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2018 (1) TMI 336 - HC - Income TaxEligibility for deduction under Section 10A - existence of unit at Dehradun - Held that:- There is a unit at Malad which has developed basic engine and there is another unit at Dehradun, STPI, where the PC Suit Software Chip was developed and exported. Consequently, in the face of the above accepted position, the submissions of the revenue that there is no unit at Dehradun is unsustainable. So far as the second contention of the Revenue viz. Dehradun Unit is a mere extension of Malad, Mumbai Unit is concerned, we find that the Tribunal has rendered a finding of fact that the basic engine facility was developed at Mumbai. Thereafter this basic engine was taken to the Dehradun Unit and developed into a separate, intelligent and superior software known as PC Suit Software. This development of the software was done admittedly at Dehradun as the Tribunal itself records undisputed position that only basic engine was developed at Mumbai and the PC Suit Software which is a distinct software was developed at STPI, Dehradun. This software was exported and benefit of Section 10A of the Act is claimed in respect of the Dehradun unit which has developed the software and exported it. Therefore it is clear that a separate activity was performed at Dehradun Unit at STPI. The Tribunal records the fact that separate activity was performed at Dehradun Unit at STPI and it is a distinct activity from the manufacture of basic engine which was done at Mumbai. This is essentially a finding of fact of the Tribunal and not shown to be perverse warranting our interference. Third party tools were employed by the Respondent – Assessee, it would lose the benefit under Section 10A of the Act. No such such bar under Section 10A of the Act on user of the third party tools has been shown to us. This is different from outsourcing the entire work of developing the software to third parties. This is even not the case of the Revenue. In any event the impugned order records the STPI park itself makes Internet sites available for free and such sites would become a part of the product development. These sites are in nature of digital library where the units in the STPI are permitted to have free access to the Internet, digital libraries and other computer peripherals. These facilities available at the Dehradun STPI were used by the Respondent – Assessee so as to develop the PC Suit Software Chip. Therefore, this finding of the Tribunal is essentially a finding of the fact and not shown to be perverse. The finding recorded by the impugned order of the Tribunal are essentially findings of fact which are not shown to be perverse and / or arbitrary. It must be pointed out that it is not the case of the Revenue before us that any particular provision of Section 10A has been violated and / or breached by the Respondent. - Decided against revenue
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