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IT(TP)A Nos. 299 & 218/Bang/2014 Details Submissions dated Certified softex forms stating "duly certified 13th December 2012 and for the exports of software development"- 4th March 2013 Signed by Director of STPI (Page no. 640, 661 to 672 - File 3) and (page 4983 to 4996 of File 20) Audited financials stating that the software 21st November 2011 has been exported (Page no 215 to 248 - File

                       Details                        Submissions dated

  Certified softex forms                            13th December 2012 and
                                                    4th March 2013

In the financial statements of the Company 21st November 2011 software unit has been treated as separate business segment Invoice copies raised on SEITC USA 13th December 2012 and 4th March 2013 Agreement for export of software to SEITC USA 13th December 2012 and 4th March 2013 FIRCs evidencing realization of export proceeds 4th March 2013 Letter provided by SEITC USA confirming the 4th March 2013 receipt of services therein He brought to our notice that the main objects of the Memorandum of Association of the Company states as under:

116. He prayed that it should be held that:

a. Profits of the software unit should be considered as business income b. Such profits should be allowed deduction under section 10A

117. The learned DR relied on the order of the DRP.

IT(TP)A Nos. 299 & 218/Bang/2014

118. We have carefully considered the contentions of the Assessee and the grounds on which the revenue authorities denied the benefit of deduction u/s.10A of the Act to the Assessee on profits of the software unit. The evidence in the form of Softex furnished by the Assessee which were in the paper book and referred to in the table given in the earlier paragraphs dealing with this issue, clearly shows that there was export of computer software by the Assessee. In fact the TPO has in the order passed u/s.92CA of the Act has proceeded on the basis that the Assessee exported computer software and determined the ALP for that transaction. It is therefore not correct on the part of the AO/DRP to conclude that the Assessee never exported computer software. Such conclusions are contrary to material on record and in complete disregard to such material. On the aspect of the Agreement with APCC, USA and the Assessee for development of software being for the period prior to 1.4.2001, it is seen that the Software Service development agreement was entered into with APCC, USA on 1.1.2001 i.e., prior to amendment of Sec.10A of the Act. A new Section 10A was substituted by the Finance Act, 2000 W.e.f. 1.4.2001. First proviso to section 10A(1) allows benefit under section 10A by extending the benefit of deduction u/s.10A of the Act to undertakings which were entitled for such benefit before the substitution of section by Finance Act, 2000 for unexpired period of aforesaid ten consecutive assessment years. Therefore Software unit of the Assessee was eligible for deduction under the provisions of section 10A prior to its amendment. Hence, by the virtue of the first proviso, the Assessee IT(TP)A Nos. 299 & 218/Bang/2014 would be entitled to claim deduction under section 10A post its amendment too. With regard to the observations of the AO that the agreement for rendering the software development services was entered in January 2001 while the operations commenced in FY 2000- 2001 it is seen that the activities of the Assessee commenced only from 1st June 2000 (AY 2001-02) as is evident from the annual report at Page 230, File 2 of the Paper book and the submissions made before the DRP at page 4950, File 20. In any event absence of an Agreement to develop software for export would not be eligible for deduction only for the period prior to 1.1.2001. As far as AY 2009-10 is concerned, the Agreement dated 1.1.2001 still holds good and the period for which the Assessee claims benefit of Sec.10A deduction is also within the permissible period.

120. In view of the aforesaid conclusions, nothing turns on the finding of the AO that the income that was claimed as deduction of software unit u/s.10A of the Act, being considered as "Income from other sources" by the AO and such finding in the light of the material brought to our notice by the Assessee noted in the earlier paragraphs dealing with this issue clearly is unsustainable.

121. We direct the AO to allow deduction u/s.10A of the Act after due verification of the documents cited in the earlier paragraph and after affording Assessee opportunity of being heard. Thus Gr.No.21 is treated as allowed but sent for the limited extent of verification of the details brought to our notice like softex forms, realization of export proceeds within the time limit etc. IT(TP)A Nos. 299 & 218/Bang/2014