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TMI Blog2013 (7) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... ee source and therefore, eligible for the purpose of deduction under section 80IB as per the decision of the Liberty India [2009 (8) TMI 63 - SUPREME COURT]. In the case of service charges as decided in Unicorn Appliances Ltd. vs. CIT [2009 (1) TMI 764 - ITAT MUMBAI] has held that receipts by way of service charges is classified as other income which cannot be held as income derived from the industrial undertaking. Thus service charges are not profits derived from the industrial undertaking and therefore, receipts on account of service charges to be excluded while computing the profit eligible for deduction under section 80IB - Decided against the revenue. - ITA.No.2104/Hyd/2011 - - - Dated:- 30-4-2013 - Shri Chandra Poojari And Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iz., MRI, smart tickets and filed return of income for the assessment year 2004-2005 on 29.4.2000 admitting income at Rs.39,49,078/-. The assessment under section 143 (3) was completed by the Assessing Officer determining the income at Rs.68,04,750/-. In the assessment order the Assessing Officer made additions which were contested by the assessee in further appeal. The first issue is with respect to Rs.1,07,94,108/- shown as income from "Service Charges" in profit and loss account. It was submitted by the learned A.R. for the assessee that the service charges consist of two components. They are (1) service charges collected from the customers for services rendered and (2) software sales. The Assessing Officer was of the view that service c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Charges" and the assessee had given a break-up of the service charges which shows that the invoice for sale of software were included under the head "Service Charges". It was further submitted by the learned A.R. that in the purchase order, there will be two invoices (1) for software and the other for hardware. It was clarified that out of Rs.1,07,94,108/- an amount of Rs.95,10,970/- represents software sales and the balance of Rs.12,93,554/- is towards service charges. It was pointed out that sales tax return and service tax return reflecting the amount as sales and service charges have been filed respectively. The learned A.R. filed copies of sales tax order showing the total sales of software of Rs.97,35,770/- out of the service char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice charges to the extent of Rs.12,93,554/- while computing the profit eligible for deduction under section 80IB. 6. The CIT (A) has rightly held that sale of software need to be taken for the purpose of deduction under section 80IB whereas service charges are not to be taken for the purpose of deduction under section 80IB. We find no infirmity in the Order of the CIT (A) as the sale of software consists of sales which are effected of the articles produced by the industrial undertaking and are derived from the industrial undertaking and are first degree source and therefore, eligible for the purpose of deduction under section 80IB as per the decision of the Liberty India 317 ITR 218. 7. In the case of service charges the Hon'ble I.T.A.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alembic Chemicals Ltd. vs. CIT 177 ITR 377 (SC). The department has wrongly raised ground No.4 as the software development expenses are totally different from sale of software with respect to which section 80IB deduction was claimed by the assessee. We therefore, find no infirmity in the Order of the learned CIT (A) and confirm the Order of the CIT (A) in allowing software development expenses as revenue expenditure and dismiss the ground No.4 of appeal raised by the department. 9. Ground No.5 raised by department is misconceived as the learned CIT (A) in para 3.3 of his order followed the decision of Hon'ble Supreme Court in the case of Liberty India vs. CIT (2009) 317 ITR 218 (SC). We, therefore, dismiss this ground raised by the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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