Income Tax Appellate Tribunal - Pune
Hemant G. Sathe, Pune vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
Pune Bench "A" , Pune
Before Shri I.C. Sudhir, Judicial Member
and G.S. Pannu, Accountant Member
ITA No. 62/PN/2007
(Asstt. Year: 2003-04)
Dy. CIT, Cir. 5, Pune ... Appellant
v.
Shri. Hemant G. Sathe ... Respondent
54, Natraj Society, Karvengr
Pune-411 052
PAN : Not
Appellant by : Shri. S.K. Ambastha
Respondent by : Shri. V.L. Jain
Date of hearing :17.10.11
Date of Pronouncement: .11.11
ORDER
Per I.C. Sudhir, JM
The revenue has questioned first appellate order on several grounds involving the issue as to whether Ld CIT(A) has erred in deleting the disallowance of Rs. 11,73,014/- which had been made in the assessment by rejecting the assessee's claim of deduction u/s. 80 HHE of the I.T. Act 1961.
2. We have heard and considered the arguments advanced by the parties in view of the orders of the lower authorities and the decision relied upon by the Ld. A.R.
3. The Ld. D.R. has basically placed reliance on the assessment order whereas the Ld. A.R. has tried to justify the first appellate order on the issue.
4. The relevant facts are that the assessee engaged in translation and interpretation services rendered via the internet had claimed deduction u/s. 80HHE of a sum of Rs. 11,73,014/-. The assessee had also furnished report of C.A. in the 2 ITA . No 62/PN/2007 Shri Hemant G. Satje A.Y. 2003-04 Page of 5 form 10CCAF as required u/s. 80HHE(4) with the return. The A.O disallowed the claim on the ground that the services were not covered u/s. 80HHE.
5. The Ld CIT(A) has allowed the claimed deduction on the strength of Notification No. SO 890(E) dated 26.9.2000 issued by the CBDT to enlarge the scope of the benefits of Section 80HHE of Information Technology except provisions or service. The Ld CIT(A) has observed that the A.O has denied the claim by observing that the business of the assessee is not covered by either of the 15 Services notified by the CBDT. While doing so, the A.O has not considered it necessary to explain why the services provided by the assessee cannot be covered under the prescribed category of services. After detailed discussion, the Ld CIT(A) has given his finding in para No. 4.1 of the first appellate order reproduced hereunder for a ready reference :
"4.1 I have gone through the facts of the case. The deduction u/s 80HHE is available where the assessee is engaged in the business of export out of India of computer software or its transmission from India to a place outside India by any means. Computer software has been defined in the Explanation as under :
"computer software" means, -
(i) any computer programme recorded on any disc, tape, perforated media or other information storage device; or
(ii) any customised electronic data or any product or service of similar nature as may be notified by the Board.
Which is transmitted or exported from India to a place outside India by any means;
The section proceeds on the basis that service of similar nature also constitutes computer software. The Central Board of Direct Taxes by Notification No. 11521 (F.No. 1342/49/2000-TPL) dated 26.9.2000 [245 ITR(St.) 102] issued in terms of sub-clause (i) of the Explanation 2 has specified the following Information Technology enabled products or services, as computer software:
(i) Back Office operations;
3 ITA . No 62/PN/2007
Shri Hemant G. Satje
A.Y. 2003-04
Page of 5
(ii) Call Centres;
(iii) Content Development or Animation;
(iv) Data Processing;
(v) Engineering and Design;
(vi) Geographic Information System Services;
(vii) Human Resource Services;
(viii) Insurance Claim Processing
(ix) Legal Databases;
(x) Medical Transcription;
(xi) Payroll;
(xii) Remote Maintenance;
(xiii) Revenue Accounting;
(xiv) Support Centres; and
(xv) Web-site Services
The definition of computer software read with the Notification issued by the CBDT covers wide spectrum of activities within the meaning of computer software. It covers various services referred in the Notification.
In view of the above Notification, the service of translation & interpretation of the data in various languages like German and Spanish is held to fall under clause (iv) of the Notification issued by the Board. It is also held to be covered under clause (xiv) being Support Centres under the Notification. In this connection reference is made to the decision of the Delhi Tribunal in the case of ACIT v. Amadeus India P. Ltd. 79 ITD 407 in the context of deduction under section 80HHE. In this case the assessee was involved in data processing activity. It had main computer in Delhi connected to various travel agents in India. Whenever reservation had to be made the travel agent connected to the computer of Amadeus India processed the data and sent it to Germany through leased lines. In Germany the data was further processed for correct status of reservation. Amadeus India raised bills on Amadeus Germany based on segments in reservation. The Delhi Tribunal held that the assessee was entitled to deduction under section 80HHE since the assessee was exporting instructions to computer which were capable of causing a computer to perform a particular task or achieve a particular result. This decision in a sense gave wider meaning to the term computer software consistent with object of section 80HHE and general policy of the Government to encourage exports and information technology. The view of the Tribunal gets fortified by the entry of date processing 4 ITA . No 62/PN/2007 Shri Hemant G. Satje A.Y. 2003-04 Page of 5 included in the Notification referred to above. In view of above, this ground of appeal is allowed."
5. Considering the above submissions, we find that the assessee is engaged in translation and interpretation services rendered by the Internet. These services involved translation of product manuals, sales broachers etc., in languages like German, Spanish etc. These services are Web involved and the assessee is not required to travel abroad for this purpose. The data on either side is transmitted through the net. The sale services result in earnings in convertible foreign exchange. The assessee had claimed deduction u/s. 80HHE of Rs. 11,73,014/- on this earning. The definition of "Computer Software" provided in Section 80HHE of the Act read with clarification made by the CBDT vide its notification dated 26.9.2000 (Supra) discussed hereinabove in para no. 4 makes it clear that the services rendered by the assessee comes under the definition of the "Computer Software " enabling it eligible for the claimed deduction. The decision of Delhi Bench of the Tribunal in the case of ACIT Vs. Amadeus India P. Ltd. (Supra) relied upon by the ld. CIT(A) also supports the case of the assessee. We thus do not find reason to interfere with the first appellate order in this regard. The same is upheld. The grounds involving the issue are thus rejected. Consequently, appeal is dismissed.
6. In result, the appeal is dismissed.
The order pronounced in the open Court on 13th December 2011.
Sd/- Sd/-
(G.S. PANNU) (I.C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Pune, dated the 13th December, 2011
US
Copy of the order is forwarded to :
5 ITA . No 62/PN/2007
Shri Hemant G. Satje
A.Y. 2003-04
Page of 5
1. The Appellant
2. The Respondent
3. The CIT -III, Pune
4. The CIT(A)-II, Pune
5. The D.R. "A" Bench, Pune
6. Guard File
By order
Senior Private Secretary
Income Tax Appellate Tribunal
Pune