TMI Blog2014 (4) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the provisions of section 10A of the Act and for this purpose the report of the auditor in Form 56F of the Act filed before the CIT(A) is admitted as additional evidence. We are of the view that, in the interest of justice, the issue should be directed to be examined by the Assessing Officer afresh u/s. 10A of the Act in the light of the observations made by us in the earlier part of this order. Accordingly, we set aside the order of the CIT(Appeals) and remand the issue to the Assessing Officer for fresh consideration claim of the Assessee for deduction u/s.10A of the Act. The Assessing Officer will decide the issue afresh after affording the assessee opportunity of being heard. - ITA No. 1504/Bang/2013 - - - Dated:- 16-4-2014 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER Appellant by: Shri V. Chandrashekar, Advocate Respondent by: Shri O.P. Yadav, CIT-I (DR) O R D E R Per N.V. Vasudevan, Judicial Member This is an appeal by the assessee against the order dated 30.08.2013 of the CIT(Appeals)-I, Bangalore relating to assessment year 2009-10. 2. The assessee is a company engaged in the business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion technology enabled services have been included within the notified activities for the purpose of section 10A. The Assessee also pointed out that the services were to foreign clients and the consideration has been received in convertible foreign exchange. The claim for deduction u/s.10A of the Act has been examined in the past and allowed by the AO after detailed scrutiny for assessment years 2001-02 to 2008-09. That there has been no change in the nature of activities for the past several years and hence in the present A.Y. it was not open to the AO to review Assessee s eligibility as neither there is any change in the law nor in the facts. The assessee also enclosed a copy of the Notification of CBDT, S.O. No.890(E) dated 26.9.2000. 5. The AO examined the nature of services as given by the assessee in its reply to the show cause notice and found the description of the services rendered by the Assessee to be as follows:- 1) Abstracting and Indexing Services 2) Directory compilation Updating Services 3) Metadata Compilation and Updating Services 4) Data Conversion Services. 1. Abstracting and Indexing Services: The Assessee has experts in vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of converted data, organize and format the converted content to various search and delivery formats for delivering through internet, computer, mobile devices etc. This process is called Data Conversion Services. The AO however held that the service was nothing but providing technical service and was eligible for exemption u/s. 10B of Income Tax Act. IV. Metadata Compilation and Updating Services: Publishing companies creating information products require metadata creation. Metadata is a technical name for data about data which is similar to address of people in a Directory or listing of books in a particular way in the Catalog of books etc. The Assessee specialized in creating metadata for articles published in academic and technical journals. The metadata components of an article are called bibliographic data such as: Author s name, Title of the article, Name of the journal in which it is published with year and page numbers, etc. Abstract of the article if available in the article. The Assessee submitted that it provides to one of the major US clients Chemical Abstracts service (CAS). The said client provides the Assessee list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found at the sources listed and linked to from HighBeam s tool. Wikimedia Commons, the Library of Congress. Open Photo, Creative Commons (Flickr) and the PerryCastaneda Library collection. This list is not exclusive nor does it guarantee that an image found using these sources is copyright-free, all images must be checked. Flickr is a special ease in that it hosts some images that are ok to use and other that are not. Make sure that all images from Flickr are available to be used for commercial purposes. You can limit you search on Fickr to those images and each image. Copyright-free images can also be found at other sources. As long as the copyright status is stated clearly for an image, other sources can be used. Additional sources may be added to the tool as discovered and the Consultant Relationship Manager will be informed. 7. The AO was of the view that the above services are in the nature of providing technical services to clients not eligible for exemption u/s 10(B) of the IT Act. 8. Based on the above, the AO came to the conclusion that the assessee was not engaged in the business of manufacture or production of article or things or computer softw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HYD ) discussed this issue in detail and decided in favour of the revenue. The Hon ble High Court of Delhi decided the issue in conformity with the decision of Hon ble ITAT, Hyderabad in the case of CIT vs. Regency Creation Ltd. (2012) 353 ITR 326 (Delhi ) and the Assessing Officer heavily relied upon the same. 10. With regard to the alternative claim of the assessee for deduction u/s. 10A of the Act, the assessee had filed before the CIT(A) a report of the auditor in Form 56F r.w. Rule 16D of the I.T. Rules, 1962, in which the claim for deduction u/s. 10A was made. On the above claim of the assessee, the CIT(A) held that deduction u/s. 10A of the Act can be allowed only when the report in the prescribed from is filed along with the return of income. He held that the said Form was not filed along with the return of income or before the completion of the assessment, hence the same cannot be entertained. The CIT(A) further held that it is not possible to shift the claim of deduction from 10B to 10A of the Act and in this regard observed as follows:- Under sub-section (1) of section 10B of the Act provided that subject to the provisions of this section, a deduction of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of electronic data or any product or service of similar nature which are notified by the CBDT are also considered as development of computer software. The CBDT has specified an exhaustive list of certain Information Technology enabled ( IT enabled ) services [vide Notification No SO 890(E), dated 26 September 2000], which are as under: Back-office Operations Call Centres Content Development and Animation Data Processing Engineering and Design Geographic Information System Services Human Resource Services Insurance Claim Processing Legal Databases Medical Transcription Payroll Remote Maintenance Revenue Accounting Support Centres Web-site Services 13. It is not in dispute that in the past the Assessee has been claiming deduction u/s.10A of the Act and had been allowed the benefit of such deduction. The Revenue in those years did not question the nature of services rendered by the Assessee as not amounting to manufacture of computer software. In assessee s own case for the A.Y. 2005-06, this Tribunal in ITA No.982/Bang/2009 had considered the question of compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority to furnish correct Form for claiming deduction u/s 10A [which it had admittedly failed to do so at the time of assessment proceedings, the entire issue requires to be looked into afresh at the assessing officer s level. To facilitate the AO to implement the above direction and to take appropriate action in accordance with the provisions of the Act, the issue is restored on the file of the AO. In the meanwhile, the assessee through its AR is advised to furnish all the relevant documents/proof at its possession before the AO so as to enable him to carry out the above direction expeditiously. It is ordered accordingly. 15. The ld. counsel for the assessee also further reiterated the submissions as were made before the CIT(Appeals) as to how the nature of services rendered by the assessee would fall within the meaning of data processing and content development, as envisaged in the Notification issued u/s. 10A of the Act viz., Notification S.O. No.890(E) dated 26.9.2000. 16. The ld. DR, however, relied upon the order of the Assessing Officer. 17. We have considered the rival submissions. A perusal of the order of assessment shows that the question whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was only providing data and that would be only providing technical services. In our view the said service would fall either within the expression Content Development or Data Processing envisaged by the CBDT Circular referred to in the earlier part of this order. 21. It is clear that the AO has not examined the CBDT Circular dated 26.9.2000. In our view, the term data processing would be wide enough to cover the services rendered by the assessee. The CIT(Appeals) has only approved the findings of the AO and has not given his independent view on the issue. We therefore hold that the Assessee was engaged in the business manufacture of computer software as envisaged in Sec.10A/10B of the Act. 22. Admittedly the Assessee did not have the required approval as envisaged u/s.10B of the Act. The Assessee however claims it has the required approval for allowing deduction u/s.10A of the Act. With regard to the question as to whether the assessee can be allowed to shift the claim for deduction from section 10B to section 10A of the Act, we have already seen that in the past the assessee had been claiming deduction u/s. 10A of the Act. In our view, the decision rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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