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"It is submitted that the „program management services‟ as mentioned in the invoices raised by the assessee company for the subject assessment year are in the nature of software development eligible for deduction u/s 80HHE or exemption section 10A of the Act, as the case may be. The term „project management services‟ is merely a nomenclature assigned by the assessee to software development services rendered by the assessee company."

12. In appeal, the CIT (Appeals) sought a remand report. He also noticed that the assessee filed a certificate during the assessment proceedings to the effect that the "project management services" rendered by the assessee are actually software development services rendered in and outside India, thus eligible to deduction under Section 10A of the Act. The CIT (Appeals) further noticed that the quarterly return filed by the STP unit, Chennai and the documents filed with it showed cumulative export of software, type of software, name of the country to which the exports were made and that 35 software engineers were employed by it for providing the services. The CIT (Appeals) sought a remand report which was given in 16.02.2005. The CIT (Appeals) noticed that in the remand report the Assessing Officer had not taken any objection in respect of the compliance of various conditions or that they have not been fulfilled by the assessee under Section 10A. The relevant discussion is at page 36 of the paper-book: -

13. The above reasoning was upheld by the ITAT. This Court is of the opinion that the view taken by the Assessing Officer, that the nature of services rendered or extended by the assessee were not "computer software", is contrary to the record. The Assessing Officer's order has alluded to the CBDT Circular dated 26.09.2000 which extends or explains the services as including back-office; operations; call centres; content development or animation; data processing engineering and design; geographic information system services, human resource services; insurance claim processing; legal databases; medical transcription, pay roll; remote maintenance, revenue accounting, support centres; web-site services etc. It is apparent that the CBDT itself had interpreted the term "computer software" occurring in Explanation 2 to Section 10A of the Act in an expansive rather than a narrow manner as was done in the present case by the Assessing Officer. "Computer software" even otherwise, generically, has to be given a wider interpretation since it implies a system or software which would be capable of catering to different services capable of customization having regard to the peculiar needs of a given situation. In this case the materials placed by the assessee on record reveal that its "program management system" was nothing but a development of software which assisted in management services. The CBDT itself has treated a wide array of services which are assisted by computer software i.e. back office support, call centre, medical transcription, etc. as falling within the rubric of "computer software". The assessee's "program management services"

which is a method of providing software to achieve a particular end cannot be said to be excluded from the term "computer software". This Court accordingly holds that the findings of the Tribunal are sound and do not require any interference.
14. Regarding Question (c): As far as the claim of bad debts is concerned, the Assessing Officer's observations are as follows: -
"The assessee has claimed deduction of `3,14,90,305/- in the computation of total income on account of Bad Debts written off not passed through the profit and loss account. Under the provision of section 36(1)(vii), amount of any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year, is allowable as deduction subject to the following conditions laid down in section 36(2): -