M/s Miracle Software Systems India P Ltd., Visakhapatnam V. The Ad CIT, Range-3., Visakhapatnam

ITA 476/VIZ/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 2704 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-10-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T L PETER
• Assessee Lawyers: Y SURYACHANDRA RAO
• Keywords: Set aside
• Section: 207

Judgement Text

ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NOS. 409 & 195/VIZAG/2007; ITA NO.476/VIZAG/200 8 ASSESSMENT YEAR : 2003 - 04 ; 2004 - 05 AND 2005 - 06 MIRACLE SOFTWARE SYSTEMS INDIA (P) LTD., VISAKHAPATNAM ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1) VISAKHAPATNAM (APPELLANT) PAN NO: AABCM 4988 R (RESPONDENT) ITA NO. 229/VIZAG/2007 & ITA NO.495/VIZAG/2008 ASSESSMENT YEAR: 2004-05 AND 2005-06 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1) VISAKHAPATNAM MIRACLE SOFTWARE SYSTEMS INDIA (P) LTD., VISAKHAPATNAM (APPELLANT) PAN NO: AABCM 4988 R APPELLANT BY: SHRI Y. SURYACHANDRA RAO, CA RESPONDENT BY: SHRI T.L. PETER, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: ALL THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF LEARNED CIT (A)-I VISAKHAPATNAM AND THEY RELATE TO THE ASSESSMENT YEA RS 2003-04 TO 2005-06. 2. THE GROUNDS URGED IN BOTH THE REVENUE AS WELL AS ASSESSEES APPEAL PERTAIN TO THE MANNER OF COMPUTATION OF DEDUCTION U NDER SECTION 10A OF THE ACT IN ALL THESE THREE YEARS. 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE S TATED IN BRIEF. THE ASSESSEE COMPANY IS CARRYING ON THE BUSINESS OF DEV ELOPMENT AND EXPORT OF SOFTWARE, MANPOWER TRAINING, AND CONSULTANCY SERVIC ES. THE SOFTWARE EXPORT UNIT IS LOCATED AT BHOGAPURAM, VIZIANAGARAM. THE OT HER TWO SERVICES ARE CARRIED OUT FROM ITS HEAD OF OFFICE LOCATED IN VISA KHAPATNAM AND THEY ARE ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 2 OF 14 PROVIDED TO THE DOMESTIC CUSTOMERS. THE ASSESSEE CL AIMED EXEMPTION UNDER SECTION 10A OF THE ACT IN RESPECT OF PROFIT EARNED FROM THE BUSINESS OF EXPORT OF SOFTWARE. THERE IS NO DISPUTE WITH REGARD TO THE EL IGIBILITY OF THE ASSESSEE TO CLAIM THE SAID DEDUCTION. THERE IS DISPUTE WITH RE GARD TO THE QUANTUM OF DEDUCTION. THE AMOUNT OF DEDUCTION CLAIMED BY THE ASSESSEE WAS REDUCED BY THE ASSESSING OFFICER. THE LEARNED CIT (A) DISMISSE D THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-04 AND PARTLY ALLOWED THE APPEALS IN OTHER TWO YEARS. HENCE THE ASSESSEE IS IN APPEAL FO R ALL THE THREE YEARS IN RESPECT OF ISSUES WHICH WERE DECIDED AGAINST IT. IN THE SIMILAR MANNER, THE REVENUE IS IN APPEAL FOR TWO YEARS ON THE ISSUES WH ICH WERE DECIDED AGAINST IT. 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND ALS O PERUSED THE RECORD. WE NOTICE THAT SUB SECTION 4 OF SECTION 10A PROVIDES F OR THE MANNER OF COMPUTATION OF DEDUCTION UNDER SECTION 10A. FOR TH E SAKE OF CONVENIENCE, WE REPRODUCE BELOW THE SAID SUB SECTION. (4) FOR THE PURPOSES OF SUB-SECTIONS (1) AND (1A), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUT ER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUS INESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURN OVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEA RS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAK ING. THERE IS NO DISPUTE BETWEEN THE PARTIES THAT FOR TH E PURPOSE OF ARRIVING AT THE ELIGIBLE DEDUCTION UNDER SECTION 10A, FOLLOWING FOR MULA IS TO BE ADOPTED. EXPORT TURNOVER DEDUCTION UNDER SECTION 10A = PROFITS OF BUSI NESS X -------------------- TOTAL TURNOVER HOWEVER, THERE IS DISAGREEMENT BETWEEN THE PARTIES WITH REGARD TO THE COMPONENTS OF RECEIPTS THAT SHOULD FORM PART OF THE PROFITS OF BUSINESS, EXPORT TURNOVER AND THE TOTAL TURNOVER AND THE SAME HAS LED TO THE DIFFERENCE IN THE QUANTUM OF DEDUCTION THAT WAS WOR KED OUT BY BOTH THE PARTIES. IT IS PERTINENT TO NOTE THAT THE TERM EXP ORT TURNOVER ONLY HAS BEEN DEFINED UNDER SECTION 10A AND THE OTHER TWO TERMS H AVE NOT BEEN DEFINED IN THAT SECTION OR IN THE DEFINITION SECTION OF THE AC T. IN VIEW OF THE ABOVE, WE ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 3 OF 14 PROCEED TO RESOLVE THE DISPUTE WITH REGARD TO THE M EANING OF THE TERMS PROFITS OF BUSINESS; TOTAL TURNOVER AND EXPORT TURNOVER. 