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(8) Further, the assessee clarified that the firm was formed somewhere in the year 1992-93 with the object of earning income through business of development of software and by running training institute by appointing Shri.C. L. Deshpande as Technical Director and initially, the revenue was earned only by running training institute. Subsequently, one of the partners of the assessee firm came in the contact of Shri. S.M. Gupta, Director of M/s. Lee & Nee Software (Export) Ltd. as they were in the same field. Shri. S.M. Gupta proposed for the 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 7 business of developing software for his company, which was accepted by the assessee firm in consultation with technical director Mr.C. L. Deshpande and the first contract was entered into on 28-12-1999 as a test and case was completed successfully, which led to the receipt of even a larger contracts dated 28-7-2000 from Lee & Neo Group. For this purpose, the premises were taken on lease at Bhubnneshwar. On gaining more confidence, the assessee decided to apply for setting up of 100% export oriented unit under Software Technology Park of India (STPI), Bhubaneshwar, which was done vide application dated 16-12-2000 and the STPI granted permission on 1/1/2001. It has enclosed copies of 4 agreements with Lee & Nee Group dated 28-7-2000 and also the scope of work carried out. Further, it is reiterated that Shri C.L. Deshpande was the whole and sole person to manage the said division, who is no more. Further, it is staled that the premises were taken on lease, electricity expenses were incurred, new computers were purchased for fulfilling the contract. It has also filed sample copy of SOFTEX .which is a declaration for export of software by LNSL to Aapkidukan.Com Corporation, USA. It is also clarified that LNSL and its group was eligible to issue disclaimer certificate as the only requirement to be fulfilled for claiming 80HHE is that there should be an export of computer software and it is immaterial whether the same is developed by the assessee or purchased from market and exported."

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.