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TMI Blog2012 (11) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessment years 1993-94 to 1995-96. The Tribunal passed a common order in respect of the appeals filed by the assessee for the assessment years 1993-94 and 1994-95 and the Revenue, for the assessment years 1993-94, 1994-95 and 1995-96 respectively. 2. It is seen from the records that the assessment for the assessment years 1993-94 and 1994-95 was completed by the Assessing Officer under Section 143(3), granting relief under Section 80-O. Thus, the Commissioner of Income Tax exercised his jurisdiction under Section 263 of the Income Tax Act, taking the view that the Assessing Officer had not considered the question as to the eligibility of the assessee to have the deduction granted under Section 80-O. Further, when there is a specific provision under Section 80E, introduced with effect from 1.4.1991 to deal with deduction on the income earned on development of software for providing technical services outside India in connection with the development or production of computer software, the relief granted without considering the applicability of Section 80-O was bad and hence, prejudicial to the interests of Revenue. Thus the Commissioner of Income Tax, on revision, direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz., (i) Martek Inc., (ii) Overseas Technologies (OST), and (iii) Constella Inc. (CI). On going through the documents, in the course of assessment proceedings for 1995-96, the Assessing Authority held that going by the nature of activities, the assessee was entitled to deduction under Section 80HHE and the deduction under 80-O was disallowed. Aggrieved by this, the assessee went on appeal before the Commissioner of Income Tax (Appeals). 5. In considering the claim of the assessee for deduction under Section 80-O, the first appellate authority pointed out that the agreement with regard to Martek Inc., did not involve export of computer software for provision of technical services outside India. Hence, the assessee was directly entitled to the deduction under Section 80-O and not under Section 80HHE. As regards the services rendered by two other concerns, it was found that the assessee had supplied the software and technical assistance outside India and hence, the appellant was entitled to claim deduction under Section 80-O as well as Section 80HHE. The Commissioner of Income Tax (Appeals) pointed out that the aim of both Sections are the same, namely, to encourage industries d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee that some of the activities of the assessee would qualify for deduction under Section 80-O and they were not granted for the development of software, the Commissioner of Income Tax directed the Assessing Officer to look into the agreement and other materials to find out the real nature of the transaction and in case the transactions were in connection with the development of computer software for export and providing technical services in connection with the development of software outside India, the income would be considered for deduction under Section 80HHC. Consequent on that, by proceedings dated 29.6.1998 for the assessment year 1993-94 and for the assessment year 1994-95, the Assessing Authority considered the agreement and the bills raised by the assessee and found that the services rendered by the assessee related to systems analysis, systems design program specifications, program development documentation installation and implementation of software packages. The technical services rendered were in connection with the development of production of computer software. Thus on materials available, the Assessing Authority held that the deduction could be consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nental Construction Ltd. Vs Commissioner of Income-tax), referred to the decision reported in [1999] 235 ITR 769 (Delhi) (C.S.Mathur Vs. Central Board of Direct Taxes), wherein, the Delhi High Court, on a consideration of Section 80RRA and Section 80-O, held that Section 80-O had not impliedly repealed Section 80RRA or had any overriding effect on Section 80RRA. Thus the assessee was held to be entitled to a larger benefit under Section 80RRA. Contrasting Section 80HHE(5) with Section 80HHB(5), where there is an emphatic exclusion to other provisions, learned counsel submitted that reading Section 80HHE(5), one could note that the introduction of Section 80HHE, has not, in any manner, whittled down the choice of the assessee from claiming the relief under Section 80-O. Consequently, he submitted that the relief granted by the Tribunal could not, in any manner, be interfered with. 12. Heard learned counsel appearing on either side and perused the materials placed on record. 13. Before going into the contentions of the learned counsel appearing for the assessee, the provisions as are available under Section 80-O and Section 80HHE need to be seen. Section 80-O, as it stood dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India. (2) Omitted by FA 1974 wef 1-4-75. Section 80HHE, introduced in the statute book with effect from 1.4.1991 under Finance Act No.2 of 1991, is a specific provision for deduction in respect of profits from export of computer software, etc. The company which is engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means or a company engaged in providing technical services outside India in connection with the development or production of computer software, is granted deduction in respect of profits derived by the assessee from such business under Section 80HHE. 14. "Computer Software" is defined under Explanation (b) to Section 80HHE as follows: "(b) "computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme which is transmitted from India to a place outside India by any means." 