4. THE DISPUTE BETWEEN THE PARTIES ON THE MEANING OF THE TERM PROFITS OF BUSINESS IS WITH REGARD TO THE INTEREST RECEIVED F ROM BANK DEPOSITS AND OTHER INCOME. THE ASSESSEE CLAIMED BEFORE THE LEARNED CI T(A) IN ASSESSMENT YEARS 2003-04 AND 2004-05 THAT THE SAID RECEIPTS SHOULD B E INCLUDED IN THE PROFITS OF BUSINESS. HOWEVER, THE LEARNED CIT (A) DECIDED TH E ISSUE AGAINST THE ASSESSEE IN THE ASSESSMENT YEAR 2003-04 SINCE THE A SSESSEE HAD CONCEDED BEFORE THE ASSESSING OFFICER THAT THEY SHALL NOT FO RM PART OF THE PROFITS OF BUSINESS. HOWEVER, IN THE ASSESSMENT YEAR 2004-05 , THE LEARNED CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING THAT THE SAID RECEIPTS SHALL FORM PART OF PROFITS OF BUSINESS. HENCE, ON THIS ISSUE, THE ASSESSEE IS IN APPEAL BEFORE US FOR ASSESSMENT YEAR 2003-04 AND TH E REVENUE IS IN APPEAL BEFORE US FOR THE ASSESSMENT YEAR 2004-05. 4.1 HOWEVER, DURING THE COURSE OF HEARING, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT HE IS NOT PRESSING TH IS ISSUE IN THE ASSESSMENT YEAR 2003-04 AND ALSO SAID HE DOES NOT HAVE OBJECTI ON IN DECIDING THIS ISSUE AGAINST THE ASSESSEE IN THE REVENUES APPEAL FOR TH E ASSESSMENT YEAR 2004-05 ALSO, I.E. THE ASSESSEE IS ACCEPTING THAT THE INTER EST RECEIVED FROM BANK DEPOSITS AND OTHER INCOME HAS TO BE TREATED AS INCO ME FROM OTHER SOURCES AND ACCORDINGLY THEY SHALL NOT BE INCLUDED IN THE BUSIN ESS PROFITS. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OBJECT TO THE S UBMISSIONS OF THE ASSESSEE. ACCORDINGLY WE HOLD THAT THE INTEREST RECEIVED FROM BANK DEPOSITS AND OTHER INCOME SHOULD BE ASSESSED UNDER THE HEAD INCOME FR OM OTHER SOURCES AND ACCORDINGLY THEY SHALL NOT FORM PART PROFIT FROM B USINESS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 10A OF THE A CT. 5. THE NEXT POINT OF DISAGREEMENT IS WITH REGARD TO THE TERM TOTAL TURNOVER. THE ASSESSING OFFICER HAS INCLUDED THE RECEIPTS BY WAY OF INTEREST FROM BANK DEPOSITS AND OTHER INCOME IN THE TOTAL TU RNOVER FOR THE ASSESSMENT ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 4 OF 14 YEAR 2003-04 ONLY AND THE SAID RECEIPTS WERE NOT IN CLUDED IN OTHER TWO YEARS. ACCORDING TO THE ASSESSEE, THE SAID RECEIPTS SHOULD NOT BE INCLUDED IN THE TOTAL TURNOVER. FURTHER, ACCORDING TO THE ASSESSEE, THE T OTAL TURNOVER OF THE SOFTWARE EXPORT DIVISION SHOULD ONLY BE TAKEN AS THE TOTAL TURNOVER, WHERE AS ACCORDING TO THE REVENUE, THE TURNOVER OF THE AS SESSEE FROM ALL THE UNITS HAVE TO BE AGGREGATED FOR ARRIVING AT THE TOTAL TU RNOVER. BASED ON THE RIVAL SUBMISSIONS MADE AT THE TIME OF HEARING AND ON ASSI MILATION OF THE RELEVANT FACTS, WE ARE OF THE VIEW THAT THE DISPUTES BETWEEN THE PARTIES ON THE TERM TOTAL TURNOVER GIVE RAISE TO THE FOLLOWING QUESTI ONS. A) INTEREST RECEIVED FROM BANK DEPOSITS AND OTHER IN COME WHETHER TO BE INCLUDED IN THE TOTAL TURNOVER OR NOT. B) WHETHER THE DEDUCTION UNDER SECTION 10A IS ASSES SEE SPECIFIC OR UNDERTAKING SPECIFIC. C) WHETHER THE TOTAL TURNOVER SHALL INCLUDE TURNOVE R RELATING TO OTHER DIVISIONS OF THE ASSESSEE OR NOT. 5.1 THE FIRST QUESTION IS WHETHER THE INTEREST REC EIVED FROM BANK DEPOSITS AND OTHER INCOME SHALL FORM PART OF TURNOVER OR NOT. A S STATED EARLIER, IN THE ASSESSMENT YEAR 2003-04, THE ASSESSING OFFICER HAD INCLUDED THE ABOVE SAID RECEIPTS IN THE TOTAL TURNOVER. HOWEVER, IN THE SU CCEEDING ASSESSMENT YEAR 2004-05, THE SAID RECEIPTS WERE NOT INCLUDED IN THE TOTAL TURNOVER. IN THE PRECEDING PARAGRAPHS, WE HAVE ALREADY HELD THAT THE RECEIPTS IN THE NATURE OF INTEREST FROM BANK DEPOSITS AND OTHER INCOME ARE AS SESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. SINCE THESE RECEIPTS ARE NOT TO BE ASSESSED UNDER THE BUSINESS HEAD, IN OUR VIEW, THEY SHALL NO T FORM PART OF TOTAL TURNOVER ALSO. WE ORDER ACCORDINGLY. 