Dy.CIT,1, Cir.-5, Pune, Pune V. Shri Hemant G. Sathe, Pune

ITA 62/PUN/2007

• Counselvise Citation: 6224514 RSA 2007
• Duration Of Justice: 4 year(s) 10 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-10-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 14-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K AMBASTHA
• Assessee Lawyers: V L JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 62/PN/2007 (ASSTT. YEAR: 2003-04) DY. CIT, CIR. 5, PUNE ... APPELLANT V. SHRI. HEMANT G. SATHE RESPONDENT 54, NATRAJ SOCIETY, KARVENGR PUNE-411 052 PAN : NOT APPELLANT BY : SHRI. S.K. AMBASTHA RESPONDENT BY : SHRI. V.L. JAIN DATE OF HEARING :17.10.11 DATE OF PRONOUNCEMENT: .11.11 ORDER PER I.C. SUDHIR, JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON SEVERAL GROUNDS INVOLVING THE ISSUE AS TO WHETHER LD CIT(A) HAS ER RED IN DELETING THE DISALLOWANCE OF RS. 11,73,014/- WHICH HAD BEEN MADE IN THE ASSES SMENT BY REJECTING THE ASSESSEES CLAIM OF DEDUCTION U/S. 80 HHE OF THE I. T. ACT 1961. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF THE ORDERS OF THE LOWER AUTHORITIES AND THE DECISION RELIED UPON BY THE LD. A.R. 3. THE LD. D.R. HAS BASICALLY PLACED RELIANCE ON TH E ASSESSMENT ORDER WHEREAS THE LD. A.R. HAS TRIED TO JUSTIFY THE FIRST APPELLA TE ORDER ON THE ISSUE. 4. THE RELEVANT FACTS ARE THAT THE ASSESSEE ENGAGED IN TRANSLATION AND INTERPRETATION SERVICES RENDERED VIA THE INTERNET H AD CLAIMED DEDUCTION U/S. 80HHE OF A SUM OF RS. 11,73,014/-. THE ASSESSEE HAD ALSO FURNISHED REPORT OF C.A. IN THE ITA . NO 62/PN/2007 SHRI HEMANT G. SATJE A.Y. 2003-04 PAGE OF 5 2 FORM 10CCAF AS REQUIRED U/S. 80HHE(4) WITH THE RET URN. THE A.O DISALLOWED THE CLAIM ON THE GROUND THAT THE SERVICES WERE NOT COVE RED U/S. 80HHE. 5. THE LD CIT(A) HAS ALLOWED THE CLAIMED DEDUCTION ON THE STRENGTH OF NOTIFICATION NO. SO 890(E) DATED 26.9.2000 ISSUED B Y THE CBDT TO ENLARGE THE SCOPE OF THE BENEFITS OF SECTION 80HHE OF INFORMATION TE CHNOLOGY EXCEPT PROVISIONS OR SERVICE. THE LD CIT(A) HAS OBSERVED THAT THE A.O H AS DENIED THE CLAIM BY OBSERVING THAT THE BUSINESS OF THE ASSESSEE IS NOT COVERED BY EITHER OF THE 15 SERVICES NOTIFIED BY THE CBDT. WHILE DOING SO, THE A.O HAS NOT CONSI DERED IT NECESSARY TO EXPLAIN WHY THE SERVICES PROVIDED BY THE ASSESSEE CANNOT BE COVERED UNDER THE PRESCRIBED CATEGORY OF SERVICES. AFTER DETAILED DISCUSSION, T HE LD CIT(A) HAS GIVEN HIS FINDING IN PARA NO. 4.1 OF THE FIRST APPELLATE ORDER REPROD UCED HEREUNDER FOR A READY REFERENCE : 4.1 I HAVE GONE THROUGH THE FACTS OF THE CASE. TH E DEDUCTION U/S 80HHE IS AVAILABLE WHERE THE ASSESSEE IS ENGAGED IN THE B USINESS OF EXPORT OUT OF INDIA OF COMPUTER SOFTWARE OR ITS TRANSMISSION FROM INDIA TO A PLACE OUTSIDE INDIA BY ANY MEANS. COMPUTER SOFTWARE HAS BEEN DEF INED IN THE EXPLANATION AS UNDER : COMPUTER SOFTWARE MEANS, - (I) ANY COMPUTER PROGRAMME RECORDED ON ANY DISC, TAPE, PERFORATED MEDIA OR OTHER INFORMATION STORAGE DEVIC E; OR (II) ANY CUSTOMISED ELECTRONIC DATA OR ANY PRODUCT OR SE RVICE OF SIMILAR NATURE AS MAY BE NOTIFIED BY THE BOARD. WHICH IS TRANSMITTED OR EXPORTED FROM INDIA TO A PL ACE OUTSIDE INDIA BY ANY MEANS; THE SECTION PROCEEDS ON THE BASIS THAT SERVICE OF SIMILAR NATURE ALSO CONSTITUTES COMPUTER SOFTWARE. THE CENTRAL BOARD O F DIRECT TAXES BY NOTIFICATION NO. 11521 (F.NO. 1342/49/2000-TPL) DAT ED 26.9.2000 [245 ITR(ST.) 102] ISSUED IN TERMS OF SUB-CLAUSE (I) OF THE EXPLANATION 2 HAS SPECIFIED THE FOLLOWING INFORMATION TECHNOLOGY ENAB LED PRODUCTS OR SERVICES, AS COMPUTER SOFTWARE: (I) BACK OFFICE OPERATIONS; ITA . NO 62/PN/2007 SHRI HEMANT G. SATJE A.Y. 2003-04 PAGE OF 5 3 (II) CALL CENTRES; (III) CONTENT DEVELOPMENT OR ANIMATION; (IV) DATA PROCESSING; (V) ENGINEERING AND DESIGN; (VI) GEOGRAPHIC INFORMATION SYSTEM