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TMI Blog2016 (11) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... nt further inquiry/scrutiny under Chapter X of the Act. It is undoubtedly aphorism that a legal fiction ought to be taken to its logical conclusion and the mind should not be allowed to boggle. This merely implies that a fiction should logically take a direction; the train of thought however cannot divert elsewhere. The absence of a “deemed export” provision in Section 10A similar to the one in Section 80HHC does not logically undercut the amplitude of the expression “transfer of goods” under Section 80-IA(8) – which is now part of Section 10A. Such an interpretation would defeat Section 10A(7) entirely. Substantial questions of law framed are to be answered in favour of the assessee and against the Revenue. - ITA 1108/2007, ITA 1249 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of computer software; the software so developed by it is electronically transmitted to its head office, located abroad. In terms of the agreement between the assessee and its head office, the latter pays all direct and indirect cost for development of software with the mark up of 15% of such process. 4. The assessee had developed a software known as Softex Form , and exported it through data communication links. It received consideration and furnished the relevant clarification which was accepted by the STPI authorities. It also received remittances from the head office towards the export/ transmission of such software. It reported a profit of ₹ 2,66,95,445/- for AY 2002-03 and filed a return seeking exemption under Section 10A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introducing Section 10A was defeated. The AO crucially referred to explanation 2 to Section 80HHC which provides that where goods and merchandise are transferred by a unit to a branch office, warehouse or other establishment situated outside India, and thereafter sold, such transfer shall be deemed to be export. The absence of a similar provision in Section 10A was held to be an adverse circumstance which precluded the treatment of the transfer of computer software in this case as export. 7. The Commissioner of Income Tax (Appeals) [CIT(A)], on being approached by the assessee, upheld the AO s order. In was in these circumstances an appeal was instituted before the ITAT. 8. The ITAT in its impugned order took note of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind of transaction which the assessee had undertaken. Urging this Court to accept the reasoning of the AO, the learned counsel also relied upon explanation 2(iv) to Section 10A and said that like Section 80HHC, the expanded definition extended only to export and import turnover profit of one kind of transaction i.e. on-site development of software and provision of services. The absence of this provision akin to Section 80HHC in Section 10A, therefore, meant that for a transfer from a branch office to head office with a nominal mark up cannot be treated as export for the purposes of Section 10A. The learned counsel stated that although initially this Court had agreed and confirmed the findings of the ITAT in another decision i.e. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of transfer/ transmission of software from the branch office to the head office as an export. A plain reading of Section 80-IA(8) shows that transfer of any goods or service for the purpose of the eligible business to any other business carried on by the assessee , are covered. The only condition insisted upon by the Parliament was that the face value of such transactions was inconclusive and that the AO could determine the market value: for such transactions or sales. The incorporation in its entirety without any change in this provision [Section 80-IA(8)] to Section 10A through sub-Section (7) is for the purpose of ensuring that inter-branch transfers involving exports are treated as such as long as the other ingredients for a sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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