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TMI Blog2014 (9) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... registration and on the basis of the details, was satisfied that the respondent-assessee on factual basis had undertaken the activities - the Revenue had not stated that no such or actually no activities were performed or carried out by the respondent-assessee at Bangalore - the total business income as declared was accepted as the business receipts of the respondent-assessee - This included the amount for invoices raised by Bangalore units and by the Gurgaon unit - If the invoices issued by the Bangalore unit is excluded, then this figure cannot be added or included as the income or receipts – Thus, the order of the Tribunal is upheld – Decided against revenue. - Income Tax Appeal No. 1255/2011 - - - Dated:- 3-9-2014 - Sanjiv Khanna And V. Kameswar Rao,JJ. For the Appellant : Mr. N. P. Sahni, Sr. Standing Counsel Mr. Nitin Gulati, Advocate. For the Respondent : Mr. Ajay Vohra, Ms. Kavita Jha Mr. Vivek Bansal, Advocates. JUDGMENT Sanjiv Khanna, J. Revenue, through Commissioner of Income Tax-II, has preferred this appeal relating to the Assessment Year 2007-08, on the following substantial question of law:- Whether the Income Tax Appellate Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 of Explanation to Section 10A but observed that the respondent-assessee simply identified prospective candidates and forwarded their bio-data to the foreign company and, therefore, the said exercise cannot be called a human resource service. The respondent-assessee was merely engaged in business of transmitting data for recruitment of manpower to a company in USA. The said business activity was not a service or a product similar to customised electronic data and, therefore, not covered under the CBDT notification mentioned above, including the sub-heading human resource service . Principle of ejusdem generis would apply to clause (b) of Explanation 2(1) to Section 10A. He relied upon the opinion given by Judicial Member in the case of Income Tax Officer versus Accurum India Private Limited, (2010) 128 TTJ 249 and observed that the third member had not agreed with the view expressed by the Judicial Member/ majority decision. The respondent-assessee s case was identical to the case of Accurum India Private Limited (supra) as they were involved in a similar business activity; i.e. activity of recruitment. Keeping in view the manner in which the same was conducted, it would not fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in disc, tape or perforated media or other information storage device. Clause (a) refers to the general or common meaning associated with the term, computer software . However, clause (b) expands the meaning of the term computer software and broadens it to include any customised electronic data or any product or service of similar nature, as may be notified by the Board. The expression, any customized electronic data would mean data, which is customized; but it need not be computer software. Processing or customisation, normally would involve assimilation, correction, filtration, etc. of the data. The requirement is that it should be customised. However, clause (b) does not end with customized electronic data and the legislature wanted to further expand the scope of the term, computer software and thus the wide and broad expression, any product or service of similar nature, as may be notified by the Board . The intention and desire of the Legislature, which is palpable and lucid from the words and expression used, is that the term, computer software specifically includes customised electronic data and also any product or service of similar nature notified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance and, (xiv) support centres . These services would not necessarily and primarily involve customised data processing, but nevertheless, these are information technology enabled services. In case of call centres, queries and questions from a customer of a third company are answered by an employee of the assessee based in India. The said task is performed with the aid and help of information technology but it would not be a case of customised electronic data service or export thereof. Similar exercise may be undertaken in case of remote maintenance or support centres, which answer queries and gives suggestions by e-mails or through voice and/or video communications. These services would not normally involve processing or sending customised electronic data abroad, yet these are information technology enabled services and specifically covered under the Notification. 10. Leaned senior Standing Counsel for the Revenue submitted that the principle of ejusdem generis should apply. The said doctrine has no application in the present case for the simple reason that there is no enumeration of specific words of a particular class or category preceding the words, or any other produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral words clubbed with it. It was specified that the said principle would be applicable where there are two or more words, susceptible of analogous meaning, clubbed together and the intention is that they would be understood to be used in their cognate sense, taking colour from each other, thereby meaning that more general being restricted to that of a less general. Reference was made to two decisions in State of Bombay vs. Hospital Mazdoor Sabha AIR 1960 SC 610 and Corporation of the City of Nagpur v. Employees AIR 1960 SC 675 where the said doctrine had not been applied in construing the definition