SERVICES; (VII) HUMAN RESOURCE SERVICES; (VIII) INSURANCE CLAIM PROCESSING (IX) LEGAL DATABASES; (X) MEDICAL TRANSCRIPTION; (XI) PAYROLL; (XII) REMOTE MAINTENANCE; (XIII) REVENUE ACCOUNTING; (XIV) SUPPORT CENTRES; AND (XV) WEB-SITE SERVICES THE DEFINITION OF COMPUTER SOFTWARE READ WITH THE NOTIFICATION ISSUED BY THE CBDT COVERS WIDE SPECTRUM OF ACTIVITIES WITHIN THE MEANING OF COMPUTER SOFTWARE. IT COVERS VARIOUS SERVICES REFERRED IN T HE NOTIFICATION. IN VIEW OF THE ABOVE NOTIFICATION, THE SERVICE OF T RANSLATION & INTERPRETATION OF THE DATA IN VARIOUS LANGUAGES LIK E GERMAN AND SPANISH IS HELD TO FALL UNDER CLAUSE (IV) OF THE NOTIFICATION ISSUED BY THE BOARD. IT IS ALSO HELD TO BE COVERED UNDER CLAUSE (XIV) BEING SUPPORT CENTRES UNDER THE NOTIFICATION. IN THIS CONNECTION REFERENCE IS MADE TO THE DECISION OF THE DELHI TRIBUNAL IN THE CASE OF ACIT V. AMADEUS INDIA P. LT D. 79 ITD 407 IN THE CONTEXT OF DEDUCTION UNDER SECTION 80HHE. IN THI S CASE THE ASSESSEE WAS INVOLVED IN DATA PROCESSING ACTIVITY. IT HAD MAIN COMPUTER IN DELHI CONNECTED TO VARIOUS TRAVEL AGENTS IN INDIA. WHENEVER RESERV ATION HAD TO BE MADE THE TRAVEL AGENT CONNECTED TO THE COMPUTER OF AMADEUS I NDIA PROCESSED THE DATA AND SENT IT TO GERMANY THROUGH LEASED LINES. IN G ERMANY THE DATA WAS FURTHER PROCESSED FOR CORRECT STATUS OF RESERVATI ON. AMADEUS INDIA RAISED BILLS ON AMADEUS GERMANY BASED ON SEGMENTS IN RESER VATION. THE DELHI TRIBUNAL HELD THAT THE ASSESSEE WAS ENTITLED TO DE DUCTION UNDER SECTION 80HHE SINCE THE ASSESSEE WAS EXPORTING INSTRUCTIONS TO COMPUTER WHICH WERE CAPABLE OF CAUSING A COMPUTER TO PERFORM A PARTICUL AR TASK OR ACHIEVE A PARTICULAR RESULT. THIS DECISION IN A SENSE GAVE WIDER MEANING TO THE TERM COMPUTER SOFTWARE CONSISTENT WITH OBJECT OF SECTI ON 80HHE AND GENERAL POLICY OF THE GOVERNMENT TO ENCOURAGE EXPORTS AND INFORMATION TECHNOLOGY. THE VIEW OF THE TRIBUNAL GETS FORTIFIED BY THE ENTR Y OF DATE PROCESSING ITA . NO 62/PN/2007 SHRI HEMANT G. SATJE A.Y. 2003-04 PAGE OF 5 4 INCLUDED IN THE NOTIFICATION REFERRED TO ABOVE. IN VIEW OF ABOVE, THIS GROUND OF APPEAL IS ALLOWED. 5. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE ASSESSEE IS ENGAGED IN TRANSLATION AND INTERPRETATION SERVICES RENDERED B Y THE INTERNET. THESE SERVICES INVOLVED TRANSLATION OF PRODUCT MANUALS, SALES BROA CHERS ETC., IN LANGUAGES LIKE GERMAN, SPANISH ETC. THESE SERVICES ARE WEB INVOLV ED AND THE ASSESSEE IS NOT REQUIRED TO TRAVEL ABROAD FOR THIS PURPOSE. THE DA TA ON EITHER SIDE IS TRANSMITTED THROUGH THE NET. THE SALE SERVICES RESULT IN EARNI NGS IN CONVERTIBLE FOREIGN EXCHANGE. THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80HHE OF RS. 11,73,014/- ON THIS EARNING. THE DEFINITION OF COMPUTER SOFTWARE PROVIDED IN SECTION 80HHE OF THE ACT READ WITH CLARIFICATION MADE BY THE CBDT V IDE ITS NOTIFICATION DATED 26.9.2000 (SUPRA) DISCUSSED HEREINABOVE IN PARA NO. 4 MAKES IT CLEAR THAT THE SERVICES RENDERED BY THE ASSESSEE COMES UNDER THE D EFINITION OF THE COMPUTER SOFTWARE ENABLING IT ELIGIBLE FOR THE CLAIMED D EDUCTION. THE DECISION OF DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. AMADE US INDIA P. LTD. (SUPRA) RELIED UPON BY THE LD. CIT(A) ALSO SUPPORTS THE CASE OF T HE ASSESSEE. WE THUS DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD. THE GROUNDS INVOLVING THE ISSUE ARE THUS REJECTED. CONSEQUENTLY, APPEAL IS DISMISSED. 6. IN RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DECEMBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 13 TH DECEMBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : ITA . NO 62/PN/2007 SHRI HEMANT G. SATJE A.Y. 2003-04 PAGE OF 5 5 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -III, PUNE 4. THE CIT(A)-II, PUNE 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE