TMI Blog2006 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer as far as denial of exemption under section 80-IA was concerned. Further aggrieved, the assessee is in appeal on the following grounds :- "1. The order of the Assessing Officer and the CIT(A) is contrary to law, facts and circumstances of the case. 2. The Assessing Officer erred in not allowing the claim of the assessee for deduction under section 80-IA of the Income-tax Act. 3. The CIT(A) erred in confirming the findings of the Assessing Officer with respect to not allowing the claim of deduction under section 80-IA of the Income-tax Act. 4. Any other ground which the appellant may urge at the time of hearing." 3. The learned counsel for the assessee submitted that the main business as per the objects of the company is to carry on data processing, marketing research, consultancy, promotion in the field of marketing, management, distribution management, sales and other related fields. The various types of research handled by the assessee company inter alia include quantitative research, qualitative research, International research, Special Product Tracking Study, Desk research, syndicated research. The company also handles various data collection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be an industrial undertaking. This being the case, he submitted, the reports, analysis and other data processed and generated by the assessee would come within the expression "article" or "thing" which is capable of a very wide meaning and accordingly would be entitled to deduction under section 80-IA. He relied on the following case laws: 1. CIT v. Ajay Printery (P.) Ltd. [1965] 58 ITR 811 (Guj.). 2. CIT v. Commercial Laws of India (P.) Ltd. [1977] 107 ITR 822 (Mad.). 3. CIT v. IBM World Trade Corporation [1981] 130 ITR 739 (Bom.). 4. CIT v. Datacons (P.) Ltd. [1985] 155 ITR 66 (Ker.). 5. CIT v. Peerless Consultancy Services (P.) Ltd. [1990] 186 ITR 609 (Cal). 6. CIT v. Shaw Wallace Co. Ltd. [1993] 201 ITR 17 (Cal). 7. CIT v. Computerized Accounting Management Services (P.) Ltd. [1999] 235 ITR 502 (Ker.). 8. CIT v. Comp Help Services (P.) Ltd. [2000] 246 ITR 722 (Mad.). 9. CIT v. Peerless Consultancy Services (P.) Ltd. [2001] 248 ITR 178 (SC). 10. CIT v. Technotive Eastern (P.) Ltd. [2002] 255 ITR 253 (Gau.). 11. CIT v. Emirates Commercial Bank Ltd. [2003] 262 ITR.55 (Bom.). 12. CIT v. Vinay Kumar Sigtia [2003] 262 ITR 686 (Ori.). 13. CIT v. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manpower resources and sophisticated software tools that would need to be put to use to render the best result. This part of any project is carried out by highly qualified professionals who are management and marketing professionals having expertise in the designing of the study. (b) The sample size, questionnaire, budgets, collection methodology and the resources being finalized, the field team that will actually engage in data collection activity are briefed on all aspects of each job and how the assignment needs to be carried out. After the briefing, the field team moves into the pre-decided locations and carry out the data collection that presently is handled out of almost 25 to 30 locations in the country. The data collection is an extensive exercise, which is again supported by two to three levels of data back-check to ensure that the data collected has been accurately done and also to check whether the understanding of the respondents on the information sought has been recorded accurately. This is one of the production departments of the company where the primary production of data begins. (c) The data thus collected in the form of questionnaires is sent to the data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also specific insights into the project. This is the stage that a substantial value addition is rendered since the essence of the data and analysis goes into the processing of a document that meets the client requirements fully. (f) These findings are presented to the client. A senior manager of the company also uses extracts from the analyzed data in the reports, which are also supported by a presentation to the clients. The process of market research done by the company uses many proprietary and other software which support dedicated and proprietary methodologies used in the formulation/processing of a market research report. Some of the proprietary methodologies and softwares as well as research software that are used in the company for data and research analysis etc. are as follows: 1. Stochastic Reaction Monitor/Marketmind/Marketwhys: This is a brand and advertising tracking system that goes beyond basic awareness measures to understand the real impact of marketing activities. In fact this could also be called brand development monitors that help in brand tracking projects. This system helps in understanding the effects and impact of both the media and creative parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hods to correct sampling imbalances and automatically apply statistics and significance tests. By using Quanvert, SPSS' desktop survey analysis tool, Quantum can be used to automatically create Quanvert databases that reflect our preferred formatting. Quantum is the only tabulation tool that offers direct integration with Quanvert. Quanvert has been specifically designed for market research. 8. SPSS: - This is a modular, tightly integrated, full-featured product line for the analytical process - planning, data collecting, data access, data management and preparation, data analysis, reporting, and deployment. SPSS provides a broad range of capabilities for the entire analytical process. With SPSS, we can generate decision-making information quickly using powerful statistics, understand and effectively present results with high-quality tabular and graphical output, and share results with others using a variety of reporting methods, including secure Web publishing. Results from data analysis enable us to make smarter decisions more quickly by uncovering key facts, patterns, and trends. An optional server version delivers enterprise-strength scalability, additional tools, security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /apparatus is situated. This is over and above the test of the end-product being an entirely different commercial commodity vis-a-vis the input. Therefore, in a computer system or data processing system, the inputs which are fed in are entirely different, in a different form with different indicators. As against that, the end-product, viz., balance sheets, various accounts, statements, analysis, etc., which emerge by way of print-outs are distinct and different from the inputs, inasmuch as what comes out has a different connotation and use. Thus, the activity of data processing through the use of computers is one which would amount to business of manufacture or production of articles or things and the unit which undertakes such computer services for other concerns would be an industrial undertaking." The Hon'ble High Court thus held that the assesses-company which provided computer services to other concerns was an industrial undertaking engaged in the business of manufacture or production and was thus eligible for investment allowance under section 32A of the Act on the cost of computer. 10. The first appellate authority has observed that the Assessing Officer was wrong in hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haw Wallace and Co. Ltd [1993] 201 ITR 17, Hon'ble Calcutta High Court, following the cases of CIT v. Datacons (P.) Ltd. [1985] 155 ITR 166 (Kar.); Union of India v. Delhi Cloth and General Mills Co. Ltd AIR 1963 SC 791 and Name Tulaman Manufacturers Pvt. Ltd. v. Collector of Central Excise [1990] 183 ITR 577 (SC), held that the computations and statements that a computer brings out after processing technical and commercial data which are fed into the computer as inputs are entirely different in content from the inputs fed into the computer and, therefore, the assessee-company is an industrial undertaking. The nature of the activity carried on by the assessee-company being identical to that carried on by Shaw Wallace and Co. Ltd., we quite agree with the view taken by the Calcutta High Court in Shaw Wallace and Co. Ltd. [1993] 201 ITR 17, that after processing technical and commercial data which are fed into the computer as inputs, the computations and statements that a computer brings out, are entirely different in content from the inputs fed into the computer and, therefore, the assessee-company can be said to be engaged in the production of mechanically prepared information, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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