6. THE NEXT QUESTION IS WHETHER THE DEDUCTION U NDER SECTION 10A IS ASSESSEE SPECIFIC OR UNDERTAKING SPECIFIC. THE ASSESSING OFF ICER IS OF THE VIEW THAT THE DEDUCTION IS ASSESSEE SPECIFIC, WHERE AS THE CLAIM OF THE ASSESSEE IS THAT IT IS UNDERTAKING SPECIFIC. IF THE SAID SECTION IS ASSESS EE SPECIFIC, THEN THE TOTAL TURNOVER SHALL INCLUDE THE TURNOVER FROM ALL THE UN ITS AND OPERATIONS CARRIED ON BY THE ASSESSEE. IF, HOWEVER, IT IS HELD TO BE UNDE RTAKING SPECIFIC, THEN THE ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 5 OF 14 TOTAL TURNOVER SHALL INCLUDE ONLY THE TURNOVER PERT AINING TO THE UNDERTAKING PERFORMING THE DEVELOPMENT AND EXPORT OF SOFTWARE O NLY. 6.1 TO RESOLVE THIS QUESTION, IT IS PERTINENT T O EXTRACT SUB SECTION 4 OF SECTION 10A AND WE EXTRACT THE SAME BELOW: (4) FOR THE PURPOSES OF SUB-SECTIONS (1) AND (1A), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUT ER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUS INESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURN OVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEA RS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAK ING. IT IS ALSO PERTINENT TO NOTE THAT THE ABOVE SAID SUB SECTION 4 OF SECTION 10A WAS SUBSTITUTED BY FINANCE ACT 2001 W.E.F. 1.4.2001 AND PRIOR TO ITS SUBSTITUTION, SUB SECTION 4 READ AS UNDER: (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFI TS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE S HALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUC H ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. IT CAN BE NOTICED THAT, BEFORE ITS SUBSTITUTION BY F INANCE ACT 2001, THE DEDUCTION HAS TO BE COMPUTED BY TAKING THE TOTAL TU RNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE, I.E., THE TURNOVER OF ALL THE UNITS AND OPERATIONS HAVE TO BE AGGREGATED. HOWEVER, AFTER THE AMENDMEN T MADE BY THE FINANCE ACT 2001, THE TOTAL TURNOVER SHALL COMPRISE OF THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING ONLY. THE AMENDED SECTION IS APPLICABLE FOR THE YEARS UNDER CONSIDERATION. HENCE, THE TOTAL T URNOVER SHALL COMPRISE OF THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY TH E UNDERTAKING ONLY FOR THE PURPOSE OF CALCULATION OF ELIGIBLE AMOUNT OF DEDUCT ION UNDER SECTION 10A OF THE ACT. 7. THE NEXT QUESTION IS WHETHER THE TURNOVER RELA TING TO OTHER DIVISIONS OF THE ASSESSEE COMPANY SHOULD BE INCLUDED IN THE TOTAL TURNOVER FOR THE PURPOSE OF CALCULATION OF DEDUCTION UNDER SECTION 10A OF TH E ACT. ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 6 OF 14 7.1 THE CLAIM OF THE ASSESSEE IS THAT ITS EXPORT DI VISION LOCATED IN THE BHOGAPURM VILLAGE IS AN UNDERTAKING AND HENCE THE TOTAL TURNOVER SHALL INCLUDE THE TOTAL TURNOVER OF THE EXPORT DIVISION O NLY AND ACCORDINGLY THE TURNOVER PERTAINING TO THE OTHER UNITS LOCATED IN V ISAKHAPATNAM SHOULD NOT BE AGGREGATED FOR ARRIVING AT THE TOTAL TURNOVER. IT IS PERTINENT TO NOTE THAT THE INCOME TAX ACT HAS NOT DEFINED THE TERM UNDERTAKING . HOWEVER, THE COURTS HAVE INTERPRETED THE SAID TERM AND THE ASSESSEE HA S PLACED RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TE XTILE MACHINERY CORPORATION LTD. VS. CIT (1977) (107 ITR 195). THE SAID DECISI ON HAS BEEN RENDERED UNDER SECTION 15C OF THE 1922 ACT. IN THAT CASE, THE ASS ESSEE THEREIN WAS ENTITLED TO A DEDUCTION UNDER SECTION 15C OF THE 1922 ACT IN RE SPECT OF THE NEW UNIT ESTABLISHED FOR MANUFACTURE OF ARTICLES. THE HON'B LE APEX COURT HAD THE OCCASION TO DWELL UPON THE MEANING OF THE TERM UND ERTAKING AND THE RELEVANT OBSERVATIONS OF THE HON'BLE APEX COURT ARE EXTRACTE D BELOW: IT IS CLEAR THAT THE PRINCIPAL BUSINESS OF THE ASS ESSEE IS HEAVY ENGINEERING IN THE COURSE OF WHICH IT MANUFACTURES BOILERS, WAGONS, ETC. IF AN INDUSTRIAL UNDERTAKING PRODUCES CERTAIN MACHINES OR PARTS WHICH ARE, BY THEMSELVES, IDENTIF IABLE UNITS BEING MARKETABLE COMMODITIES AND THE UNDERTAK ING CAN EXIST EVEN AFTER THE CESSATION OF THE PRINCIPAL BUSINESS OF THE ASSESSEE, IT CANNOT BE ANYTHING BUT A NEW AN D SEPARATE INDUSTRIAL UNDERTAKING TO QUALIFY FOR APPR OPRIATE EXEMPTION UNDER SECTION 15C. THE PRINCIPAL BUSINESS OF THE ASSESSEE CAN BE CARRIED ON EVEN IF THE SAID TWO ADDITIONAL UNDERTAKINGS CEASE TO FUNCTION. AGAIN, T HE CONVERSE IS ALSO TRUE. THE FACT THAT THE ARTICLES PRODUCED BY THE TWO UNDERTAKINGS ARE USED BY THE BOILER DIVISION OF THE ASSESSEE WILL NOT WEIGH AGAINST HOLDING THAT THESE ARE NEW A ND SEPARATE UNDERTAKINGS. ON THE OTHER HAND, THE FACT THAT A PO RTION OF THE ARTICLES PRODUCED IN THESE TWO NEW INDUSTRIAL UNDER TAKINGS HAD BEEN SOLD IN THE OPEN MARKET TO OTHERS IS A CIRCUMS TANCE IN FAVOUR OF THE ASSESSEE THAT THE NEW INDUSTRIAL UNITS CAN F UNCTION ON THEIR OWN. USE OF THE ARTICLES BY THE ASSESSEE IS NOT DEC ISIVE TO DENY THE BENEFIT OF SECTION 15C. SECTION 15C PARTIALLY EXEMPTS FROM TAX A NEW INDUST RIAL UNIT WHICH IS SEPARATE PHYSICALLY FROM THE OLD ONE, THE CAPITA L OF WHICH AND THE PROFITS THEREON ARE ASCERTAINABLE. THERE IS NO DIFFICULTY TO HOLD THAT SECTION 15C IS APPLICABLE TO AN ABSOLUTELY NEW UNDERTAKING FOR THE FIRST TIME STARTED BY AN ASSESSEE. THE CASES WH ICH GIVE RISE TO ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 7 OF 14 CONTROVERSY ARE THOSE WHERE THE OLD BUSINESS IS BEI NG CARRIED ON BY THE ASSESSEE AND A NEW ACTIVITY IS LAUNCHED BY H IM BY ESTABLISHING NEW PLANTS AND MACHINERY BY INVESTING SUBSTANTIAL FUNDS. THE NEW ACTIVITY MAY PRODUCE THE SAME COMMOD ITIES OF THE OLD BUSINESS OR IT MAY PRODUCE SOME OTHER DISTINCT MARKETABLE PRODUCTS, EVEN COMMODITIES WHICH MAY FEED THE OLD B USINESS. THESE PRODUCTS MAY BE CONSUMED BY THE ASSESSEE IN H IS OLD BUSINESS OR MAY BE SOLD IN THE OPEN MARKET . ONE THING IS CERTAIN THAT THE NEW UNDERTAKING MUST BE AN INTEGRA TED UNIT BY ITSELF WHEREIN ARTICLES ARE PRODUCED AND AT LEAST A MINIMUM OF TEN PERSONS WITH THE AID OF POWER AND A MINIMUM OF TWENTY PERSONS WITHOUT THE AID OF POWER HAVE BEEN EMPLOYED. SUCH A NEW INDUSTRIALLY RECOGNIZABLE UNIT OF AN ASSESSEE CANNOT BE SAID TO BE RECONSTRUCTION OF HIS OLD BUSINESS SINCE THERE IS NO TRANSFER OF ANY ASSETS O F THE OLD BUSINESS TO THE NEW UNDERTAKING WHICH TAKES PLACE W HEN THERE IS RECONSTRUCTION OF THE OLD BUSINESS. FOR THE PURPOSE OF SECTION 15C THE INDUSTRIAL UNITS SET UP MUST BE NEW IN THE SENS E THAT NEW PLANTS AND MACHINERY ARE ERECTED FOR PRODUCING EITH ER THE SAME COMMODITIES OR SOME DISTINCT COMMODITIES. 7.2 THE HON'BLE MADRAS HIGH COURT HAD ALSO AN O CCASION TO DEAL WITH THE MEANING OF THE TERM UNDERTAKING IN THE CASE OF CI T VS. PREMIER COTTON MILLS (240 ITR 434 (MAD)) IN THE CONTEXT OF SEC. 80J OF T HE ACT. THE RELEVANT OBSERVATIONS OF THE SAID COURT ARE EXTRACTED BELOW: THERE IS, THUS, NO REQUIREMENT IN SECTION 80J OF TH E ACT THAT THE UNDERTAKING IN RESPECT OF WHICH THE DEDUCT ION CAN BE CLAIMED MUST HAVE BEEN SET UP AS AN INDEPEND ENT UNIT . AS NOTICED EARLIER, THE UNIT BEING INDEPENDENT BY ITSELF WILL NOT ENTITLE SUCH A UNIT TO CLAIM THE BENEFIT. THE E SSENTIAL REQUIREMENT FOR CLAIMING THE BENEFITS UNDER THE PRO VISION IS THE INSTALLATION OF PLANT AND MACHINERY AND THE MANUFAC TURE OR PRODUCTION OF ARTICLES WITH THE AID OF SUCH PLANT A ND MACHINERY. THE PLANT AND MACHINERY SO INSTALLED IS NOT TO BE T HE PLANT AND MACHINERY TRANSFERRED FROM AN EXISTING BUSINESS. THE