of industry because the Legislature had deliberately used wider words and defined the word correspondingly wider. The principle being that only when the intention of the Legislature in associating wider words with words of narrower significance is in doubt, or otherwise not clear, that the rule of construction, noscitur a sociis can be usefully applied. Therefore, the said doctrine applies when the words used are vague, imprecise, and ambiguous, and there is no indication that those have been deliberately used for wider meaning. As noticed above, in the present case, the Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther purport. Notification is a piece of delegated legislation and to that extent cannot be contrary to the principal enactment nor can it whittle down the effect of the same. Albeit, clause (b) of Explanation 2 to Section 10A has been worded in a manner which enforces the view and the opinion that Legislature, in their wisdom, has left it to the Board to decide which product or services of similar nature would qualify and should be treated as falling under clause (b), in addition to customised data processing. The intention of the Legislature was not to constrain or restrict but to enable the Board to include several services or products of similar nature in the ambit of the provision. This is what precisely the Board has done when it used the expression, information technology enabled products or services in the notification. 15. The next question, which arises for consideration is whether the respondent-assessee was engaged in providing human resource services and the nature specified in notification No. 890 (E), i.e. information technology enabled service relating to human resource . In the impugned order passed by the Tribunal dated 27th May, 2011, it is recorded that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals). Commissioner of Income Tax (Appeals), in his order, has mentioned the submission of the respondent-assessee that they were engaged in the activity of identification and short listing of candidates and post-processing forwarding their bio-data, etc. to the companies based in USA. For the purpose of forwarding bio-data, software was used and exchange of information took place through e-mails. The respondent-assessee did not hire any employee for themselves but the hiring was undertaken by the foreign companies who took the final call or decision as to whether or not the candidates so identified should be hired or not. The respondent-assessee has filed before us a paper book which was also filed before the Tribunal and it sets out, in detail, the entire process undertaken. Stage one of the process involved sourcing of prospective technically skilled employees by accessing database stored abroad. In the second stage, after filtering data, a list of shortlisted technical candidates was transmitted to overseas clients through the assessee s tracking software called, CATS . The said software was hosted on Mindlance Inc. Service in Hoboken, New Jersey (USA). The assessee was pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogy based products or services , the Board was conscious and aware that human resource services can be rendered in India to third party companies, which are stationed abroad. The word, human means, a man or a woman and the word resource , in normal parlance, refers to supply of goods, raw material, etc, which a person can use. When read together, the word, human resource would include a large number of services and activities involving humans rendering their services in any business, trade or a profession. It would be incorrect and/or illogical to hold that the process of acquiring and recruiting employees would not be included in the expression, human resource . Nascom literature includes recruitment, staffing, education and training, pay rolls services and record management under the head, human resource services . Gary Desser in his work, Human Resource Management has explained the said term as the process of acquiring training, appraising and compensating employees, and attending to their labour relations, health and safety and fairness concerns. Process of acquiring is an integral part of human resource management and not alien or excluded. Cambridge Online Dictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the shifting itself would disqualify and negate the claim has not been specifically raised in the grounds of appeal filed by the Revenue or in the questions posed. Nor has any question or issue with regard to alleged violation of the STPI letter, dated 27th October, 2004, raised before us. The respondent-assessee had applied for registration of the Bangalore unit upon shifting the undertaking from Delhi. The application form, dated 23rd January, 2007, has been placed on record and states, IT enabled services and human resource . The name of the buyer or the client has been given as Mindlance Inc. and date and number of invoice issued by them has been mentioned as dated 30th September, 2006. It is further stated that the export contract and purchase order was already registered with STPI. The approval letter was issued by STPI on 31st March, 2007 and states that STPI were happy to inform that the assessee s case was examined and had been approved under the delegated powers to the Directors of STPI. No doubt, the said letter also mentions and calls for confirmation and execution of an agreement within thirty days and the deposit of money but this was a subsequent act, post app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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