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2020 (9) TMI 972 - HC - Income TaxEligibility of deduction u/s 10A - Whether the services of the assessee were limited to drafting of patent application and their submission to the US patent office and as such the assessee was not entitled to claim deduction? - HELD THAT - Notification No.890 dated 26.09.2008 specifies that information and technology enabled products or services mentioned in the Notification shall be treated as Information Technology enabled products or services for the purposes of Explanation 2(i)(b) of Section 10A of the Act, which includes Back Office Operations and Data processing as well. The activities of the assessee can be classified as Data Processing, Legal Databases and remote maintenance under the Notification issued by the CBDT. The assessee is transmitting the patent application and related data, which is stored in electronic form and therefore, such data, is customized data and is eligible for deduction under Section 10A of the Act. Therefore, it is evident that assessee is engaged in back office operations, which is prescribed as information technology enabled services in the Notification dated 26.09.2000. It is pertinent to note that the revenue itself has granted the benefit of deduction to the assessee vide order dated 27.01.2006 in respect of Assessment Year 2003-04 under Section 80HHE of the Act, which is a pari materia to Section 10A of the Act. It is well settled legal proposition that tribunal is a fact finding authority and decision on facts rendered by the tribunal can be gone into by High Court only if a question is referred to it, which says the finding is perverse See SANTHOSH HAZARI VS. PURUSHOTTAM TIWARI 2001 (2) TMI 131 - SUPREME COURT and SOFT BRANDS (P) LTD. 2018 (6) TMI 1327 - KARNATAKA HIGH COURT Concurrent findings of fact recorded by the revenue that assessee is entitled to benefit of deduction under Section 10A of the Act is based on meticulous appreciation of evidence on record. The aforesaid findings, by no stretch of imagination can be said to be perverse. - Decided against revenue.
Issues:
1. Entitlement to benefit of deduction under Section 10A of the Income Tax Act, 1961. Detailed Analysis: 1. The appeals under Section 260A of the Income Tax Act were preferred by the revenue concerning the Assessment Year 2009-10 and 2010-11. The main issue in both appeals was whether the assessee was entitled to the benefit of deduction under Section 10A of the Act. The Assessing Officer initially denied the deduction, stating that the activities of the assessee did not qualify under Section 10A. However, the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal later ruled in favor of the assessee, allowing the deduction under Section 10A based on the nature of services provided by the assessee. 2. The revenue contended that the assessee, being an individual and not a company or undertaking located in a Special Economic Zone (SEZ), was not entitled to the benefit of Section 10A. They argued that the activities of the assessee did not constitute back office operations, which are necessary to claim the deduction. The revenue relied on various legal precedents to support their arguments and emphasized the need for strict interpretation of the exemption notification in favor of the revenue. 3. On the other hand, the assessee argued that as a registered STP unit engaged in IT-enabled services, the activities fell under the purview of Section 10A. They highlighted that the CBDT had issued a clarificatory notification specifying that back office operations and data processing are considered information technology enabled services for the purpose of Section 10A. The assessee also pointed out that they had previously been granted deductions under similar provisions. 4. The High Court analyzed the submissions and evidence on record. They noted that the assessee's activities, involving back office work for registering technology in the US patent office, qualified as back office operations and data processing under the CBDT notification. The Court emphasized that the revenue had previously granted deductions to the assessee under similar provisions, indicating consistency in treatment. The Court also highlighted that the concurrent findings of fact by the lower authorities were based on a thorough evaluation of the evidence and were not found to be perverse. 5. Ultimately, the High Court concluded that no substantial question of law arose for consideration in the appeals. They upheld the lower authorities' decisions, stating that the matter was concluded by the meticulous appreciation of evidence on record. The appeals were dismissed, and the assessee was deemed entitled to the benefit of deduction under Section 10A of the Income Tax Act, 1961.
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