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2020 (10) TMI 711 - AT - Income TaxDeduction u/s. 80IC - service fees income - Whether deduction should be allowed on the services fees also as it has a close nexus with the supply of software and hence has to be regarded as part of the profits derived from the eligible business? - Conclusion of the CIT(Appeals) was that service activity was separate and independent and had nothing to do with the supply of software by the assessee - HELD THAT:- the contracts are with 3 different parties. It is clear from the submissions made before the CIT(A) that the service income in respect of which the Assessee claimed deduction u/s.80IC of the Act had a clear nexus with the supply of software and providing services were inter-linked and therefore the service fees received was to be regarded as profits derived by the industrial undertaking from manufacture of goods. As decided in own case [2020 (5) TMI 14 - ITAT BANGALORE] the claim made by the assessee for deduction u/s. 80IC of the Act on service income ought to have been allowed by the AO/CIT(A) and they fell into an error in not allowing the said claim. We therefore hold that the assessee is entitled to claim deduction u/s. 80IC of the Act on service income - Decided in favour of assessee.
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