ITS ENGINEERING THROUGH COMPUTER. THE KIND OF WORK DONE BY THE APPELLANT IS BASICALLY ASSISTING THE ARCHITECT AND FAB RICATOR TO GIVE A FINAL STRUCTURE, WITHOUT THE INVOLVEMENT OF THE APPELLANT, THE STRUCTURE WOULD BE IN COMPLETE. THEREFORE, SUCH ACTIVITY OF THE APPELLANT IS NOT ASSEMBLING BUT IT REQUIRES ENGINEERING SKILL AND ACCORDINGLY DESIGN HIGH TECH STRUCTURE OF CLI ENTS AROUND THE WORLD. 11 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . (VIII) THE APPELLANT HAS ALSO REFERRED TO THE INTRODUCTION OF SECTION 101313 WITH RETROSPECTIVE EFFECT FROM 01.04.1994. WITH THIS INTRODUCTION, IT HAS ENLARGED THE SCOPE OF COMPUTER PROGRAMMING IN SECTION LOB AND IT STANDS SUBSTITU TED WITHIN THE EXPRESSION COMPUTER PROGRAMMER OR PROCESSING OR MANAGEMENT OF ELECTRONIC DATA. (IX) WITHOUT PREJUDICE TO APPELLANTS' CONTENTION THAT THEIR ACTIVITY IS ENGINEERING, EVEN PRES UM ING THAT IT IS NOT SO IT STILL CONTINUE TO ENJOY THE BENEFIT EVEN UNDER EXTENDED MEANING CONSIDERING IT AS TRANSFERRING OF ELECTRONIC DATA. WHERE AN ASSESSEE DEVELOPS DESIGN, DRAWINGS AND LAYOUTS, WHICH ARE GENERATED BY ASSESSEE'S ENGINEERS BY USING COMPUTER SOFTWARE FROM THE DATA FURNISHED BY OVERSEAS CLIENTS, IT FALLS UNDER ONE OF THE IT ENABLED SERVICES BEING 'MANAGEMENT OF ELECTRONIC DATA' ENTITLING THE ASSESSEE TO THE EXEMPTION. THIS IS BASED ON PROVISIONS OF SECTION 101313 OF INCOME TAX ACT, 1961 AND THE JUDGEMENT OF JURISDICTIONAL MUMBAI TRIBUNAL IN THE CASE OF DY .CIT VS. TECHN ICB (P) LTD. 25 SOT 0133(2009) SUPPORT THE APPELLANTS' CASE. (X) IN THE CASE OF THE APPELLANT, THE CLAIM OF DEDUCTION U/S. LOB IS ELIGIBLE AS IT CARRIED ON THE SERVICES OF ENGINEERING AND DESIGNING FOR ITS CLIENTS, AS NOTIFIED, VIDE CBDT'S NOTIFICATION NO. SO 890(E), DATED 26.09.2000. (XI) THE AR FURTHER RELIED ON THE JUDGMENT OF JURISDICTIONAL MUMBAI TRIBUNAL JUDGMENT IN THE CASE OF DY. CIT V. TECNIMONT ICB (P) LTD.002 ITR (TRIB) 0480 (2010), 25 SOT 0133 (2009).THE FACTS OF THE CASE ARE ALMOST IDENTICAL WITH THAT OF THE APPELLANT AND THEREFORE THE JUDGMENT IS SQUARELY APPLICABLE IN THE CASE OF THE APPELLANT. 5.2 IN VIEW OF THE ABOVE STATED FACTS, THE DISALLOWANCE OF DEDUCTION CLAIMED U/S.1013 OF THE ACT BY THE AO IS NOT JUSTIFIED AND AC CORDINGLY, THE CLAIM OF THE APPELLANT IS JUSTIFIED FOR CLAIM OF DEDUCTION U/S.10B. IN FACT, WITH THE INTRODUCTION OF SECTION 101313 RETROSPECTIVELY FROM A.Y.1.4.1994 THIS HAS FURTHER STRENGTHEN THE CLAIM OF THE APPELLANT. THE ABOVE OBSERVATIONS AND FIND INGS OF THE LD. CIT (APPEALS) WERE NOT REBUTTED BY THE REVENUE. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 10B OF THE ACT. 7 . IN THE RESULT, APPEAL S OF THE REVENUE ARE DISMISSED. 12 M/S TECH - FLOW ENGINEERS INDIA PVT. LTD . ITA NO S . 3 099 & 3 100 /MUM/20 15, A.Y.20 0 7 - 0 8 AND 2008 - 09 . ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH DAY OF APRIL 2017 . SD/ - SD/ - ( RA JENDRA ) ( C.N.PRASAD ) / / ACCOUNTANT MEMBER JUDICIAL MEMBER / MUMBAI; / DATED 12 .04. 2017 LR, SPS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, (ASSTT. REGISTRAR) , / ITAT, MUM 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. // TRUE COPY / /