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TMI Blog2021 (10) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer in the present case that the exporters Apkidukan.com, the ultimate purchasers of the softwares does not appear to be genuine, cannot be accepted. Assessing Officer had relied upon statements of 5 persons who had denied having developed any software for respondent. ITAT rightly concluded that respondent should have been given an opportunity to cross-examine those 5 persons, which was not granted. ITAT has also observed that there were others, whose affidavits were filed by respondent confirming that they worked for respondent and those affidavits have not been considered by the Assessing Officer. ITAT has made an observation on fact is that the Assessing Officer has also overlooked the fact that TDS for the payments made were duly recorded in the books of accounts and relevant vouchers found during the search only corroborate the genuineness of such payments and that TDS duly deducted was paid to the Government account. ITAT held that nothing has been brought on record by the Assessing Officer to suggest that all such facts borne from the books of account were bogus or incorrect as the books of account have not been rejected. We find that no substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware (Exports) Ltd. (LNSEL) 28.07.2000 M/s L.T.Soft Services 28.07.2000 M/s Raj Soft Services 28.07.2000 M/s. M S Soft Services 28.07.2000 Out of the above four parties, M/s L T Soft Services, M/s Raj Soft Services and M/s M S Soft Services, with effect from 28th February 2000, amalgamated with LNSEL vide order dated 18th September 2000 passed by High Court of Calcutta. Hence virtually all the four contracts were entered with LNSEL. 4. On gaining even more confidence, respondent decided to apply for 100% Export Oriented Unit (EOU) under Software Technology Park of India (STPI), Bhubaneswar Centre for the development of computer software which was done vide application dated 16th December 2000. The STPI granted permission on 1st January 2001. For the purpose, premises were also taken on lease. The contract of Lee and Nee Group was huge enough to engage assessee in export related work. As already stated above, assessee firm had already appointed Shri C.L.Deshpande as technical director as none of the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kaan.com and decided to outsource designing of various modules and templates for the said software. For said purpose, orders were placed with various other software developers apart from respondent. Once the work outsourced was completed and received by LNSEL through email, the various parts outsourced to different developers were assembled and linked with the main portal. To this extent, there was a value addition by LNSEL. On the said value addition, exemption u/s 10B was claimed by LNSEL and same was accepted by the department in ITAT. 9. Subsequently, assessee claimed deduction u/s 80HHE of the Act on supply of above device to LNSEL as supporting manufacturer. 10. The Assessing Officer disallowed and brought to tax the deduction of claim of ₹ 7,67,33,946/- (Appeal No.1200 of 2017) and claim of ₹ 10,33,88,045/- (Appeal No.1232 of 2017) under Section 80HHE (deduction of in respect of profits from export of computer software etc.) and software development charges of ₹ 23,48,200/- (Appeal No.1200 of 2017) and ₹ 46,20,400/- (Appeal No.1232 of 2017). 11. Following are the reasons for dis-allowance:- (a) Shri R.R.Chaturvedi, a Director of responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst respondent by the Assessing Officer were mainly presumptions and surmises and not substantiated by any cogent evidence. 13. Aggrieved by this order of CIT(A), appellant preferred an appeal before ITAT. ITAT by its very well reasoned order dated 18th August 2016 dismissed the appeal filed by appellant. Infact, respondent had also preferred an appeal to ITAT which also came to be dismissed. 14. The substantial questions of law proposed in both appeals are identical except that the amounts vary. The same read as under: INCOME TAX APPEAL NO.1200 OF 2017 (i) Whether on facts and circumstances of the case and in law the Hon ble ITAT was correct in confirming order of CIT(A) allowing deduction u/s 80HHE of ₹ 7,67,33,946/- without considering the facts brought on records which clearly established that the assessee did not conduct any software development and the assessee failed to establish the genuineness of the software development charges so paid as evidence from the replies to the summons issued to the persons to whom the assessee purportedly paid software development charge and the assessee even failed to produce the source code of the purported software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as correct in confirming order of CIT(A) allowing deduction u/s 80HHE of ₹ 10,33,88,045/- without considering the facts brought on records which clearly establishes that person, i.e., Apkidukaan.com in USA for whom the purported software was developed was not active in the business as confirmed by USA revenue authorities in response to reference made? (iii) Whether on facts and circumstances of the case and in law the Hon ble ITAT was correct in confirming order of CIT(A) allowing deduction u/s 80HHE of ₹ 10,33,88,045/- without considering the facts revealed during the course of search and assessment proceedings that M/s Lee Nee Software Exports P Ltd was not even entitled to issue disclaimer certificate for supporting manufacturer to the assessee and thereby the assessee was not entitled to deduction u/s 80HHE ? (iv) Whether on the facts and circumstances of the case and in law, the Hon ble ITAT was correct arriving at conclusion that the claim of the assessee u/s 890HHE was genuine in spite of contrary fact brought on record to prove the claim of the assessee as false ? (v) Whether on facts and circumstances of the case and in law the Hon ble ITAT was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export. It is also noted that CIT (A) had corresponded with the Assessing Officer of LNSEL, who has informed CIT(A) that there was no dispute pending with regard to the claim of deduction under Section 10B of the Act by LNSEL and no recourse was taken to the provisions of Section 147 of the Act for AY 2000-2001 to 2002-2003. ITAT has come to the factual finding that on the basis of material on record the claim of respondent under Section 80HHE of the Act was in order. ITAT has also come to the factual finding that the source code of softwares developed have been provided by respondent to the Assessing Officer. ITAT, therefore, concluded that when the export made by LNSEL has been accepted to be genuine by the Assessing Officer in LNSEL s case, the objection of the Assessing Officer in the present case that the exporters Apkidukan.com, the ultimate purchasers of the softwares does not appear to be genuine, cannot be accepted. 18. Moreover, the Assessing Officer had relied upon statements of 5 persons who had denied having developed any software for respondent. ITAT rightly concluded that respondent should have been given an opportunity to cross-examine those 5 persons, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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