15. Section 80HHE(5) reads as follows: "(5) Where a deduction unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es outside India in connection with the development or production of computer software. The deduction under sub section (1) would be allowed only if the consideration is received in or brought into India by the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. The Section also gives the definition of "computer software". A reading of Section 80 and Section 80HHE show that both operate on different fields. 17. It is no doubt true that prior to the introduction of Section 80HHE under the Finance Act No.2 of 1991 with effect from 01.04.1991, there was no specific head under which technical or professional services would qualify for deduction other than under Section 80-O of the Income Tax Act. It may be noted that even for Section 80-O, Section 85-C was the fore-runner, in substitution of which alone, Section 80C was inserted under Finance (No.2) Act, 1967 with effect from 01.04.1968 and Section 80-O was later on amended. In other words, the phrase "technical or professional services" is given a generic meaning for any type of technical or profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to accept this plea. As already pointed out, given the fact that unlike Section 80-O, Section 80HHE is a specific provision to deal with export of computer software and providing of technical services in connection with the development and production of computer software, the wording in Section 80HHE(1)(ii) read as "providing technical services outside India" alone and there is no further qualification as is found in the said Section reading as "in connection with the development or production of computer software". Perhaps what the assessee contends herein, as narrated above, may be correct. However, given the fact that Sub Section (ii) to Section (1) of Section 80HHE restricts technical services rendered outside India as one in connection with the development or production of computer software, we do not find that the assessee could fall back on Section 80-O for the purpose of claiming a better deduction. In this connection, the reliance placed on the decision of the Delhi High Court reported in [1999] 235 ITR 769 (C.S.Mathur Vs. Central Board of Direct Taxes) needs to be seen. The said case related to the case of a Chartered Accountant who was engaged in providing professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , certainly it would have resorted to such measures to deal with Section 80RRA. Consequently, it could not be held that Section 80-O either employed a repeal of Section 80RRA or had an overriding effect on Section 80RRA, to restrict the benefit on an assessee like the petitioner therein. 24. Thus the Delhi High Court quashed the order refusing to grant approval under Section 80RRA and directed the Revenue to grant the approval and pass orders thereon. A perusal of Section 80-O and Section 80RRA, as are available under the statute book, show that while Section 80-O is with reference to the technical or professional services rendered outside India, Section 80RRA is with reference to deduction on the remuneration received by the individual from the employer for the services rendered by him outside India. There is no definition as to the nature of service contemplated for the purpose of Section 80RRA. Given the fact that Section 80-O deals with rendering of technical or professional services outside India, Section 80RRA is equally on services rendered by the assessee outside India, the only requirement under Section 80RRA is that there should be an employer-employee relationship. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after going through the documents, the Officer recorded a factual finding that the services rendered by the assessee are systems analysis, systems design program specifications, program development, documentation, installation and implementation of software packages and the technical services rendered by the assessee are in connection with the development of production of computer software. The said facts had not, in any manner, been controverted by the assessee in the appeal preferred before the Commissioner of Income Tax (Appeals) for the assessment years 1993-94 and 1994-95. So too before the Tribunal, the said finding had not, in any manner, been controverted. Apparently, persuaded by what had been contended by the assessee in the Section 263 proceedings, without even giving a finding of fact, the Tribunal observed that the services of the assessee were overlapping on areas of export of software development and some covered under the head "provision of technical services". 26. When the specific provision under Section 80HHE is concerned about technical services rendered in connection with software development, we do not approve of the line of reasoning of the Tribunal. One ..... X X X X Extracts X X X X X X X X Extracts X X X X
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