9911796707
TMI Blog2012 (12) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the case in brief, as taken from the appeal folder for assessment year 2003-04, are that the assessee company, Technics Consulting Ltd was incorporated as a private limited company with effect from 23.3.2000 under the Companies Act, 1965 and originally was titled as LVS E-Commerce Solutions Ltd. Subsequently, the name of the company was changed to Technics Consulting Ltd. with effect from 14.6.2000. The main objects of the company as specified in the Memorandum of Association comprise of development of software products/solutions and customization/technical support/networking services/customer services/certification/marketing of software, hardware, on/off site consultants/providing of internet and intra net services/ecommerce/ e-mail services/products and commercial training/image processing and products/data communications /data warehousing- /multimedia applications/data conversion and migration/euro conversions/solid modeling/cartography/CNC/CMM programming /electronic design automation/bios and video communicated net work. The company also included in its principal object-buying, selling, dealing, importing, exporting, designing and developing systems and software. From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract works itself with its own manpower/infrastructure. There by where an exporter of computer software had executed either 100% or more than 51% of the export contract through sub-contractors- the exemptions/deductions u/s. 10A of the Income-tax Act, 1961 cannot be allowed in respect of such exporter. f) In views of the Assessing officer even if an assessee is registered with software technology park of INDIA and all the regulations governing export of computer software as per the STPI Scheme might have been complied with by an Indian concern including realization of export, proceeds in foreign currency through the approval of RBI -where a substantial portion or the whole of the export contract is factually executed through subcontractors - the fulfillment of the STPI regulations will not entitle such software 3edporte for the benefit of section 10A of the Income-tax Act, 1961." For the above reasons, the assessing officer disallowed the assessee's claim for exemption under S.10A of the Act. 4. On appeal, the CIT(A) on detailed examination of the contentions of the assessee in the light of the provisions of S.10A of the Act, held that denial of exemption under S.10A in pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessing officer by disallowing the claim for the assessee for relief under S.10A of the Act. 5. Facts of the case for the assessment year 2004-05 are similar o those for assessment year 2003-04 discussed at length hereinabove, but for the amount of disallowance involved for that year. The amount of disallowance made by the assessing officer, by rejecting the assessee's claim for relief under S.10A of the Act, is Rs.12,75,960. The addition thus made by the assessing officer for that year has been deleted by the CIT(A), following the order of the CIT(A) for the assessment year 2003- 04. 6. Aggrieved by the orders of the CIT(A) for these two years, granting reliefs to the assessee as above, Revenue is in appeal before us. 7. During the proceedings before us, the Learned Departmental Representative relied heavily on the orders of the assessing officer and mentioned that in a case where IT enabled services for web maintenance were not done at the premises of the assessee, the benefits of the provisions of S.10A should not be made available. This aspect was not appreciated by the CIT(A), while granting relief to the assessee, in the impugned orders. Further, he obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , these decisions laid a legal principle that outsourcing is part and parcel of the manufacturing activity and helpful in producing product or article or thing. The case-law mentioned by the CIT(A) in the impugned orders may not be in the context of either STPI cases or under S.10A or 10B of the Act, but in our opinion, they are relevant as they throw light on the relevant concepts in the matter of manufacturing of an article or thing. The CIT(A) has rightly relied on them. We have also perused the Circular of the CBDT No.697 dated 23.11.1999 and the relevant portion of the same reads as follows- " For the purpose of section 10A or 10B as long as a unit in the EPZ/EOU/STP itself produces computer programmes and exports them it should not matter whether the programme is actually written within the premises of the unit". From the above circular, it is evident that the writing of the computer programme at the premises of the assessee's unit is not relevant matter and so long as the product is produced by the assessee in the STPI zone, the assessee would be entitled for the benefit of S.10A of the Act. 10. As such we do not find any mistake in the orders of the CIT(A) in interpretin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered to be bogus or fictitious. 25. If the Assessing officer had any doubt regarding the possible collusion between the foreign client and India company for any over estimation of export proceeds or understating of Indian expenses necessary incriminating evidence should have been brought on record to prove such points. On the contrary a reference made by the AO to the transfer pricing authority at Hyderabad u/s. 92 of the Income Tax Act, 1961, it has been officially held by the concerned authority that the export proceeds shown by the assessee company for IT enabled services rendered comprising of wave maintenance for the foreign client could be taken as a correct reflection of the exports proceeds." 13. We have also perused the decisions relied upon by the Learned Departmental Representative and find that the said decision in the case of Kwal Pro Exports (110 ITD 59) was rendered on the fact that the assessee has purchased a completely manufactured product and has not done any manufacturing barring a bit of polishing and finishing. Therefore, the ratio of those decisions has no application to the facts of the present case. 14. In the light of the above, discussion, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X
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