REQUIREMENTS OF THE SECTION ARE MET IF THE ASSE SSEE IS ABLE TO DEMONSTRATE THAT THE ASSESSEE HAS ESTABLISHED AN IN DUSTRIAL UNDERTAKING WHICH MANUFACTURES OR PRODUCES ARTICLE WITH THE AID OF PLANT AND MACHINERY NEWLY INSTALLED IN THAT UNDE RTAKING. THE TERM INDUSTRIAL UNDERTAKING IS NOT DEFINED IN SECTI ON 80J OF THE ACT. THE WORD UNDERTAKING IS NOT TO BE EQUATED WITH TH E LEGAL ENTITY WHICH MAY OWN UNDERTAKING. A SINGLE LEGAL ENTITY MAY OWN AND OPERATE MORE THAN ONE INDUSTRIAL UNDERTAKING AND THE FACT OF COMMON OWNERSHIP DOES N OT RENDER UNDERTAKINGS WHICH ARE OTHERWISE CAPABLE OF BEING ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 8 OF 14 SEPARATE INTO A COMMON UNDERTAKING. WHAT IS OF RELEVANCE IS THE EXISTENCE OF ALL THE FACILITIES INCLUDING FA CTORY BUILDINGS, PLANT, MACHINERY GODOWNS AND THINGS WHIC H ARE INCIDENTAL TO THE CARRYING ON OF MANUFACTURE OR PRODUCTION, ALL OF WHICH WHERE TAKEN TOGETHER ARE C APABLE OF BEING REGARDED AS AN INDUSTRIAL UNDERTAKING. 7.3 IN ASSESSMENT YEAR 2005-06, THE ASS ESSING OFFICER HAS CONSIDERED THE CONCEPT OF COMMON MANAGEMENT IN SUPPORT OF HIS DECI SION TO INCLUDE THE TURNOVER OF THE OTHER UNITS IN THE TOTAL TURNOVER . FROM THE DECISION OF HON'BLE COURTS CITED ABOVE, IT IS CLEAR THAT THE CO NCEPT OF COMMON OWNERSHIP/MANAGEMENT IS NOT RELEVANT FOR DECIDING W HETHER A UNIT IS A SEPARATE UNDERTAKING. THE HON'BLE MADRAS HIGH CO URT HAS HELD CLEARLY THAT THE WORD UNDERTAKING SHOULD NOT BE EQUATED WITH T HE LEGAL ENTITY WHICH MAY OWN UNDERTAKING. THUS THE LEGAL ENTITY, WHICH IS NORMALLY ASSESSED TO TAX, IS A BROADER ONE AND THE UNDERTAKING IS A PA RT OF THE LEGAL ENTITY FOR THE PURPOSE OF TAXATION. FOR THAT REASON, IT HAS BEEN HELD BY THE HON'BLE MADRAS HIGH COURT THAT A SINGLE ENTITY MAY OWN AND OPERATE MORE THAN ONE INDUSTRIAL UNDERTAKING. IT HAS ALSO BEEN CLEARLY HELD THAT WH AT IS RELEVANT IS THE EXISTENCE OF ALL THE FACILITIES INCLUDING FACTORY B UILDINGS, PLANT, MACHINERY GODOWNS AND THINGS WHICH ARE INCIDENTAL TO THE CARR YING ON OF MANUFACTURE OR PRODUCTION, ALL OF WHICH WHERE TAKEN TOGETHER ARE C APABLE OF BEING REGARDED AS AN INDUSTRIAL UNDERTAKING, I.E. THE UNDERTAKING SHOULD BE A SELF CONTAINED UNIT. 7.4 NOW TURNING INTO THE FACTS OF THE CASE, IT IS ALREADY NOTICED THAT THE ASSESSEE IS HAVING THREE SEPARATE UNITS, VIZ., A MA NPOWER TRAINING DIVISION CALLED GURUKULAM, A CONSULTANCY SERVICES DIVISION AND A SOFTWARE DEVELOPMENT CENTRE. THE FIRST TWO DIVISIONS ARE LOC ATED AT ITS HEAD OF OFFICE IN VISAKHAPATNAM AND THIRD DIVISION, VIZ., SOFTWARE DE VELOPMENT CENTRE IS LOCATED AT BHOGAPURAM VILLAGE, VIZIANAGARAM. THE SAID SOFT WARE DIVISION IS AN EXPORT ORIENTED UNDERTAKING REGISTERED WITH VISAKHAPATNAM SPECIAL ECONOMIC ZONE. THE SAID SOFTWARE DIVISION DEVELOPS AND EXPORTS THE SOFTWARE AND THE ASSESSEE IS CLAIMING DEDUCTION UNDER SECTION 10A IN RESPECT OF THE PROFITS GENERATED IN ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 9 OF 14 THAT DIVISION. THERE APPEARS TO BE NO DISPUTE WITH REGARD TO THE FACT THAT THE SOFTWARE DIVISION LOCATED AT BHOGAPURAM IS A SELF C ONTAINED UNIT, HAVING ALL THE REQUIRED INFRASTRUCTURE TO BE CALLED AS AN UNDERTA KING. IN ANY CASE, THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THA T THE ASSESSEE HAS OBTAINED SEPARATE CENTRAL EXCISE REGISTRATION NUMB ER FOR THAT DIVISION AND FURTHER THE SAID DIVISION HAS BEEN ACKNOWLEDGED BY THE MINISTRY OF COMMERCE & INDUSTRY AS THE INFORMATION TECHNOLOGY ENABLED SE RVICES UNIT. HENCE, CONSIDERING THE DECISIONS OF HON'BLE COURTS EXTRACT ED ABOVE WITH REGARD TO THE MEANING OF THE TERM UNDERTAKING, WE HOLD THAT THE S OFTWARE DIVISION OF THE ASSESSEE COMPANY LOCATED AT BHOGAPURAM HAS TO BE TA KEN AS A SEPARATE UNDERTAKING FOR THE PURPOSE OF CALCULATING DEDUCTIO N UNDER SECTION 10A OF THE ACT AND CONSEQUENTLY, WE HOLD