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2012 (6) TMI 34 - HC - Income TaxDeduction u/s 80IA - assessee engaged in providing satellite based telecommunication solutions - AO on observing that payment was made to British Telecom (Worldwide) and no income or receipts was shown as earned from any third party made addition holding that the income included income from satellite services not in the nature of domestic satellite service - Held that:- As long as assessee was providing broadband/internet services and had received payments for the specified services, the income earned would qualify for deduction u/s 80IA(4)(ii). In case the assessee incurs expenditure to buy and utilize space segment on a satellite for providing the qualifying services, the expenditure incurred cannot be disallowed and no notional income can be computed or reduced from the income earned from the qualifying service. In view of absence of details, we remit the matter to the tribunal to examine the said aspect afresh. Tribunal has to examine and clearly decide nature and character of service rendered by the assessee to third parties and whether the same qualifies and is a prescribed/stipulated service u/s 80IA. Exclusion of sales of equipments from the deduction claimed u/s 80IA on ground that income is not derived from specified services - Held that:- Nature of each contract has to be examined. It has to be ascertained whether it was a case of supply of goods or was it composite contract of providing equipments with telecommunication services. In case, the sale of goods was inextricably linked, had nexus and was connected with the primary purpose of providing or starting telecommunication services, the assessee will be entitled to benefit u/s 80IA - Remitted back to Tribunal. Income earned from development and sale of software upgrades for smooth and trouble free working of VSAT service provided by the appellant - whether qualify for deduction u/s 80IA - Held that:- Nature, character and type of the software and whether or not it could be treated and regarded as income earned from the business referred to in sub-section (4) clause (ii) to Section 80IA has not been examined and considered, therefore, this issue is accordingly remitted to the tribunal for a fresh decision. Exclusion of Interest income on FDR and other income - Held that:- In Liberty India v. CIT [2009 (8) TMI 63 (SC)] it is held that highlighted Section 80IA is a profit linked incentive and only profits “derived from” eligible business are entitled to deduction. The expression “derived from” covers sources not beyond the first degree. Devices to inflate or reduce profits from eligible business should be rejected. Therefore, in absence of details, matter remitted back to tribunal to examine quantum of expenditure incurred/attributed to earning of exempt income u/s 80IA.
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