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2019 (10) TMI 1192 - AT - Income TaxDeduction u/s.80JJAA - Deduction in respect of employment of new workmen - whether manufacture of computer software tantamount to manufacture of an article or thing ? - whether persons working in software industry can be said to be “Workmen” for the purpose of Sec.80JJAA? - according to the Assessee it had paid additional wages to new regular workmen employed by the Assessee in the relevant previous year and that it satisfies all the other conditions laid down in the provisions of Sec.80JJA - According to the AO in normal parlance manufacture of computer software is not akin to manufacture of an article or thing and that is the reason why a specific provision has been made in Sec.10B, Sec.10(15) and 72A of the Act - HELD THAT:- Assessee has to be regarded as an Industrial Undertaking engaged in manufacture of article or thing, even going by the reasoning given by the AO. We are also of the view that the term “Industrial Undertaking” having been defined in the Act, though for a different statutory provision, can be a guiding factor to the intention of the legislature to apply that definition to statutory provision in which the said term has not been defined. In the absence of any contrary intention emanating from attending circumstances or for any other reasons, adopting the definition given in the Act, would be more appropriate. Whether the employees employed in software industry can be said to be “Workmen”, the Bangalore Bench of ITAT has already settled this issue in the case of Texas Instruments (India) Pvt.Ltd. [2006 (12) TMI 405 - ITAT BANGALORE] held that Software Industry has also been notified as Industry for the purpose of Industrial Disputes Act, 1947 by the State of Karnataka and that the employees employed in software development industry render technical services and not services in the nature of supervisory or management character Whether there is any distinction between salary and wages and whether monies paid to a person working in software industry cannot be termed as “Wages”? - There is no distinction sought to be made in the provisions of Sec.80JJAA of the Act and the reason assigned by the AO for considering remuneration received by a person employed in software industry as “Salary” and not “Wages”, is without any basis. In our view such distinction sought to be made by the revenue authorities for denying the claim of the Assessee for deduction u/s.80JJAA of the Act is unsustainable. Assessee should be allowed deduction u/s.80JJAA of the Act, subject to quantification of the sum to be allowed as deduction by the AO after due opportunity to the Assessee.- Decided in favour of assessee.
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