THAT THE TURNOVER PER TAINING TO THE OTHER TWO UNITS SHOULD NOT BE INCLUDED IN TOTAL TURNOVER FO R THE PURPOSE OF CALCULATION OF DEDUCTION UNDER SECTION 10A OF THE ACT. 8. THE NEXT POINT OF DIFFERENCE IS WITH REGARD TO THE MEANING OF THE TERM EXPORT TURNOVER. THE SAID TERM HAS BEEN DEFINED CLAUSE (IV) TO EXPLANATION 2 OF SECTION 10A AND THE SAME IS EXTRACTED BELOW: (IV) EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPECT OF EXPORT (BY THE UNDERTAKING) OF ARTICLES OR THINGS O R COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB -SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHA RGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTIC LES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICE S OUTSIDE INDIA; HENCE FOR THE PURPOSE OF CALCULATING THE DEDUCTION U/S 10A, THE EXPORT TURNOVER HAS TO BE REDUCED BY THE FREIGHT, TELECOMM UNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FORE IGN EXCHANGE, IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA. ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 10 OF 14 8.1 THE ASSESSEE HAS PAID IN ALL THE YEARS UNDE R CONSIDERATION CERTAIN AMOUNTS IN US DOLLARS TO MCI WORLD COM FOR THE IPCL L EASED LINES, WHICH WERE USED FOR COMMUNICATION BETWEEN THE ASSESSEE AND ITS ASSOCIATE CONCERN NAMED MIRACLE SOFTWARE, USA. THE ASSESSING OFFICER HAS TREATED THE SAID COMMUNICATION CHARGES AS THE AMOUNT ATTRIBUTABLE FO R THE DELIVERY OF COMPUTER SOFTWARE AND HAS ACCORDINGLY DEDUCTED THE SAME FROM THE EXPORT TURNOVER. THE CLAIM OF THE ASSESSEE BEFORE THE TAX AUTHORITIE S WAS THAT THE AMOUNT SO PAID FOR IPCL LEASED LINES ARE ONLY COMMUNICATION EX PENSES, I.E. THEY HAVE BEEN INCURRED FOR INTER OFFICE COMMUNICATION BETWEE N MIRACLE SOFTWARE, USA (ASSOCIATED COMPANY) AND THE ASSESSEE COMPANY AND T HERE IS NO DIRECT DELIVERY EXPENSES AS THE DELIVERY IS MADE BY ITS AS SOCIATE CONCERN IN USA. HOWEVER, THE SAID CLAIM DID NOT FIND FAVOUR WITH TH E LEARNED CIT(A) ALSO. 8.2 HOWEVER, IN THE ASSESSMENT YEAR 2005-06, TH E ASSESSEE CONTENDED BEFORE THE LEARNED CIT(A) THAT THE IMPUGNED TELECOM MUNICATION CHARGES SHOULD BE DEDUCTED BOTH FROM THE EXPORT TURNOVER AS WELL AS THE TOTAL TURNOVER, WHILE ARRIVING AT THE DEDUCTION UNDER SEC TION 10A OF THE ACT AND THE SAME WAS ACCEPTED BY THE LEARNED CIT(A). HOWEVER, THE ASSESSEE DID NOT MAKE SIMILAR CLAIM IN THE EARLIER TWO YEARS, VIZ., ASSESSMENT YEAR 2003-04 AND 2004-05. HENCE THE ASSESSEE HAS FILED A PETITION F OR ADMISSION OF THE SAID CLAIM AS AN ADDITIONAL GROUND WITH THE PLEA THAT TH E SAME IS PURELY A LEGAL GROUND AND DOES NOT REQUIRE ANY INVESTIGATION OF FA CTS AND IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF NTPC LTD. VS. CIT (229 ITR 383). HAVING RE GARD TO THE SUBMISSIONS MADE BY THE ASSESSEE, WE ADMIT THE ADDITIONAL GROUN D RAISED BY THE ASSESSEE IN THE ASSESSMENT YEARS 2003-04 AND 2004-05. THE P OINT OF DISAGREEMENT WITH REGARD TO THE TERM EXPORT TURNOVER GIVES RISE TO THE FOLLOWING TWO QUESTIONS. A) WHETHER THE TELECOMMUNICATION CHARGES INCURRED BY THE ASSESSEE SHOULD BE DEDUCTED ONLY FROM EXPORT TURNOVER OR BOT H FROM EXPORT TURNOVER AS WELL AS TOTAL TURNOVER. B) WHETHER THE TELECOMMUNICATION CHARGES INCURRED B Y THE ASSESSEE CAN FULLY BE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE. ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 11 OF 14 8.3 WE HAVE ALREADY NOTICED THAT THE TERM EXPORT T URNOVER HAS BEEN DEFINED IN SECTION 10A OF THE ACT; HOWEVER, THE TER M TOTAL TURNOVER HAS NOT BEEN DEFINED IN THAT SECTION. THE CLAIM OF THE ASSE SSEE IS THAT IF THE COMMUNICATION EXPENSES INCURRED BY IT ARE TO BE RED UCED FROM THE EXPORT TURNOVER; IT SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER ALSO. THE SAID CLAIM IS BASED ON THE REASON THAT BOTH THE NUMERATOR AND DENOMINATOR IN A FORMULA SHOULD BE OF SAME CATEGORY AND SHOULD COMPRISE OF S AME INGREDIENTS IN ORDER TO ARRIVE AT A RATIONAL FIGURE OF ELIGIBLE DEDUCTIO N. IN SUPPORT OF ITS CLAIM, THE ASSESSEE HAS RELIED UPON THE DECISION OF BANGALORE BENCH OF ITAT IN THE CASE OF TATA ELXSI LTD VS. A.C.I.T. REPORTED IN (2008) 1 15 TTJ (BANG) 423. THE OBSERVATIONS MADE IN THAT CASE WHICH ARE RELEVANT T O THE ISSUE BEFORE US ARE EXTRACTED BELOW: 10. THE TERM TOTAL TURNOVER NO DOUBT IS NOT DEFI NED IN S.10A. HOWEVER, THE TERM TOTAL TURNOVER WOULD BE AN ENLARGEMENT O F THE TERM EXPORT TURNOVER. IN OTHER WORDS, THE SUM TOTAL EXPORT TUR NOVER AND DOMESTIC TURNOVER WOULD CONSTITUTE TOTAL TURNOVER. THE FOR MULA FOR COMPUTATION OF THE DEDUCTION UNDER S.10A, WHEN RESTATED IN THE ABOVE MANNER, WOULD BE AS UNDER: THE TERM EXPORT TURNOVER WOULD THEN BE A COMPONE NT OR PART OF THE DENOMINATOR, THE OTHER COMPONENT BEING THE DOME STIC TURNOVER. IN OTHER WORDS, TO THE EXTENT OF EXPORT TURNOVER T HERE WOULD BE A COMMONALITY BETWEEN THE NUMERATOR AND DENOMINATOR O F THE FORMULA. IN VIEW OF THE COMMONALITY, THE UNDERSTAND ING SHOULD ALSO BE THE SAME. IN OTHER WORDS, IF THE EXPORT TURNOVE R IN THE NUMERATOR IS TO BE ARRIVED AT AFTER EXCLUDING CERTA IN EXPENSES, THE SAME SHOULD ALSO BE EXCLUDED IN COMPUTING THE TOTA L TURNOVER IN THE DENOMINATOR. THOUGH THERE IS NO DEFINITION OF T HE TERM TOTAL TURNOVER IN S.10A, THERE IS ALSO NOTHING IN THE SA ID SECTION TO MANDATE THAT WHAT IS EXCLUDED FROM THE NUMERATOR (E XPORT TURNOVER) WOULD NEVERTHELESS FORM PART OF THE DENOM INATOR. ONE WOULD HAVE TO APPLY CONSISTENT STANDARD IN UNDERSTA NDING AND APPLYING A TERM, PARTICULARLY WHEN, SUCH TERM, VIZ. , EXPORT TURNOVER HAS AN INDEPENDENT FUNCTION AND AT THE SAME TIME A PART OF A LARGER TERM VIZ., TOTAL TURNOVER. THUS, IF SOME EXPENSES, FOR ANY REASON ARE EXCLUDED IN ARRIVING AT THE EXPORT TURNOVER, THE SA ME SHOULD BE REDUCED FROM TOTAL TURNOVER ALSO. 11. EVEN OTHERWISE, IN THE CONTEXT OF S.80HHC WHER E UNDER A SIMILAR FORMULA IS APPLICABLE, IT HAS BEEN HELD THA T THE COMPONENTS ENTERING INTO EXPORT TURNOVER AND THE TOTAL TURNOVE R SHOULD BE THE SAME. IN OTHER WORDS, ONE SHOULD COMPARE APPLES WITH APPLES AND ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 12 OF 14 NOT APPLES WITH ORANGES. VARIOUS HIGH COURTS HAVE H ELD SO IN THE FOLLOWING CASES: (I) CIT VS. SUDARSHAN CHEMICALS INDUSTRIES LTD.(2000 ) 163 CTR (BOM) 596: (2000) 245 ITR 769 (BOM). (II) CIT VS. CHLORIDE INDIA LTD (2002) 178 CTR (CAL ) 432: (2002) 256 ITR 625 (CAL); (III) CIT VS. BHARAT EARTH MOVERS LTD. (2004) 188 C TR (KAR) 488: (2004) 268 ITR 232 (KAR.) (IV) CIT VS. LAKSHMI MACHINE WORKS (2007) 210 CTR (S.C) 1: (2007) 290 ITR 667 (S.C) (V) CIT VS. LOTUS TRANS TRAVELS () LTD (2007) 207 CTR ( DEL) 105: (2007) 290 ITR 1( DEL) 11(A). IN THE CASE OF CIT VS. SUDARSHAN CHEMICALS I NDUSTRIES LTD. (SUPRA) AT P.773 THE HON'BLE BOMBAY HIGH COURT HELD AS UNDER: FURTHER, THE MEANING OF EXPORT TURNOVER IN CL.(B) OF EXPLN. TO S.80HHC, THEREFORE, CLEARLY SHOWS THAT EXPORT TURNO VER DID NOT INCLUDE EXCISE DUTY AND SALES TAX. THE EXPORT TURNO VER IS THE NUMERATOR IN THE ABOVE FORMULA WHEREAS THE TOTAL TU RNOVER IS THE DENOMINATOR. THE ABOVE FORMULA HAS BEEN PRESCRIBED TO ARRIVE AT THE PROFITS FROM EXPORT. IN THE CIRCUMSTANCES, THE ABOVE TWO ITEMS, NAMELY, SALES-TAX AND EXCISE DUTY CANNOT FORM PART OF THE TOTAL TURNOVER. IN FACT, IF THE DENOMINATOR WAS TO INCLUD E THE ABOVE TWO ITEMS AND IF THE NUMERATOR EXCLUDED THE ABOVE TWO I TEMS THEN THE FORMULA WOULD BECOME UNWORKABLE. 11(B). IN THE CASE OF CIT VS. CHLORIDE INDIA LTD. ( SUPRA) AT P.630 THE HON'BLE CALCUTTA HIGH COURT HELD AS UNDER: WE FIND NO REASON TO DIFFER FROM THE VIEW OF THE D IVISION BENCH OF THE BOMBAY HIGH COURT EXPRESSED IN THE ABOVE NOTED CASE (CIT VS. SUDARSHAL CHEMICALS INDUSTRIES LTD. (SUPRA) IN OUR VI EW, OCTROI, EXCISE DUTY AND SALES TAX CANNOT HAVE ANY ELEMENT O F PROFIT AND AS SUCH THOSE ITEMS CANNOT BE INCLUDED IN THE TOTAL TU RNOVER. IF CONTRARY VIEW IS TAKEN THAT WILL MAKE THE OBJECT SO UGHT TO BE ACHIEVED BY THE LEGISLATURE NUGATORY. 