TMI Blog2004 (12) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... s not call for any interference by us. Accordingly, we approve the conclusions arrived at by the CIT(A) and decline to interfere in the matter. Appeal is, thus, dismissed. Technical services for development of computer software - deduction u/s 80HHE - In our considered view, the documents reasonably establish the fact that the said technical services are indeed rendered by the assessee s personnel. The mere fact that most of these evidences are in the nature of documentation of AWSC affiliates cannot lead to the conclusion that the documentation is unreliable. We have also noted that the detailed billing particulars in respect of each project are available. However, only because AWSC makes one billing adjustment does not vitiate the fact that the complete details of the relevant earnings are on record. It is not necessary that in respect of each billing unit a separate entry is required to be made by the AWSC. In our considered view reasonable evidence in support of the services having been rendered by the assessee s personnel is on record. Even though the evidences are internal to the extent the evidences are primarily from AWSC, this fact by itself cannot indicate that the eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in second appeal, a co-ordinate Bench of the Tribunal, in which one of us (the Accountant Member) was also present, restored the matter to the file of the Assessing Officer by observing as follows: "The claim of the assessee needs to be examined on the touchstone of section 37(1) of the Income-tax Act, 1961 and other related sections. We find that the Assessing Officer did not have the opportunity to consider this aspect in the light of the aforesaid evidences*, which the Tribunal permitted the assessee to adduce at the time of hearing. As such, we aside the impugned order and restore the issue to the file of the Assessing Officer, with direction to decide the issue afresh, in accordance with the law, after providing adequate opportunity to the assessee of being heard." (*additional evidences filed by the assessee under rule 29 of the Appellate Tribunal Rules, and a list of which was also annexed to the Tribunal s order). That is how the Assessing Officer came to be in seisin of the matter, regarding admissibility of deduction on account of reimbursement of expenses to AWSC, once again. 4. In this round of proceedings, and after an elaborate discussions on the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the training expenses incurred directly, and to the hotel expenses which, according to the Assessing Officer, completely verified. The disallowance was thus worked out at Rs. 1,66,19,762. Aggrieved, assessee carried the matter in appeal before the CIT(A) who deleted the impugned disallowance. While deleting the disallowance, the Assessing Officer observed as follows: "The Assessing Officer has discussed at length the benefits turned by the appellant from the association of appellant with AWSC in various fields. In the light of voluminous evidence submitted by the appellant and examined by the Assessing Officer, the Assessing Officer has accepted that the expenditure is wholly and exclusively for the purpose of business of the appellant. The fact that appellant has also incurred separate expenses for training, etc., does not impinge upon the nature of payment to AWSC in respect of training, etc. In fact, the payment to AWSC is not specifically for training a person. Such a payment is part of the payment made for various services. The Assessing Officer has not pointed out the parameters as to why the payment may be considered excessive. The inference about non-verifiability of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng grievance: The CIT(A) has erred in confirming the disallowance of Rs. 9,25,02,953 paid to Arthur Anderson Worldwide SC (AWSC) towards reimbursement of its establishment costs on the ground that Commissioner of Income- tax (Appeals) - III has held in respect of the assessment year 1997-98 that the reimbursement of establishment expenses is not payment made wholly and exclusively for the professional purpose and that the facts of the case in assessment year 1997-98 being the same, the CIT(A) has no reasons to differ from the view taken by the CIT(A)-III, Mumbai. 11. Learned representatives agree that whatever is decided in the revenue s appeal for the assessment year 1997-98, the same will follow here as well. The nature of payment and all the material facts are the same. In 1997-98, on the matter being restored to the file of the Assessing Officer for adjudication de novo , the Assessing Officer himself has decided the issue in favour of the assessee but made a kind of token disallowance of 20% of expenses to cover any possible leakage of revenue by the possibility of expenses being excessive in nature. This disallowance was deleted by the CIT(A) and that action of the CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnel to the AWSC who in turn were deputing those employees to various contracts/projects undertaken by them. By a single invoice, the assessee billed AWSC for US $ 19,24,686 in respect of the computer services and software. The assessee s deduction under section 80HHE was in respect of US $ 5,98,579 billed on account of computer services and software. The Assessing Officer also observed that there was no specific contract between AWSC and the assessee for development of software. The Assessing Officer took note of the appraisal reports of persons said to be working on the software development projects but did not attach much importance to the same on the ground that the same cannot be treated as evidence of services provided for developing software. The Assessing Officer also took note of the letter received from Arthur Anderson Consulting confirming that personnel were deputed at their clients for software development but rejected the same as of any evidentiary value on the ground that it does not provide any evidence to show that technical services were actually utilized for development of software. The letters written by AWSC to the assessee-firm on requirement of various perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia to a place outside India by any means; or ( ii ) providing technical services outside India in connection with the development or production of computer software. Therefore, once an assessee can establish that the technical services were provided in connection with or for the purpose of the development of computer software, the assessee will be eligible for being considered for deduction under section 80HHE. In the case before us, the assessee has furnished full details of the clients to whom the services were rendered in connection with development of software. These clients, as evident from the list of recipients of services at page 104 of the paper book, include Nokia Telecommunication (Finland), Bayerische Vereinsba (Germany), Department of Social Security (United Kingdom); Shell International (United Kingdom), West Pac (Australia), Prudential Corporation (United Kingdom) and Caterpillar Asia (Singapore). The precise nature of services are also on record at page 105 of the paperbook. The qualifications of the persons actually working on these projects are also furnished. No doubt, some of these persons are plain graduates but that fact by itself cannot mean that they lacke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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