TMI Blog2017 (9) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... computer software including television news software. Therefore, the position for the AY 2000-01 onwards is not in doubt. Assessee has been able to demonstrate that the television news software produced by it for the AY in question was indeed ‘customized electronic data’ which was exported from India to a place outside India. The entire process of making the programmes was to meet the requirement of STAR TV during the AY in question and the use of several software programmes for such production was sufficient to enable the ITAT to conclude in favour of the Assessee. - Decided in favour of the Assessee and against the Revenue - ITA No. 40 of 2005 - - - Dated:- 31-8-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Appellant Through: Mr. Raghvendra Singh, Advocate. Respondent Through: Mr. M.S. Syali, Senior Advocate with Mr. Mayank Nagi, Advocate. JUDGMENT Dr. S. Muralidhar, J.: 1. This appeal, under Section 260A of the Income Tax Act, 1961 ( Act ), is directed against the impugned order dated 26th July 2004 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA No. 1757/Del/2003 for the Assessment Year ( AY ) 1999-2000. 2. While admitting this appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, editing/processing the same and conversion of machine signals into images. The AO noted that under Section 80HHE deduction can be allowed only if export of computer software is made. 7. The AO noted that, in terms of clause (b) of the Explanation to Section 80HHE, computer software means any computer programme recorded in any disk/tape including any such programme of customized electronic data , which is transmitted from India to outside world by any means. The AO concluded that the production of news software by no means can be described as computer software. It was noted that with effect from 1st April 2000, by virtue of Finance Act ( FA ), 1999, TV news software was covered under Section 80HHF. 8. The AO disallowed the deduction under Section 80HHE on the ground that the Assessee company is not engaged in the production and export of computer software. Another ground on which the deduction was refused was that according to the AO, the agreement between NDTV and NTVI and the MoU dated 21st March 1998 between the Assessee and STAR TV/NTVI showed that the Assessee was not an exporter of computer software. It was only engaged in the production of news programmes wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software provided the sale consideration is received in or brought into India inconvertible foreign exchange. Software exports have grown exponentially in recent years. With a view to increasing India s market share in the international arena, the Explanation (b) below this section has been extended to include any customised electronic data within the meaning of computer software . The benefits of deduction have also been extended to supporting software developers. With this in view, the proviso to sub-section (1); and sub-section (1A), (3A) and (4A) have been inserted by the Act so that the benefit of export can also be passed on to software developers by software exporting companies. (emphasis supplied) 12. As already noticed, a change was brought about in Section 80HHF which was inserted by FA 1999 with effect from 1st April 2000. Sub-section (1) of Section 80HHF clearly envisages export or import by any means outside India inter alia of television news software. In fact from 1st April 2000 onwards the Assessee has been claiming deduction of profits from export of television news software only under Section 80HHF of the Act. 13. Therefore, it is only for one AY, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is different from the data. Data is entirely different than the product produced by the Assessee. The CIT (A) held that the Assessee was not engaged in the business of customized electronic data. Consequently, the Assessee was held not entitled to the deduction under Section 80HHE during the AY in question. Order of the ITAT 17. Aggrieved by the order of the CIT (A), the Assessee went before the ITAT. In the impugned order, the ITAT discussed in detail the activities of the Assessee, which included the programme planning, data collection and input, graphics, editing and transmission of the final product. The Assessee was held entitled to the deduction under Section 80HHE of the Act. However, in coming to the said conclusion, the ITAT placed reliance on clause (b) of the Explanation to 80HHE which was effective from 1st April 2001. The ITAT also referred to its decision in ACIT v. Amadeus India Pvt. Ltd. (decision dated 17th January 2001 in ITA No. 4616 of 1998). Submissions of counsel for the Revenue 18. Mr. Raghvendra Singh, learned Senior standing counsel for the Revenue, at the outset pointed out that there was an error on the face of the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 80HHE of the Act, only one survives for consideration. The issue whether the benefit of deduction under Section 80 HHE of the Act would be available not to the Assessee but to NTVI appears to have been finally decided in favour of the Assessee without any further challenge by the Revenue. In any event no question has been framed on this issue. 23. To recapitulate, the question that requires to be examined is whether the television news software produced and exported by the Assessee outside the country was 'customised electronic data' and thereby eligible for deduction under Section 80 HHE of the Act? 24. It requires to be noticed that one of the questions that arose in Commissioner of Income Tax v. Kiran Kapoor (supra) was whether the activity of collection, collation, formatting of data and information and its export) fulfils the conditions stipulated in Section 10B (2) of the Act? This Court answered the above question in the affirmative and held as under: The expression computer software is wide enough to embrace diverse activities. To eliminate any doubt, the reference to customised electronic data in the second Explanation to Section 10B (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained the word include as under: The word include in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension, and not with restriction. The word include is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include. [See (i) Stroud s Judicial Dictionary, 5th Edn. Vol. 3, p. 1263 and (ii) CIT v. Taj Mahal Hotel AIR 1972 SC 168, (iii) State of Bombay v. Hospital Mazdoor Sabha AIR 1960 SC 610 ]. 29. On facts, the Court finds that the Assessee has been able to demonstrate that the television news software produced by it for the AY in question was indeed customized electronic data which was exported from India to a place outside India. The entire process of making the programmes was to meet the requirement of STAR TV during the AY in question and the use of several software programmes for such p ..... 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