11(C). IN THE CASE OF CIT VS. BHARAT EARTH MOVERS L TD (SUPRA) AT P.238 THE HON'BLE KARNATAKA HIGH COURT HELD AS UNDE R: CONSEQUENTLY, IT FOLLOWS THAT IF THE EXPORT TURNOV ER DOES NOT HAVE THE ELEMENTS OF SALES TAX OR EXCISE DUTY, THE TOTAL TURNOVER SHOULD ALSO NOT HAVE THE SAID INPUTS. IN THE CIRCUMSTANCES , TO INCLUDE EXCISE DUTY AND SALES TAX FOR ARRIVING AT THE TOTAL TURNOV ER, WHEN SALES TAX AND EXCISE DUTY CANNOT FORM PART OF EXPORT TURNOVER , WOULD BE ILLOGICAL AND ARBITRARY. ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 13 OF 14 THEREFORE, FROM THE AFORESAID DISCUSSION AND THE DE CISIONS RENDERED BY VARIOUS HIGH COURTS, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD SUCCEED IN THE ALTERNATIVE SUBMISSIONS MADE. ACCORD INGLY WE DIRECT THE A O TO EXCLUDE THE EXPENDITURE INCURRED IN FORE IGN CURRENCY BY THE ASSESSEE FROM THE TOTAL TURNOVER. IT IS ORDERED ACCORDINGLY. THE VIEW OF THE TRIBUNAL STATED ABOVE WAS CONSISTEN TLY FOLLOWED BY THE BANGALORE BENCH OF THE ITAT IN THE FOLLOWING CASES ALSO: A) M/S I-GATE GLOBAL SOLUTIONS LTD., (ITA NO.248 & 249/BANG/2007) B) I SEVA SYSTEMS LTD., (ITA NO.401/BANG/2007) 8.4 WE NOTICE THAT THE LEARNED CIT (A), IN THE ASSESSMENT YEAR 2005-06, HAS ACCEPTED THIS CLAIM OF THE ASSESSEE ON THE BASIS OF THE DECISIONS OF BANGALORE BENCH OF ITAT AND ALSO BY PLACING RELIANCE ON THE D ECISION OF HYDERABAD BENCH OF ITAT IN THE CASE OF ITO WARD-I(2) VS. D.E.BLOCK I NDIA SOFTWARE LTD (ITA NO.893 AND 894/HYD/2006), WHEREIN A SIMILAR VIEW WA S EXPRESSED. IN THE INSTANT CASE BOTH THE NUMERATOR AND DENOMINATOR PER TAIN TO THE EXPORT TURNOVER ONLY, I.E. THE TOTAL TURNOVER OF THE UNDER TAKING IS ONLY THE EXPORT TURNOVER. HENCE, CONSISTENT WITH THE VIEW TAKEN BY OTHER BENCHES OF THE TRIBUNAL CITED ABOVE, WE ALSO HOLD THAT THE COMMUNI CATION CHARGES THAT WERE DEDUCTED FROM THE EXPORT TURNOVER SHOULD ALSO BE DE DUCTED FROM THE TOTAL TURNOVER ALSO. 8.5 ANOTHER CLAIM OF THE ASSESSEE IS THAT THE TELEC OMMUNICATION CHARGES INCURRED BY IT ARE NOT FULLY ATTRIBUTABLE TO THE DE LIVERY OF SOFTWARE. WE DO NOT FIND IT NECESSARY TO ADJUDICATE THIS ISSUE FOR THE REASON THAT ONCE THE SAID COMMUNICATION EXPENSES ARE DEDUCTED FROM BOTH EXPOR T TURNOVER AND TOTAL TURNOVER, THERE WILL NOT BE ANY REDUCTION IN THE AM OUNT DEDUCTION ELIGIBLE UNDER SECTION 10A. HENCE, WE DECLINE TO ADDRESS THIS ISSU E. 9. SINCE THE DEDUCTION ALLOWABLE UNDER SECTION 10A NEEDS TO BE RECALCULATED, IN THE LIGHT OF PRINCIPLES DISCUSSED ABOVE, WE DEEM IT PROPER TO SET ASIDE THE SAME TO THE FILE OF THE ASSESSING OFF ICER AND ACCORDINGLY, SET ITA NOS.195 OF 07409 OF 07229 OF 07 476 OF 08 495 OF 0 8 MIRACLE SOFTWARE PAGE 14 OF 14 ASIDE THE ISSUE TO HIS FILE WITH A DIRECTION TO RE- COMPUTE THE DEDUCTION ALLOWABLE UNDER SECTION 10A IN ACCORDANCE WITH THE PRINCIPLES SET OUT IN THE PRECEDING PARAGRAPHS AFTER AFFORDING NECESSARY OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 10. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE AND THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2005-06 ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2004- 05 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24 TH NOVEMBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE:24-11-2010 COPY TO 1 M/S MIRACLE SOFTWARE SYSTEMS (P) LTYD., MIG-49, L AWSONS BAY COLONY VISAKHAPATNAM 2 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-3( 1) VISAKHAPATNAM 3 4. THE CIT VISAKHAPATNAM THE CIT(A)-I VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM FIT FOR PUBLICATION (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER