2014 (6) TMI 504 - AT - Income Tax

Disallowance of deduction u/s 10B - producing a ready to print e-book - customized electronic data Held that - Following Kiran Kapoor Versus ITO Ward-23(2) New Delhi 2014 (5) TMI 548 - ITAT DELHI - The assessee after collecting raw data and pictures has utilized its expert designing skills in producing a ready to print e-book - The final product is intended for use of a particular customer and it does not fit in the category of production of any customized electronic data as per the definition of computer software defined in Explanation 2 to section 10B of the Act - even if it is said that the assessee has merely customized the data, which was already available and has not created altogether new software then too the appellant cannot be deprived of the benefit of deduction the definition of produce is wider than the term manufacture. The Assessee s business involved export of ready to print books which in the instant case is the customized electronic data - The nature of activity done by the assessee in the EOU was that of producing designs, drawings, layouts and scanning for the projects of foreign clients on the basis of their parameters and specifications - This activity is done by taking into consideration the data collected by the assessee itself or from clients the assessee is entitled to claim deduction u/s 10B of the Act - the ready to print books exported by the appellant in the form of a CD or e-mail are customised electronic data eligible for claiming benefit of deduction the AO to allow the claimed deduction u/s 10B of the Act Decided in favour of asseessee.

Summary

Issues:
1. Disallowance of deduction u/s 10B of the Act
2. Charging/upholding levy of interest u/s 234B of the Act

Analysis:
1. The main issue in the appeals was the disallowance of deduction u/s 10B of the Act. The appellant questioned whether the Ld. CIT(A) was justified in upholding this disallowance. The Tribunal referred to a previous decision in the case of the same assessee for the assessment year 2006-07, where similar issues were decided in favor of the assessee. The Tribunal found that the appellant's business activities, involving the export of ready-to-print books, qualified as "customized electronic data" under the definition of computer software in Explanation 2 to section 10B of the Act. The Tribunal held that the appellant was eligible for the deduction u/s 10B of the Act based on this analysis. Consequently, the Tribunal directed the AO to allow the claimed deduction u/s 10B of the Act, setting aside the orders of the authorities below.

2. The second issue pertained to the charging of interest u/s 234B of the Act. The Tribunal deemed this issue to be consequential in nature and did not require separate adjudication. Therefore, the Tribunal dismissed the appeals, with the order pronounced on June 6, 2014.