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2011 (5) TMI 594 - AT - Income TaxDeduction u/s 10A - whether income derived from transmission of data in respect of eligible employees for appointment in software development company in the USA would qualify the deduction under section 10A - Held that:- Software is not merely knowledge but, rather is knowledge recorded in a physical form having a physical existence, taking up space on a tape, disc or hard drive, making physical things happen and can be perceived senses. However, misunderstanding arose that since the recruitment and training of the personnel was by itself not IT enabled, the profit earned by the assessed is not eligible for deduction under section 10A. The requirement of the provision is that there should be a customized electronic data and such data should be exported outside India. The data which a customer may require, may be gathered either by manual effort or by electronic means, as for example, through internet. By whatever means the data is collected, once it is stored in an electronic form, it becomes a customized electronic data which can be exported to qualify for deduction under section 10A. Approval from STP Authority for the Bangalore office on the last date of the accounting year - Held that:- Assessee submitted that it was operating at Gurgaon when it was become unviable then it went to Bangalore and applied for registration with STPI Authority on 23-1-2007. The registration was granted with effect from 31-3-2007. The assessee has started commercial production on this date. According to the assessee in fact, it was carrying out all the activities prior to registration granted by STPI authorities. The assessee has placed on record copy of the lease agreement, list of its employees, details of salary paid, copy of the application made for grant of registration. It was already operating at Gurgaon. Thus on the strength of all these details, it has demonstrated that it was in commercial production. It has applied for the registration. Such registration was granted to it on the last date and it has raised the invoices accordingly. Ultimately, it has received the payment also. Share holding of family members - Assessing Officer has just discussed the share holding patterns of two companies i.e., USA and of Indian Company however, he did not dispute their status in the eyes of law. He has not recorded the statement of any Directors and come out with an argument that no such activity has been carried out by the assessee. The assessee has produced before the Assessing Officer e-mails etc. for demonstrating its case. Thus assessee is entitled for deduction under section 10A - in favour of assessee.
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