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3.5 On the basis of avove report, it was observed by the Assessing Officer that Aapkidukaan.com Corporation was never active. LNSEL had exported nothing and alternatively, assessee did not develop any software and nor exported. In response to further query made in this regard, assessee contended that as Aapkidukaan.Com Corporation dealt with LNSL, who issued disclaimer Certificate to assessee.

3.6 After taking into account the above explanation of the assessee, Assessing Officer observed that though assessee stressed on the admissibility of exemption u/s.10B of the Act claimed and allowed by the department to the exporter company to whom permission was granted by STPI vide letter dated 30.04.1992 and if this was a case, then what is the fate of a certificate of recognition of Software Export House w.e.f. 01.04.2002 issued by the Jt. Director General of Foreign Trade, Kolkata vide No.013420 dated 03.04.2003 addressed to M/s. Lee & Nee Software (Export) Ltd. As regards to the source code, it was stated that the documents were lying with the department, therefore, the assessee was not in a position to provide any further clarification. According to Assessing Officer, a prudent businessman could not forget the basic ingredients of any products manufactured by him by which he has flourished and therefore, the plea that documents were with the department I TA N o s . 8 8 9 t o 8 9 2 , 1 4 8 1 , 1 5 2 7 , 1 5 2 8 & 1 4 0 2 / M u m / 0 9 A.Ys . 00-01 & 03-04 (M/s. Shreepati Com pute rs) Page 11 could not be accepted by him. Regarding export of software, it had enclosed a copy of Softex Form certified by the STPI, in which name of the assessee appeared as supporting manufacturer. According to Assessing Officer, the Foreign Tax Division had not come across any transaction in its inquiries. It has found that Aapkidukaan.com, USA was never active. Foreign Tax Division also found that agreement between Aapkidukaan.com and Lee & Nee Software Ltd. never materialized.

7.4 In respect of the observations made by the Assessing Officer that LNSEL did not make any export, on careful consideration of the above facts and going through the copies of SOFTEX forms, I do not find any merit in the conclusion drawn by him. Under the provisions of Foreign Exchange Management Regulations, 2000/Exim Policy etc such type of business is required to make a declaration of export of software in Softex form which is necessarily to be submitted to the designated official of the Department of Electronics, Government of India at the Software Technology Parks of India (STPIs) etc. Perusal of such forms submitted by LNSEL and related concerns clearly shows that the competent authority on behalf of Department of Electronics, in the space provided in the said form, has duly certified that the software described above was actually transmitted and the export/royalty value declared by the exporter has been found to be in order and accepted by them.

5.8.3 Regarding M/s. LNSEL is only engaged in trading of software and they are not manufacturing any software. Further, there was no mention in the return of income of LNSEL that it had given disclaimer certificate to the appellant firm and thus it has violated the provisions of Income Tax Act. LNSEL claimed exemption u/s. 10 A on the same profits on which the assessee firm claimed deduction u/s. 80 HHE. At para 7, page no.8 of the assessment order, Assessing Officer has commented that LNSEL is engaged in I TA N o s . 8 8 9 t o 8 9 2 , 1 4 8 1 , 1 5 2 7 , 1 5 2 8 & 1 4 0 2 / M u m / 0 9 A.Ys . 00-01 & 03-04 (M/s. Shreepati Com pute rs) Page 33 only trading of software and not in manufacturing of software. On the same page 8 of the assessment order, in the beginning para, Assessing Officer has stated that the assessee firm has filed sample copy of SOFTEX form, which is a declaration for export of software by M/s. LNSEL. The SOFTEX form has to be submitted to the designated official of department of electronics of Government of India at the STPI and the said export is done under the supervision of competent authority i.e. Director of STPI. Apart from the above, it was certified by the said officer that the software described in the SOFTEX form was actually transmitted and the export value by the exporter has been found in order and accepted by the said authority. Further the export through STPI is allowed only when certificate of STPI is granted. Copy of sample SOFTEX form filed by LNSEL is forming part of paper book page nos. 141-160. Further the claim of assessee LNSEL would be proportionately reduced when disclaimer certificate is issued to the supporting manufacturer. In the instant case, LNSEL is eligible to issue disclaimer certificate, as it is an exporting company. Further LNSEL claimed deduction u/s.10B of the Act on the value addition. LNSEL issued disclaimer certificate in form 10CCAG to assessee company with respect to appellant company's share in software export. The copy of Form 10CCAG is forming part of paperbook page nos. 44-60. In this regard, during the appellate proceedings, CIT(A) had corresponded with the Assessing Officer of LNSEL, Kolkata I TA N o s . 8 8 9 t o 8 9 2 , 1 4 8 1 , 1 5 2 7 , 1 5 2 8 & 1 4 0 2 / M u m / 0 9 A.Ys . 00-01 & 03-04 (M/s. Shreepati Com pute rs) Page 34 wherein he was intimated vide letter dated 10.12.2008 that there was no dispute pending with regard to the claim of deduction u/s.10B of the Act and no recourse was taken to the provision of section 147 for AYs 2000-01 to 2002-03. The CIT(A) has recorded this fact in Para 7.5 at Page 29 of his order which reads as follows:

I TA N o s . 8 8 9 t o 8 9 2 , 1 4 8 1 , 1 5 2 7 , 1 5 2 8 & 1 4 0 2 / M u m / 0 9 A.Ys . 00-01 & 03-04 (M/s. Shreepati Com pute rs) Page 36 5.8.5 Next objection of Assessing Officer was that enquiry made by Foreign tax Division with respect to the transmission of software developed to Aapkidukan.com Corporation, did not come across any such transaction. Further the said company had two bank accounts but the owners of Aapkidukan.com were not the owners of these accounts. Assessing Officer doubted the export of software. In this regard, stand of assessee has been that SOFTEX form through which the software has been exported by LNSEL, was certified by competent authority i.e. Director of STPI, which is a Government authority. Thus, the stand of the Assessing Officer is a mere surmise and in contradiction to the Competent Authority which is the Director STPI. Assessee firm was also required to explain why M/s. Apakidukaan.com Corporation had two bane accounts but the owners of Aapkidukaan.com were not the owners of these accounts. In response to this, it was reiterated by assessee firm that the Bank certificate SOFTEX form proves the receipt of foreign exchange by LNSEL. The appellant firm cannot be expected to know the internal affairs of Aapkidukaan.com Corporation with whom, assessee firm had no privity of contract or transaction. As assessee firm had direct transaction with LNSEL, it has tried to enquire with them and provide as many information as is relevant to establish the claim of assessee firm. The assessee firm was never in direct touch with M/s. Aapkidukaan.com Corporation and hence to providing such information was I TA N o s . 8 8 9 t o 8 9 2 , 1 4 8 1 , 1 5 2 7 , 1 5 2 8 & 1 4 0 2 / M u m / 0 9 A.Ys . 00-01 & 03-04 (M/s. Shreepati Com pute rs) Page 37 beyond the scope of assessee firm. CIT(A) rightly held that the report of FTD does not falsify the claim of export made by LNSEL and it concerns itself more about the business activities of Aapkidukan and its existence as an entity. On both these counts the report of the FTD confirms the existence and business activities. Accordingly, it was rightly held that the point raised by Assessing Officer does not carry significance vis-à-vis the appellant, so long as the export made by LNSEL have been accepted to be genuine by Assessing Officer in its case. In view of above discussion, this object was rightly noted out by CIT(A) while granting relief to assessee.