Indian Kanoon - Search engine for Indian Law

d) In a typical scenario, Client would send us the web address and ask the team in India to execute their software engineering tasks to work on the development of the application. Our teams perform engineering tasks on the software and post the results in the source code repository system at the client site on record the results in the database at client site or email the work product to the client. In all events, the code is transmitted either via the internet or via CDs to our office, initially stored on local drives and at the end of each day completed source code is electronically transmitted to the client site to be merged and store on their repository systems and electronic media such as hard drives.

34. The second aspect of the issue is non purchase of capital goods by the assessee in Unit I at SP IC Centre, Chandigarh and Unit II at Sector 34-A, Chandigarh. The allegation of the Assessing Officer were that no capital goods were purchased by the assessee and hence it is presumed that the business at Unit I & Unit II was carried on after restructuring of the existing unit at Mohali, which is not permissible in view of the provisions of section 10B(2) of the Act . The assessee vide its written submissions furnished before the CIT(A) had tabulated the details of the units of the assessee company which are reproduced under para 25 at page 14 of the appellate order. The Unit I at SPIC Centre, Chandigarh received its STPI approval on 12.3.2003 whereas the Unit II at Sector 34-C, Chandigarh received its STPI approval on 5.8.2004. The claim of the assessee is that the equipments were loaned from its Principal which were pre loaded with the information on which the assessee had to carry on its progress reports in connection with the customers and export of said services to M/s Raico Inc. dba QASource, USA. The assessee had imported the capital goods for unit-I at the value of Rs. 8,37,479/- during the period 22.4.2003 on 11.11.2003 and for the Unit II for Rs. 19.69 lacs from 20.10.2004 to 5.3.2005. The information in respect of the loaned equipment received from Principal as per the Agreement between the assessee company and its Principal was declared by way of Note No.6 to the notes of accounts annexed to the balance sheet for the respective years. The said note 6 is reproduced under para 22 at pages 11 & 12 of the appellate order under which it has been declared that the aforesaid equipment includes computer software, computer code, sources code, requisite know-how in the form of design and other facilities according to the requirement of the projects. Further, it was declared that the equipment would be returned after the completion of the project / term of agreement. From the perusal of the terms of the agreement which are referred to by us in the paras hereinabove, we have noted that it was agreed between parties that Company would provide the proprietar y information, equipment etc so that the services be provided by the consultant (i.e. the assessee) as per the specifications and projected plans of the Company, to ensure qualit y and timel y delivery and confidentialit y. It is pertinent to mention here that equipments which had been provided by the Company to the Consultant were preloaded with certain Proprietary Information which was developed by the company. The highl y sophisticated, advanced and proprietary software which were bundled in the equipments were given by the Company to the Consultant and the Consultant i.e. the assessee had to provide the customized services on the said facilities. The said facilities were provided to the assessee company so that there was no variation in the final outcome of the services provided to the various customers of the company.