TaxTMI 
TaxTMI 
2013 (8) TMI 823
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....nd thus denying deduction u/s. 80IB of the Act. (ii) The ld. AO as well as ld. CIT(A) failed to appreciate that the software developed and maps produced by the appellant [on the basis of material and raw data supplied by the customers of the appellant] which are capable of being maneuvered electronically are different and distinct products the property in which gets transferred to the customer after they came into existence and are sold/transferred by delivery to the customers. It is submitted that it be so held now. 3. (i) The learned AO did not confine himself to the direction issued by the Hon'ble ITAT in the original proceedings and went on to decide the issues which were not in dispute in the original proceedings. The ld. CIT(A) also similarly erred in doing the same thing. It is submitted that it be so held now. (ii) The ld. CIT(A) grossly erred in ignoring the binding judicial precedents quoted by the appellant which are reproduced in para 3.10 of his order observing that they are quite old forgetting that it is the ratio of the decision which is to be seen and it is irrelevant whether ....
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....essing Officer disallowed claim of deduction under section 80IB on the ground that the customized software developed by the assessee was not manufacture of articles or things. 10. On appeal, Learned Commissioner of Income Tax (Appeals) upheld the order of the Learned Assessing Officer. 11. Before us the Learned Authorised Representative of the assessee submitted that the assessee procures maps of a particular area which is digitized and supplied to the customers in the form of software on which a user can raise his query and find the answer. The software so developed is manufacturing and for which contention he relied upon the decision of Hon'ble Supreme Court in the case of Tata Consultancy vs. State of Andhra Pradesh 249 ITR 99.(SC) the decision of Hon'ble Gujarat High Court in the case of CIT vs. Professional Information Systems & Management 274 ITR 242 (Guj.), the decision of Hon'ble Supreme Court in the case of CIT vs. Peerless Consultancy and Services Pvt. Ltd., 248 ITR 178 (SC) and the decision of the Hon'ble Supreme Court in the case of CIT vs Oracle Software India Ltd., (2010) 320 ITR 546 (SC). 12. On the other hand, the Learned De....
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.... developer can be held as engaged in manufacture of a customized software. 16. We find that in the instant case, both the parties have brought no materials before us to show the point of time at which the customer or client of the assessee acquired property in the software developed by the assessee. The lower authorities have also not considered the issue from this angle. Thus, in our considered view it shall be in the interest of justice to restore this issue back to the file of the Learned Assessing Officer for adjudication afresh after proper verification in light of the observations made herein above. In our considered view when the customer of the assessee acquires property in the software developed by the assessee after its development and only on transmission of the software to the client then the profit derived from such transaction should be treated as profit derived from manufacturing of article or thing and the assessee shall be entitled to deduction under section 80IB in respect of such profit only. We therefore, set aside the orders of the lower authorities and remit the matter back to the file of the Learned Assessing Officer for fresh adjudication after....
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.... of claim of deduction under section 80 IB fails. 5. The assessee is aggrieved and again in appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case in the light of the applicable legal position. 7. In order to adjudicate on this issue, it is also appropriate to understand what precisely the assessee does. It is a case in which, with the help of technology, interactive digital and vectorized maps are prepared. The assessee is engaged in development of Geographical Information System (GIS) software, which, inter alia, includes converting the raw data into maps by digitizing and vectorizing it. The GIS is a computer based information system to digitally represent and analyze the geographical features present on earth's surface and activities thereon. This is done to meet the daily functions of municipalities and is said to be built on the Visual Studio platform. This process is described by the assessee, in his note, as follows: The maps of municipality were collected in paper form which were then digitized, seamless mosaic were prepared and registered on IKONOS satellite data and further ....