TaxTMI 
TaxTMI 
2016 (1) TMI 938
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....les the assessee to claim deduction under section10A of the Act. However, the counsel submits that for this assessment year the deduction shall be only 50% and not 100% in view of the provisions of section 10A(1A) of the Act. Copy of the order of the co-ordinate Bench dated 30.04.2015 is placed on record. 4. Departmental Representative supports the orders of the lower authorities. 5. Heard both sides. Perused orders of lower authorities and the decision relied on. On a perusal of the co-ordinate Bench decision cited above, we find that similar issue i.e. whether the assessee is entitled for deduction under section 10A or not has been decided in favour of the assessee by the Tribunal observing as under:- "2. The Assessee has raised 12,12 ,10 & 11 elaborate grounds in its respective appeals for the assessment years 2006-07,2007-08, 2008-09 & 2009-10; however the crux of the issues are that the Assessee is aggrieved by the order of the Ld. CIT (A), who had upheld the order of the Ld. Assessing Officer (i) in denying relief under section 10A of the Act for the assessment years 2006-07 to 2009-10. (ii) Levy of interest U/s. 234B of the Act for the assessment years 2006-07 to 200....
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....he manufacturers so that the said manufacture produces the goods as per such specifications. Thus the assessee company was only receiving the orders from its overseas customers which are passed on to other manufacturers in India. v) The copies of invoices raised by the assessee showed that billing was made under the head "international sales commission", "international inspection charges", and "Transaction charges". 4.2 Based on the above observations, the Ld. Assessing Officer queried as to how the assessee would be entitled for deduction U/s. 10A because it appeared that the assessee was not engaged in manufacturing activity or software development activity, to be eligible for deduction U/s. 10A of the Act. The assessee in response made the following submissions before the Ld. Assessing Officer:- "The assessee company was registered with MEPZ and had commenced its operation in special Economic Zone from 01.09.2003. Thereafter, the company has started the activities such as Software development; Web based solutions software, Creation and development of website and web catalogue, manufacturing and export of kits for automobile industry. From these activities, the assessee had....
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....s overseas clients. The overseas clients buy such components' directly from the manufacturers after obtaining the technical specifications from the appellant or place the order with the appellant for it to purchase from the ultimate manufacturer and export to them. From the above, it can be understood that the appellant acts as an intermediary between the overseas customer and Indian manufacturer. The overseas customers do not have an establishment in the form of a branch, etc. in India to identify the reliable and dependable manufacturer for their small orders. For such purposes, they utilize the services of the appellant. After getting the goods manufactured through other manufacturers in India, the appellant undertakes final assembly and packing before they are exported outside India. This process cannot be said to be a manufacturing process and therefore the appellant was asked to explain why deduction u/s l0A should not be disallowed in its case. The appellant stated that an undertaking would be said to be engaged in manufacturing activity, if it is doing part of the manufacturing activity by itself and for the rest of it, engages the services of somebody else. 7.2. The ....
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....factured in India. As a result, this ground of appeal is dismissed." 4.5 Before us, the Ld. A.R. made the following written submissions in order to establish that the assessee was engaged in manufacturing activity and software development which entitles it to claim the benefit U/s.10A of the Act:- "Manufacturer 2. The appellant is in the business of manufacturing auto parts/components for its overseas clients. 3. The manufacturing process of the appellant involves the procurement of orders from the customers, preparation of technical drawings as per the specifications of the customers, outsourcing to suppliers, supervision at the suppliers premises, inspection, assembling and packaging. The detailed flow chart showing the manufacturing process of the appellant is reproduced in the assessment order 4. Though the appellant is not personally engaged in the manufacture it is the appellant who prepares the technical drawings and gets the same done through job workers supervises and inspects at the suppliers premises. The ultimate responsibility to deliver the end product as per the customers specifications is on the appellant. Therefore it is most humbly submitted that the app....
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....nternational inspection a/c, international sale commission a/c, international retainership a/c etc. Though they were grouped under these heads they were received only for rendering the IT enabled services to the overseas customers. 13. The regular commission, retainership etc received locally were offered only as commission etc and credit for the tax deducted at source on the same has been claimed. The appellant has not claimed deduction u/s.10A on these incomes 14.ln the light of the above submissions it is most humbly prayed that the Hon'ble Tribunal may be pleased to decide whether or not the appellant is in the business of rendering IT enabled services and if the Hon'ble Tribunal is satisfied that the appellant is in fact is engaged in rendering IT enabled services then the Hon'ble Tribunal may be pleased to set aside the matter to the Assessing Officer only for the limited purpose of quantifying the amount of income earned from rendering the IT enabled services .eligible for claiming deduction u/s.10A. 15. The appellant is engaged in development of computer software like making customized electronic catalogs etc. 16. Sample copy of the invoice raised in the....
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....lty & exclusivity AA promises to maintain complete confidentiality regarding all projects for which IPD mandates it. All efforts will be taken to maintain utmost confidentiality to protect the interest of IPD or any company of that group regarding all software projects for whose execution IPD or any company of that group mandates AA. * The codes developed for this project will be the property of IPD. * The art work, brand developed, design & data will be exclusive property of IPD. * AA will have no claim whatsoever on the inputs & outputs of the project * AA will not approach business competitors of IPD. * 3. First right of refusal AA notes with pleasure the "Favored vendor" status accorded by IPD whereby, for any software project, the IPD will consider AAA as the preferred service provider. This means IPD will first make an offer to AA to roll-out any software related service before making an offer to any other software service provider. For Autopartasia Pvt Ltd. -Sd/- Mr.K.Vaidyanathan CEO For IPD Group -Sd/- Mr.richard grishabar" CEO ii) Memorandum of understanding with Reliance Group "This Covenant entered into between Autopartsasia Private Lim....
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....ee establishes that the assessee is carrying out information technology enabled services. As pointed out by the assessee, the CBDT Circular No.S.O.890(E) dated 26.09.2000 reported in 163 CTR (St) 25 specifies that for the purpose of Section-10A of the Act, back office operations and web site services are information technology enabled services. The Ld. A.R. has also explained the nature of activity rendered by the assessee with respect to giving access of the ERP to its clients for their purchases as follows:- "For initiating purchase: When the stock at the customers' location reaches the predetermined re-order level, it triggers the action at the assessee's end for initiating a Purchase order. Based on this requirement, the assessee generates a Purchase order through the customer ERP. This Purchase Order (PO) on the vendor and the subsequent activities take place. In the event that the customer needs stock over and above the reorder level, the level in the ERP can be overwritten by the customer based on their internal discussions and the assessee proceeds with its activities as before. For updating stock records: Once the PO is met and the goods are received, ins....