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7. The AO noted that, in terms of clause (b) of the Explanation to Section 80HHE, 'computer software' means any computer programme recorded in any disk/tape including any such programme of 'customized electronic data', which is transmitted from India to outside world by any means. The AO concluded that "the production of news software by no means can be described as computer software." It was noted that with effect from 1st April 2000, by virtue of Finance Act ('FA'), 1999, TV news software was covered under Section 80HHF.

"36.1 Under the existing provisions of Section 80HHE, 100% deduction is allowed on profits derived from export of computer software provided the sale consideration is received in or brought into India inconvertible foreign exchange. Software exports have grown exponentially in recent years. With a view to increasing India's market share in the international arena, the Explanation (b) below this section has been extended to include 'any customised electronic data' within the meaning of 'computer software'. The benefits of deduction have also been extended to supporting software developers. With this in view, the proviso to sub-section (1); and sub-section (1A), (3A) and (4A) have been inserted by the Act so that the benefit of export can also be passed on to software developers by software exporting companies." (emphasis supplied)

27. Circular No. 772 dated 23rd December 1998 explained the rationale behind introduction of these words. It acknowledged that "software exports have grown exponentially in recent years" and there was need to increase India's market share in the international arena. Therefore, the expression 'any customized electronic data' requires a liberal interpretation. The amendment to clause (b) of the Explanation makes it more explicit. Section 80HHF (1) now envisages computer software including television news software. Therefore, the position for the AY 2000-01 onwards is not in doubt.