2001 (12) TMI 43 - HC - Income Tax

Court upholds deductions for computer documentation services under Income-tax Act

The appeal challenging the Income-tax Appellate Tribunal's order on claiming allowances under sections 80-IH and 80-I of the Income-tax Act, 1961 for ... - Issues involved: Appeal against order of Income-tax Appellate Tribunal regarding allowance under sections 80-IH and 80-I of the Income-tax Act, 1961 for income earned through computer documentation service.Judgment Summary:The appeal was filed challenging the Tribunal's order on the entitlement of the assessee to claim allowance under sections 80-IH and 80-I of the Income-tax Act, 1961, for income from computer documentation services. The appellant relied on a Division Bench judgment discussing the concept of 'manufacture' and the need for transformation for a new article to emerge. On the other hand, a Division Bench decision of the Calcutta High Court was presented, emphasizing the nature and function of computers in data processing. The Court agreed with the latter judgment, considering a computer division as an industrial undertaking satisfying the conditions for deduction under the Income-tax Act.The substantial questions of law framed included whether separate accounts are required for claiming deductions under sections 80HH and 80-I, and if the Tribunal's decision on allowing deductions for income from computer documentation services was correct. The Court clarified that the law does not mandate separate accounts for claiming deductions under the specified sections, especially when the assessee is a company. The decision on allowing deductions for income from computer documentation services was upheld against the Revenue's contention.In conclusion, the appeal was dismissed after considering the arguments presented by the appellant and the absence of representation from the respondent.