2013 (1) TMI 512 - HC - Income Tax

Claim of deduction u/s 80HHE - assessee had exported customized electronic data - Held that - CIT(A) as well as the Tribunal has concurrently come to a finding of fact that the respondent assessee is engaged in customizing the data collected by it from various sources to meet specific requirement by its client. Both the authorities under the Act have on a finding of fact negatived the contention of the revenue that the work carried out by the respondent assessee was that of a news agency. Therefore the activity carried out by the assessee was of transmitting customized electronic data to its client is factually so found by two authorities under the Act. This finding of fact arrived at by the authorities under the Act is not perverse and nor arbitrary so far as deduction under Section 80HHE for data entry is concerned the same is covered by CBDT notification dated 26.09.2000 wherein the job of data entry has been notified as being computer software service. Therefore the assessee is entitled to the benefit of Section 80HHE. Also the orders of the Tribunal for the earlier AY i.e. 1999-2000 2000-2001 2001-2002 and the subsequent year 2004-2005 have already been dismissed by this court for non-removal of office objections and the department has taken no further action to have the dismissed appeal restored. Therefore the revenue seem to have accepted the orders of the Tribunal for the earlier and also for subsequent Assessment years - in favour of assessee.

Summary

Issues:
- Whether the Tribunal was justified in allowing the assessee's claim of deduction u/s 80HHE for exporting customized electronic data?
- Whether the Tribunal was justified in holding that similar deduction u/s 80HHE was allowed to the assessee for earlier years, even though the claim was for deduction u/s 80HHC in those years?

Analysis:
1. The respondent-assessee, engaged in information vending, filed a return for the assessment year 2003-04 claiming a deduction under Section 80HHE of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction citing a pending appeal against a previous year's allowance by the Commissioner of Income Tax (Appeals).

2. The CIT(A) allowed the deduction for the respondent-assessee for the current year based on favorable orders from the Tribunal and CIT(A) for previous assessment years, establishing a consistent pattern of allowance.

3. The Tribunal, in its order, recognized the respondent-assessee's activities of selling customized electronic data and data entry/processing. It referred to a CBDT notification and its previous order for the Assessment Year 2001-2002, supporting the eligibility of the respondent-assessee for the deduction under Section 80HHE.

4. The appellant argued that the respondent-assessee was not providing customized electronic data but functioning as a news agency, thus ineligible for the deduction under Section 80HHC. However, the Tribunal's findings and the CBDT notification supported the respondent-assessee's eligibility for the deduction.

5. The Court noted that both the CIT(A) and the Tribunal had factual findings supporting the respondent-assessee's activities of customizing data for clients, negating the revenue's claim of news agency work. The CBDT notification also covered data entry as a computer software service, aligning with the respondent-assessee's operations.

6. The Court highlighted that previous appeal orders dismissed by the court for non-removal of objections indicated the revenue's acceptance of Tribunal decisions for earlier and subsequent assessment years, reinforcing the respondent-assessee's entitlement to the deduction under Section 80HHE.

7. Consequently, the Court found no grounds to interfere with the Tribunal's decision, dismissing the appeal without costs. The consistent findings of fact and legal provisions supported the respondent-assessee's eligibility for the deduction, as established by previous orders and notifications.

This detailed analysis of the judgment from the Bombay High Court addresses the issues raised regarding the deduction under Section 80HHE for the respondent-assessee's activities involving customized electronic data and data entry, providing a comprehensive understanding of the legal reasoning and factual findings leading to the dismissal of the revenue's appeal.