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TMI Blog2008 (4) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... ionalities, which could vary from user to another user. Thus, every maintenance or modification or bug repairing would require independent code and each such independent code/procedure including codes written of interfacing and specific problem solving relating to legacy programme would still be software s and nothing else. We also find from Explanation 2 to section 10A that computer software means any computer programme recorded on any disc, tape, perforated media or other information storage device which is transmitted or exported from India by any means. There is no dispute that whatsoever the software, the software which were in nature of bug repairing, interpreting and code maintenance programmes, could have been transmitted by the assessee to its client abroad only if it was recorded initially in some information storage device, which could be either the hard disc memory or any other memory devices temporarily or permanently used for the purpose of storing the programme codes. In taking this view, we are also fortified by the decision of the Tribunal in ISBC Consultancy Services Ltd. v. Dy. CIT [ 2002 (8) TMI 840 - ITAT MUMBAI] , wherein it was held that even customization of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S software documentation. ------------------------------------------------------------------- 2. DSS/OV/001 22-6-00 6000 USD 2,66,177 -Do- ------------------------------------------------------------------- 3. DSS/OV/066 22-9-00 6000 USD 2,63,719 -Do- ------------------------------------------------------------------- 4. DSS/OV/013 22-12-00 6000 USD 2,76,807 -Do- ------------------------------------------------------------------- 10,66,788 ------------------------------------------------------------------- 3.2 Assessee had given explanation that it was obliged under contracts with M/s. OVI to modify the software called 'OVISS' in order to ensure full and proper functioning of such software, and also had to support M/s. OVI in the event of faults and damages due to improper use of the software, handle queries, make master data management and handle monitoring and trouble shooting. According to the assessee, the abovesaid activities would fall within the purview of section 10A. However, learned Assessing Officer excluded the above receipts of Rs. 10,66,788 from M/s. OVI and allowed exemption under section 10A to the assessee only for the balance amount of Rs. 52,28,642. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised Representative also submitted that maintenance programmes were nothing but software since according to him any modification in an existing software would require devising new codes. 6. As against this, the learned Departmental Representative submitted that the assessee was only engaged in maintenance work for M/s. OVI and was not independently manufacturing or producing any computer software for M/s. OVI in order to be eligible for claiming deduction under section 10A of the Act in respect of receipts from such party. 7. We have perused the orders of the authorities mentioned the submissions made and the copies of records filed. 7.1 The undisputed facts that emerge are as follows. Assessee had claimed exemption under section 10A for total amount of Rs. 62,95,430 of which except for Rs. 10,66,788 received from M/s. OVI the Assessing Officer allowed the claim. Assessee was doing work relating to all its clients from its unit in India and transmitting the same to its clients abroad for which consideration was received by it from the clients as per respective contracts. Assessing Officer has no case, whatsoever that such transmission of software to clients outside India, would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to devise programmes for repairing its bugs, prepare for its replacement with another software programming for necessary interfaces and also effecting modification/enhancement to the said software, and most importantly, to write software's required to solve specific problems in data or data structures. It is clear from the above that the OVISS software on which the assessee was working was a legacy system developed for M/s. OVI by M/s. Compu Tact Software Services. It is also clear that said client of the assessee was not confident about this OVISS software for its use worldwide and hence contracted with the assessee for making modifications therein. 7.2 In the software development life cycle, maintenance is known as last phase of development and, therefore, it is inherent part of such development. It is necessary to distinguish 'software maintenance' from 'maintenance' as understood in common parlance, i.e. maintenance of a tangible asset like plant and machinery. ICAI in its publication 'Information System Audit Reference Book' Modules 4 to 7 which describe the recommended steps for systems development methodology, defines, 'system maintenance', as the last part of the system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S, customizing programmes developed, code change in OVISS would all be nothing but manufacture/production of computer software. This being the case, we are of the opinion, that for the export thereof, assessee would be very much eligible for deduction under section 10A. 7.4 We also find from Explanation 2 to section 10A that computer software means any computer programme recorded on any disc, tape, perforated media or other information storage device which is transmitted or exported from India by any means. There is no dispute that whatsoever the software, the software which were in nature of bug repairing, interpreting and code maintenance programmes, could have been transmitted by the assessee to its client abroad only if it was recorded initially in some information storage device, which could be either the hard disc memory or any other memory devices temporarily or permanently used for the purpose of storing the programme codes. In taking this view, we are also fortified by the decision of the Tribunal in ISBC Consultancy Services Ltd. v. Dy. CIT [2004] 88 ITD 134 (Mum.), wherein it was held that even customization of software involves intellectual process, and it meets the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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