TaxTMI 
TaxTMI 
2016 (1) TMI 938
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....rmation technology enabled services which entitles the assessee to claim deduction under section10A of the Act. However, the counsel submits that for this assessment year the deduction shall be only 50% and not 100% in view of the provisions of section 10A(1A) of the Act. Copy of the order of the co-ordinate Bench dated 30.04.2015 is placed on record. 4. Departmental Representative supports the orders of the lower authorities. 5. Heard both sides. Perused orders of lower authorities and the decision relied on. On a perusal of the co-ordinate Bench decision cited above, we find that similar issue i.e. whether the assessee is entitled for deduction under section 10A or not has been decided in favour of the assessee by the Tribunal observing as under:- "2. The Assessee has raised 12,12 ,10 & 11 elaborate grounds in its respective appeals for the assessment years 2006-07,2007-08, 2008-09 & 2009-10; however the crux of the issues are that the Assessee is aggrieved by the order of the Ld. CIT (A), who had upheld the order of the Ld. Assessing Officer (i) in denying relief under section 10A of the Act for the assessment years 2006-07 to 2009-10. (ii) Levy ....
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.... iv) The assessee company was involved in preparation of drawings as per the specification of the overseas customers and placing order with the manufacturers so that the said manufacture produces the goods as per such specifications. Thus the assessee company was only receiving the orders from its overseas customers which are passed on to other manufacturers in India. v) The copies of invoices raised by the assessee showed that billing was made under the head "international sales commission", "international inspection charges", and "Transaction charges". 4.2 Based on the above observations, the Ld. Assessing Officer queried as to how the assessee would be entitled for deduction U/s. 10A because it appeared that the assessee was not engaged in manufacturing activity or software development activity, to be eligible for deduction U/s. 10A of the Act. The assessee in response made the following submissions before the Ld. Assessing Officer:- "The assessee company was registered with MEPZ and had commenced its operation in special Economic Zone from 01.09.2003. Thereafter, the company has started the activities such as Software development; Web based solutions....
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....ales 12,06,74,577 Transaction charges 50,30,229 Software consultancy 36,34,439 Miscellaneous income 8,95,336 The appellant, through its expertise in automobile engineering, sources from India various auto components for its overseas clients. The overseas clients buy such components' directly from the manufacturers after obtaining the technical specifications from the appellant or place the order with the appellant for it to purchase from the ultimate manufacturer and export to them. From the above, it can be understood that the appellant acts as an intermediary between the overseas customer and Indian manufacturer. The overseas customers do not have an establishment in the form of a branch, etc. in India to identify the reliable and dependable manufacturer for their small orders. For such purposes, they utilize the services of the appellant. After getting the goods manufactured through other manufacturers in India, the appellant undertakes final assembly and packing before they are exported outside India. This process cannot be said to be a manufacturing process and therefore the appellant was asked to explain why deduction u/s l0A should not be disallowed in ....
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....services as envisaged in Sec.10A of the Act. Therefore, the action of the A.O is justified in denying the claim of Rs. 68,86,220/- u/s.10A of the Act as the apt is found to be not engaged in the business of export of computer software or articles or things manufactured in India. As a result, this ground of appeal is dismissed." 4.5 Before us, the Ld. A.R. made the following written submissions in order to establish that the assessee was engaged in manufacturing activity and software development which entitles it to claim the benefit U/s.10A of the Act:- "Manufacturer 2. The appellant is in the business of manufacturing auto parts/components for its overseas clients. 3. The manufacturing process of the appellant involves the procurement of orders from the customers, preparation of technical drawings as per the specifications of the customers, outsourcing to suppliers, supervision at the suppliers premises, inspection, assembling and packaging. The detailed flow chart showing the manufacturing process of the appellant is reproduced in the assessment order 4. Though the appellant is not personally engaged in the manufacture it is the appell....
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....aterman Industries lnc and Reliance Parts Corporation for the assessment year 2007-08 along with ledger copies were submitted during the course of hearing to show that the appellant has rendered IT enabled services to its customers. 12.ln this connection it is further submitted that the payments received for rendering the IT enabled services were grouped under International inspection a/c, international sale commission a/c, international retainership a/c etc. Though they were grouped under these heads they were received only for rendering the IT enabled services to the overseas customers. 13. The regular commission, retainership etc received locally were offered only as commission etc and credit for the tax deducted at source on the same has been claimed. The appellant has not claimed deduction u/s.10A on these incomes 14.ln the light of the above submissions it is most humbly prayed that the Hon'ble Tribunal may be pleased to decide whether or not the appellant is in the business of rendering IT enabled services and if the Hon'ble Tribunal is satisfied that the appellant is in fact is engaged in rendering IT enabled services then the Hon'ble ....
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....rate Presentation c. Development & Maintenance of web-based sourcing cum logistics solution. The total consideration for the above services will be USD 50,000,00 The payment schedule for the above will be on a monthly basis based on the development time consumed @ USD 10 per hour with project time estimation of 5000 hrs. Invoicing will be done both on a Retainer basis, Inspection Software basis & as an extent of business done that month. 2. Confidentialty & exclusivity AA promises to maintain complete confidentiality regarding all projects for which IPD mandates it. All efforts will be taken to maintain utmost confidentiality to protect the interest of IPD or any company of that group regarding all software projects for whose execution IPD or any company of that group mandates AA. * The codes developed for this project will be the property of IPD. * The art work, brand developed, design & data will be exclusive property of IPD. * AA will have no claim whatsoever on the inputs & outputs of the project * AA will not approach business competitors of IPD. * 3. First right of refusal ....
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....onsider AAA as the preferred service provider. This means Reliance will first make an offer to AA to roll-out any software related service before making an offer to any other software service provider." From the above it is evident that the assessee's nature of activity is to:- i) Create and maintain web site. ii) Create ERP Software to perform purchase functions. iii) Produce software related to sales oriented development and corporate presentation on need basis. iv) The code developed for the project was passed on to the clients of the assessee. v) Design and data was also passed on to the client of the assessee. 4.8 This scope of work performed by the assessee establishes that the assessee is carrying out information technology enabled services. As pointed out by the assessee, the CBDT Circular No.S.O.890(E) dated 26.09.2000 reported in 163 CTR (St) 25 specifies that for the purpose of Section-10A of the Act, back office operations and web site services are information technology enabled services. The Ld. A.R. has also explained the nature of activity rendered by the assessee with respect to giving access of the ....
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....control in the work entrusted to job workers, the assessee would be entitled to the relief U/s. 80IA of the Act. Being a deduction provision, taking note of the present day outsourcing of various activities, we need to give a meaningful expression to 'assessee engaged in the manufacturing process', to hold that so long as the effective involvement of the assessee is there in the form of quality control or supply of material and dyes for the manufacture of parts of the grinders or machinery, even in the case of assembling done through job work, the assessee would be entitled to have the benefit U/s. 80-IA of the Act." 4.9 From perusing the invoices produced by the assessee, the following facts are also revealed. Sl. No. Invoice No. Date Name of party Particulars 1 021-06- Nulline 30.06.2006 Nu-Line Heavy duty Development of Nuline Website & Nuline Web and cd catalog 2 004-WM-06 30.04.2006 Waterman industries Inc. Engineering services & Business development online support April 2006. 3 091-06 Reliance 31.01.2007 Reliance Parts Corporation Web based sourcing cum logistics solutions for January 2007 4 055-Wa....