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2. Briefly, the facts of the case are that, the Assessee Company was incorporated on 15.02.1999 under the Companies Act, 1956. The Assessee ITA 217/2014 Page 1 is a wholly owned subsidiary of McKinsey Holdings Inc. which is in turn held by McKinsey & Co., Inc. The Assessee was incorporated in India to provide various support services in the area of export computer software, IT-

enabled services including data processing, customization of data, back office operations and acting as a support center to provide research analysis and information to various McKinsey entities/holdings across the globe. The Assessee is duly registered as a unit exporting computer software under the Software Technology Parks (STP) scheme of the Ministry of Communication and Information Technology, by the Government of India on 20.04.1999 and launched commercial operations on 01.03.2000. It filed its return of income declaring a total income of ` 69,49,857/- which was processed under Section 143(1) of the Act and selected for scrutiny. A statutory notice under Section 143(2), dated 26.11.2007 was issued and served upon the Assessee. The Assessee filed an objection against the draft of the proposed order dated 18.12.2009 before the Dispute Resolution Panel ("DRP") on 29.01.2010 and later withdrew the same on 23.02.2010. After accepting the withdrawal, the Assessing Officer ("AO") was allowed to pass the order as per law. The Assessing Officer computed the Assessee‟s income at ` 27,21,57,968/- and completed the assessment after disallowing the deduction claimed u/s 10A and also, making an additional revision of income by ` 59,09,890/- pertaining to transfer pricing (TP) adjustments. The Assessee appealed against the order of the AO; the CIT (A) by its order on 28.02.2011, deleted both the additions.

5. The question of law that arises before this Court for consideration is whether the deduction should be allowed to the Assessee under Section 10A, on the ground that it is indeed entitled to the benefit under the particular provision. The Revenue argues that for the Assessee to be eligible for such deduction, the services so rendered must be IT enabled and the role of ITA 217/2014 Page 3 networked software within the provision is seen as vital. Emphasis is drawn to the nature of the service and the value added to the customer is taken into account and the assessment order reflects IT enabled services as being equal to solutions whose added value for the customer is generated significantly through the use of information and communication technologies that used networked software. It was contended that the use of networked software in the case of the Assessee is limited to transmission of customized data to its parent company.

9. Aggrieved by the Assessment Order, the Assessee appealed against that to the CIT (A) who thereby held that by making the disallowance, the AO erroneously concluded that the appellant is engaged in the business of analysis of financial and business information and not in the business of data processing. CIT (A) in its findings, notes that it is evident that the appellant is customizing data, what is accessed by the appellant in the databases and what is delivered to its parent company are two different products, i.e. data is customized to suit the needs of the requester and thereafter exported out of India.

11. The court relied on the circular issued by the CBDT explaining the provisions of the Finance Act, 2000, and held that the interpretation of the term 'manufacture or produce of an article or thing or computer software' by the tax authorities should be guided by the intention of the legislature (including the pronouncements of the Central Government while notifying the STP scheme) and the directions/notifications of the CBDT. Furthermore, the deductions on the same grounds were disallowed by the INCOME TAX APPEAL NO. 1255/2011 ITA 217/2014 Page 7 AO and later permitted by the CIT (A) and upheld by the ITAT for the AY 2002-2003 and subsequently examined and allowed in the preceding AYs 2003-04, 2004-05 and 2005-06 by the AO himself and since there has been no change either in the facts or the circumstances of the case of the appellant accordingly, in view of the foregoing the appellant is eligible to claim the deduction under section 10A of the Act being the sixth year of claim. Therefore, the CIT (A) was of the opinion that the claim of the assessee that all of its business income or profits from business or profession are exempt under section 10A of the Act is correct and the assessee is entitled to exemption and thereby reversed the finding of the AO and directed him to allow the exemption to the whole of assessee‟s profit as computed under the said head 'profit and gains of business.‟ In the present case, the ITAT held that, "There is no dispute on the services provided by Assessee. The modus operandi of Assessee, as noted earlier while considering the submissions made before ld. CIT(A), makes it very clear that the assessee was acting as a back office of its parent company by providing customized electronic data as per request received by it from parent company. It is clear from the modus operandi that what was accessed by the assessee at the STP Unit and what was delivered to Mckinsey (Parent Company) after the conversion took place were two different products/services which is described as customization of data/data processing. The STP Unit undertook the series of operations on the data received from various data bases before it was finally delivered to the customer. Thus, there was value addition made by the STP Unit on the data. We, therefore, are not in agreement with the findings of AO that there was no value of addition on the data obtained from various data base from parent company. The Assessee acted as a back office of the parent company and provided support services to its parent company. Therefore, Id. CIT (A) rightly held that the activities of ITA 217/2014 Page 8 the assessee squarely fall within the expanded definition of 'computer software'..