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TMI Blog2008 (8) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... not tantamount to manufacture within the meaning of s. 80-IA of the Act." 4. It is submitted by the learned counsel of the assessee that this issue has been decided by the learned CIT(A) as per para No. 3.3 of his order and it was pointed out that learned CIT(A) has followed his order in assessee's own case for asst. yr. 1998-99 while deciding this issue. It is submitted that in asst. yr. 1998-99, the Tribunal has decided this issue in favour of the assessee and it was submitted that the relevant Tribunal decision is available on page Nos. 24 to 33 of the paper book in ITA Nos. 692 and 606/Del/2003, dt. 29th Aug., 2007. Our attention was drawn to para No. 4 of the Tribunal judgment and it was pointed out that in this year, the Tribunal has decided this issue in favour of the assessee by following the Tribunal decision in assessee's own case for asst. yrs. 1995-96 and 1996-97. It was also submitted that this Tribunal decision on this issue in three asst. yrs. 1995-96 to 1997-98 has been confirmed by Hon'ble Delhi High Court in its judgment as reported in CIT vs. Oracle Software India Ltd. (2007) 211 CTR (Del) 60 : (2007) 293 ITR 353 (Del). 5. The learned Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... royalty paid to M/s Oracle Corporation for duplicating and sublicensing of software to its customers. It was submitted by the assessee before the AO that the assessee has been paying royalty at the rate of maximum of 30 per cent of the Indian Published Prize (IPP) of the Oracle software for sublicensing. It is noted by the AO on page No. 4 of the assessment order that the assessee has total revenue of Rs. 9,816.72 lakhs, which has been earned by the assessee at Delhi unit, engaged in sublicensing of software. It is also noted that out of this, the assessee has earned software license fee of Rs. 5,968.78 lakhs, software technical support services receipts of Rs. 2,600.08 lakhs, consultancy charges of Rs. 401.20 lakhs and sale of software documentation amounting to Rs. 52.85 lakhs. It is also noted by the AO that the assessee company is 100 per cent subsidiary of M/s Oracle Corporation, USA (non-resident company). The AO vide order sheet entry dt. 20th March, 2002 asked the assessee to justify as to why provisions of s. 92 should not be invoked in view of royalty payment being made on IPP whereas software license fee received by the assessee as its income is only Rs. 5,968.78 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts are also similar and hence in view of these two decisions of the Tribunal, the issue in question is fully covered in favour of the assessee because in the present case also, the AO has not brought on record any comparable case as to what is ordinary profits in this type of business. It is pointed out that in the present case, the assessee itself has declared an income of Rs. 1,227.40 lakhs as per return of income and hence it is not the case of no profit. If the case of the AO is that the profit of the assessee is less than ordinary profit, then the AO was required to bring on record a comparable case to show ordinary profit in this type of business and if on comparison, it is found that the profit of the assessee is lower, than only, it can be said that the profit of the assessee is less than ordinary profit. In the absence of that, the AO has erred in invoking of provisions of the s. 92 of the IT Act in the present case. 10. As against this, the learned Departmental Representative of the Revenue supported the orders of the authorities below. It was submitted by him that s. 92 is applicable in the present case because out flow on account of royalty payment is more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion that the provisions of s. 92 cannot be invoked in the present case to make any addition in the profit of the business of the assessee declared by it as per return of income. We, therefore, decide this issue in favour of the assessee by respectfully following the precedents. The contentions of learned Departmental Representative of the Revenue are devoid of merit in the absence of a comparable case to show that the profits of the assessee in the present case is less than ordinary profit. 13. Before parting, we would like to mention that various other contentions were also raised by the learned counsel for the assessee but since we have decided this issue in favour of the assessee by following the two Tribunal judgments on similar issue, we are not discussing and commenting upon on those contentions of learned counsel of the assessee. 14. Ground No. 5 of the appeal reads as under: 'The Hon'ble CIT(A), New Delhi, has erred in denying allowance of Rs. 30,67,728 representing provision for leave encashment as claimed by your appellant in the course of appeal proceedings for the asst. yr. 1999-2000." 15. It was submitted by the learned counsel of the assessee that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as followed the Tribunal decision in assessee's own case for asst. yrs. 1994-95 to 1996-97. In those three years, the Tribunal has followed the decisions of Hon'ble apex Court rendered in the case of Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113 : (1980) 124 ITR 1 (SC) and in the case of Alembic Chemical Works Co. Ltd. vs. CIT (1989) 77 CTR (SC) 1 : (1989) 177 ITR 377 (SC) and it was held that expenditure on acquisition of master copy is a capital expenditure. Respectfully, following the precedent, in this year also, we decide this issue in favour of the Revenue and against the assessee. This ground of the Revenue is allowed. 22. Ground No. 2 of the appeal is as under: "On the facts and in the circumstances of the case, the learned CIT(A) has erred in allowing a relief of Rs. 4,38,34,831 on account of exemption claimed under s. 10A at the Software Development Center, Bangalore." 23. Learned Departmental Representative of the Revenue supported the assessment order. As against this, it was submitted by the learned counsel of the assessee that this issue is covered in favour of the assessee by the Tribunal decision in assessee's own case for asst. yr. 1998-99 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that appeal documents along with the pay order for Rs. 10,000 were sent by the assessee to SR Batlibai & Co. for filing the appeal. It is further submitted that sometime in early 2004, there was a change in the consultancy services when M/s RSM & Co., chartered accountants were appointed. It is also submitted that M/s SR Batlibai & Co. were assigned to the work of filing appeal and to whom relevant papers were sent in time but there was a lapse on the part of M/s SR Batlibai & Co. who did not file the appeal. It is also submitted that only in November, 2007 it came to the knowledge of the assessee that the appeal was not filed and the assessee arranged to file the appeal on 20th Dec., 2007. It is submitted that under these facts and circumstances of the case, there being no mala fide or there being no ulterior purpose, the delay may kindly be condoned. 29. Learned Departmental Representative of the Revenue objected to condonation of delay but considering the facts and circumstances of the case, as narrated in the condonation application of the assessee, we are of the considered opinion that the delay was not mala fide and it was for valid reason being lapse on the part of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine, in this year also, this issue is decided in favour of the assessee. This ground is rejected. 40. In the result, this appeal of the Revenue stands partly allowed. 41. Now we take up assessee's appeal for asst. yr. 2001-02 i.e., ITA No. 5569/Del/2004. 42. As per ground No. 1 of the appeal, the grievance of the assessee is regarding disallowance of deduction under s. 80-IA on account of software duplication activity, because it is held by the AO that it is not a manufacturing activity. 43. It is agreed by both sides that this issue is identical to the ground No. 1 in assessee's appeal for 1999-2000 and it can be decided on similar line. In that year, we have decided this issue in favour of the assessee as per para No. 6 above. On similar line, in this year also, this issue is decided in favour of the assessee. This ground is allowed. 44. As per ground No. 2 of the appeal, the grievance of the assessee is regarding disallowance of a portion of royalty paid to Oracle Corporation, USA amounting to Rs. 18,30,51,900 by invoking the provisions of ss. 92 and 37(1). 45. It is agreed by both sides that this issue is identical to the ground Nos. 2 to 4 in assessee's appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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