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Issues Involved:
1. Deduction u/s 80HHE of the Act. Summary: Issue 1: Deduction u/s 80HHE of the Act The appeal is directed by the Revenue against the order of the Commissioner of Income-tax (Appeals) pertaining to the assessment year 1996-97. The only ground of appeal raised by the Revenue relates to the deduction u/s 80HHE of the Act. The main business activity of the company involves making travel agents online with AMADEUS CRS system, providing them with free computers, and training. The agents create reservation data processed and exported to the Amadeus Data Processing Centre in Germany. The company raises invoices to Amadeus Madrid based on the number of segments generated/exported, which is remitted in hard currency. The Assessing Officer (AO) examined the allowability of deduction u/s 80HHE, which is for the export of computer software or its transmission from India. The AO felt the activities of the assessee involved exporting processed data, not software, and thus disallowed the deduction. The AO referred the issue to the Software Technology Park (STP), which confirmed the activities as data processing, a software development as per Customs Notification No. 10 of 1996. However, the AO did not accept this, stating the customs notification was not applicable to the Income-tax Act. The Commissioner of Income-tax (Appeals) considered the submissions and held that the assessee was engaged in the export of software programme and entitled to deduction u/s 80HHE. The Revenue appealed against this finding, arguing that the activities involved exporting data, not a computer programme. The counsel for the assessee argued that the AO misinterpreted the experts' opinions and the activities involved exporting a computer software programme. The Tribunal examined the activities and found that the assessee was exporting instructions through computers capable of causing a computer to perform a task, fitting the definition of a computer programme under the Copyright Act. The Tribunal noted that the AO omitted to consider that "computer software" includes any programme transmitted from India. The Tribunal also considered the opinions from STP, NIC, and ESC, which supported the assessee's claim. The Tribunal emphasized the doctrine of pari materia, suggesting the meaning of "software development" could be imported from other relevant legislations. The Tribunal concluded that the assessee was entitled to deduction u/s 80HHE as it fulfilled the conditions for exporting a computer programme. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) and dismissed the Revenue's appeal. In the result, the appeal filed by the Revenue is dismissed.
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