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2020 (1) TMI 144 - AT - Income TaxRevision u/s 263 - Reopening of assessment u/s 147 - denying deduction under section 10B of the Act pertaining to functional genomics division and other miscellaneous disallowances made - HELD THAT:- On perusal of impugned orders for assessment years under consideration, it is observed that Ld.CIT records assessee developed software i.e Vector NTI advance. However, Ld.CIT observes that there is no mention in export of the software outside India. It appears that because the service agreement does not mention any export of software outside India, Ld.CIT held order passed by Ld.AO to be erroneous and prejudicial to interest of revenue. There is no denial on behalf of Ld.CIT that assessee is not involved in development of software tools. However, according to Ld.CIT, exemption should be denied because assessee is exporting results of research and development carried out by Bioinformatics division. We deem it necessary to extract observations of DRP for assessment year 2010-11, wherein reference to Circular 1 of 2013 issued by CBDT has been made, which clarifies that even if any research and development in any field is done in process of providing notified services, in particular, services of engineering and design, the same will be covered under aforesaid CBDT notification which will be eligible for 10A/10B benefit. Although assessee conducts research and development activities, but the same is only a process step to provide final output to its parent company. Also observed that what is developed by assessee under this segment is a customised electronic data created through various research and development. No doubt, invoices placed in paper book mentions ‘Research and Development charges’ cannot impliedly mean that activities carried on by assessee under Bio-informatics segment does not amount manufacture computer software. A co-joint reading of definition of computer software and the CBDT Circular No.1/2013 what comes to our understanding is that assessee is developing a customised software in the form of bio-infirmatics tools using platforms like C++, Java which is used to analyse gene sequence, protein sequence in Silicon Valley owning, gene expression profiling, pathways development etc, This is what AO intend from what he mentioned in para 10 of assessment order, specifically referred to by Ld. CIT DR. In our opinion Ld.AO was satisfied upon verification of documents placed by assessee at the time of reassessment proceedings. He called upon various details to verify claim of assessee under both segments. And then allowed deduction under section 10B of the Act, restricting claim only to the extent of Bioinformatics segment. Thus, we are of the opinion, that view taken by Ld.AO is a possible view. It is well settled proposition that merely because, Ld.CIT has taken different view, assessment order cannot be termed as erroneous and prejudicial. For section 263 to be initiated both conditions of assessment order being erroneous as well as prejudicial to the interest of revenue must be jointly satisfied. In the facts of the present case, having regards to evidences filed by assessee as analysed by Ld.AO, view adopted by Ld.AO is one of the possible views and therefore cannot be treated as erroneous. As both conditions are not satisfied in present case, we are unable to uphold proceedings under section 263 In the present facts of the case, Ld.CIT has not analysed activities carried on by assessee under Bioinformatics division having regards to documents filed by assessee and Circular referred and relied upon by assessee, as well as considered DRP order for assessment year 2010-11, on which reliance has been placed by Ld.AR. We are hold revision proceedings under section 263 to be bad in law and the same is quashed and set-aside. - Decided in favour of assessee.
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