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14. The assessee company on the basis of the activities carried on by it claimed exemption of its income under section 10B on the ground that the assessee company is a hundred per cent EOU and earned its income from the export of computer software. Alternatively, assessee company claimed deduction in respect of its profits on the ground that the assessee was engaged in the business of export out of India of computer software/its transmission from India to a place outside India/Providing technical services outside India in connection with the Development/ Production of computer software.

37. Shri Farooq V. Irani, the learned counsel along with Sri Yogesh Thar appeared for the assessee-company. Shri Irani argued the case at length. His contentions, submissions and arguments are summarized below:

A. Exemption under section 10B in respect of CIC
1. The assessee-company is engaged in implementation and customization of software known as SAP (System Application & Product). The assessee-company has brought licences from SAP, Ag in West Germany and installed it at its offshore centre in Thane, India for carrying out the customization, implementation activities and to improve the skill and expertise of its employees. The assessee is a recognized 100% Export Oriented Unit (EOU) recognized by Government of India in the Ministry of Industry. The recognition has been granted only after satisfying that the assessee-company is engaged in the manufacture of computer software and in providing technical services outside India in connection with the development or production of computer software.
C. That, therefore, no exemption is admissible to the assessee on receipts from CIC and Unisys, under section 10B.
D. Deduction under section 80HHE
1. Section 80HHE provides for deduction on account of export of computer software or its transmission outside India by any other means or providing technical services outside India in connection with the development or production of computer software. Insofar as CIC is concerned, the nature of activity of the assessee is merely recruitment and training of personnel of SAP software who are subsequently appointed by CIC. There is no case of either production of software or its export outside India or of rendering any services to CIC for the development and production of computer software.
(i) Export out of India of computer software or its transmission from India to a place outside India by any means:
(ii) Providing technical services outside India in connection with the development or production of computer software, there shall, in accordance with the subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from such business."

54. Accordingly, the assessee could be considered as eligible for deduction under section 80HHE with reference to the receipts from CIC only if the assessee-company had exported out of India of computer software or transmitted the same from India to a place outside India by any means, or had provided technical services outside India in connection with the development or production of computer software.