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11. Relevant facts pertaining to this issue are that the assessee, a subsidiary of its USA based holding company had provided on-site and off-shore software application maintenance services to its associate companies abroad in the relevant previous year and derived income therefrom. There is no dispute between the parties that the rates charged by the assessee have already been found at arm's length in the course of assessment. In the course of 'scrutiny', the Assessing Officer was of the view that this application maintenance at its client's premises did not come within the purview of Section 10A of the Act. In assessment order, the Assessing Officer denied the claim of deduction qua this income inter alia, on three grounds i.e no conclusive proof had come demonstrating major part of the application maintenance to be from the concerned https://www.mhc.tn.gov.in/judis/ software technology park or the special economic zone unit, no separate billing or invoicing had been done qua on-site or off-shore work coupled with the fact that bifurcation had been arbitrarily shown. The third and last reason was presence of assessee's technical manpower from India at client's site was must whereas the maintenance activity in question had been supported by deputing its manpower from India after recruiting them here to the holding and other overseas associate companies. In this manner, the Assessing Officer excluded these receipts of Rs.20.43 crores from the purview of Section 10A of the Act.

The next argument of the Revenue is that the assessee had not signed any contractual argument with the clients and only placed on record a MoU between itself and the holding company. As discussed hereinabove, the assessee has signed agreements with all its clients (supra) and so far as the present MoU at pages 265 to 277 of the paper book is concerned, the same is, in fact, a Master Services Agreement which rejects the Revenue's arguments. Its last plea is that the software produced by the assessee had not been deployed at its US holding company but at a different third party premises in https://www.mhc.tn.gov.in/judis/ USA without any subsisting contract. There is no material to substantiate this plea. In our view, Section 10A is a deduction provision, which has to be liberally construed. In the course of arguments, the assessee has highlighted the fact that in preceding assessment years, it has been getting benefit of deduction qua the same on-site application maintenance operations. Apart from this, the Revenue's argument only turns out to be a hyper technical approach since in the circular dated 17.01.2013, whose contents have already been reproduced hereinabove, it is nowhere necessary that the software in question has to be mandatorily deployed at the holding company or the agreement should be between the ultimate client and assessee. The latter argument of the Revenue that there was no subsisting contract already stand repelled in our findings hereinabove that indeed there existed agreements between the assessee and its clients/associated entities. In these circumstances, we find no merit in the ground raised by the Revenue that assessee's income of Rs.20.43 crores is not eligible for deduction u/s10A of the Act since it had arisen from on-site and off-shore software application maintenance activity.”

17. The learned Senior Standing counsel drawn the attention of this Court with reference to the reasons furnished for reopening the assessment. The reasons furnished would reveal that the deduction under Section 10A, 10AA regarding the maintenance amount in the customers place are not eligible and the said amount is no way connected with the export income and thus, the said aspects are to be considered by the Assessing authority, while adjudicating the issues in the reassessment proceedings. The reasons furnished would show that the assessee company is engaged in the company of software development and related services / solutions including software/ application maintenance services. The Assessing authority observed that out of the profits earned from business more than 50% of the earnings from STPI unit was attributed to the software application maintenance activity in the relevant year. This specific activity is distinguishable to the computer software development as specified in the Income Tax Act 1961. Further, the https://www.mhc.tn.gov.in/judis/ said software maintenance services work carried out by the assessee company with the support of the technical manpower abroad. Since the software application maintenance activity was not carried out from the STPI unit, the proceeds from such software maintenance activity is not eligible for deduction under Section 10-A / 10-AA of the Act. This specific proceeds amounts to Rs.377,37,48,058/- for the instant year.

33. In the present case, the following reasons were furnished in https://www.mhc.tn.gov.in/judis/ proceedings dated 18.09.2014:

“The assessee Cognizant Technology Solutions India Private Limited (CTS) claimed deduction U/s 10A/10AA of the IT Act to the tune of Rs747,88,97,793 for the assessment year 2007-08. The assessee company is engaged in the business of software development and related services / solutions including software/application maintenance services. It is observed that out of the profits earned from business more than 50% of the earnings from STPI unit was attributed to the software application maintenance activity in the relevant year. This specific activity is distinguishable to the computer software development as specified in the Income Tax Act, 1961 Further, the said software maintenance services work earned out by the assessee company with the support of the technical manpower abroad. Since this software application maintenance activity was not carried out from the STPI unit, the proceeds from such software maintenance activity is not eligible for deduction U/S.10A/10AA of the IT Act This specific proceeds amounts to Rs.377,37,48,058 for the instant_year.-