2016 (11) TMI 285 - AT - Income Tax

Claim of deduction under section 10A - Held that - As decided in assessee s own case for assessment year 2006-07 the assessee is involved in providing back office support and thereby entitled to the benefit under the definition of the term computer software‟. Its activities are in the nature of data processing, customization of data, acting as the back office of the parent company and acting as support center to the parent company. Clearly it could not have been deprived of the benefit of Section 10A, as is argued by the revenue. This contention is accordingly rejected as unmerited - Decided in favour of assessee

Summary

Issues:
1. Allowance of deduction under section 10A of the Income-tax Act, 1961 for assessment year 2007-08.

Analysis:
The case involved the appellant claiming a deduction under section 10A of the Income-tax Act, 1961, amounting to ?38,34,83,407 for assessment year 2007-08. The Assessing Officer disallowed the claim, stating that the appellant was not engaged in rendering IT enabled services or exporting services of similar nature, thus making it ineligible for the deduction. However, the Commissioner of Income-tax (Appeals) deleted the disallowance, citing precedents where the appellant was allowed the deduction for previous assessment years. The Revenue appealed this decision, arguing that the appellant's activities did not qualify for the deduction. The appellant contended that the issue was settled by previous Tribunal decisions and a High Court judgment in their favor.

The Hon'ble Delhi High Court, in a related case for assessment year 2006-07, emphasized that for eligibility for the deduction under section 10A, two conditions must be cumulatively satisfied. The Court noted that the appellant's activities involved customization of data and data processing, which fell within the definition of 'computer software' as per the relevant provisions. The Court also highlighted the importance of the CBDT circular specifying eligible Information Technology enabled products or services for the purpose of the deduction. The Court upheld the appellant's entitlement to claim the deduction under section 10A, considering the nature of its operations and the consistency in previous decisions allowing the deduction.

In light of the High Court's decision, the Tribunal upheld the Commissioner of Income-tax (Appeals)'s order allowing the deduction under section 10A for the appellant. The Tribunal dismissed the Revenue's appeal, stating that the issue had been conclusively settled by the High Court's judgment. The Tribunal did not address the general grounds raised by the Revenue, as they were considered to be of a general nature and not necessary for adjudication. Consequently, the appeal of the Revenue was dismissed, affirming the allowance of the deduction under section 10A for the appellant for assessment year 2007-08.