TaxTMI 
TaxTMI 
2013 (7) TMI 163
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....erred on facts in holding that the service charges on account of maintenance of software of Rs.1,07,94,108/- are eligible for deduction u/s. 80IB though the transaction is in the nature of trading activity and not manufacturing activity. 3. The learned CIT (A) erred in law in holding that trading in software and providing software maintenance service is eligible for deduction u/s. 80IB though the activity is not in the nature of manufacture and the income is not derived from the industrial undertaking. 4. The order of the learned CIT (A) is self-contradictory to the extent it grants deduction u/s. 80IB treating software expenditure as revenue expenditure on one side and on the other side holding that the assessee is involved in purcha....
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....tal service charge receipts are Rs.1,07,94,108/-. 3. Before the CIT (A), in reply to the remand report the assessee clarified that the invoices for software were included under the head "Service Charges" in the ledger account of the assessee and that the sale of software cannot be equated with the services activity. It was also submitted that sales tax "was paid on the software supplied" while service tax "was paid on service charges" although both of them are accounted under the head "Service Charges". It was further pointed out that the Assessing Officer has held that the service charge receipts were at Rs.1,07,94,108/- which is a clear contradiction on the part of the Assessing Officer because he has stated that invoice for the sale o....
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....uced by the industrial undertaking it was held to be derived from the industrial undertaking and eligible for deduction under section 80IB. Accordingly, he directed the Assessing Officer to consider the sale of software on which sales tax was paid for the purpose of deduction under section 80IB. 5. Regarding service charges the CIT (A) noticed that there was a minor variation of Rs.10,416/- between the ledger figure and the figure as per the service tax returns and directed the Assessing Officer to verify the variation and adopt the correct figure. The CIT (A) in view of the fundamental principles laid down by the Apex Court in CIT vs. Sterling Foods 237 ITR 579 and Liberty India vs. CIT 317 ITR 218 (SC) has held that receipts by way of ....
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....ting the profit eligible for deduction under section 80IB. Hence, we remit the issue to the file of Assessing Officer to verify the amount on service charges and sale of software and consider only the sale of software for purpose of deduction u/s. 80IB. Further the learned A.R. contended before the CIT (A) that the corresponding expenditure incurred for the purpose of deriving service charges has not considered. According to the Hon'ble Mumbai Tribunal decision in the case of Unicorn Appliances Ltd. (supra) it is the receipt that has to be excluded and not profit therefrom. In view of the above, we find that the CIT (A) has not given any finding on this issue. Hence, we remit the issue back to the file of the CIT (A) to adjudicate upon the ....