2014 (7) TMI 1239

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.... value addition before the product is delivered and therefore entitled to benefit under Section 10A of the Income Tax Act.  2. The assessee is in the business of providing medical transcription facilities. It is an I.T. enabled service. The case of the assessee was taken up for scrutiny. The assessing authority noticed that a s um of Rs. 53,92,523/- was debited in the accounts as technical service charges. These charges were paid to Target Transcriptions (P) Ltd, Infy communications (P) Ltd., and Xen Call Centre. The assessing Officer therefore concluded that the services were not rendered in the STPI facility but were rendered outside since the work was sub-contracted. He was of the view that the activity of the assessee should be ....

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.... verified. Only after all the transcription work is double checked and verified properly the product is fit for export. The material and files are sent to sub contractors for transcription . On completion of work the same are returned to the assessee. The product cannot be exported without final processing, proofing, quality check and converting the material into uploadable export quality work. Therefore, only one portion of the payment made to sub- contractors is in respect of work done outside the facility. Therefore, the appellate authority was of the view that substantial value addition was made before the product is delivered. Therefore, the appeal was allowed and the benefit of Section 10A was extended to the assessee. Aggrieved by....

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....ally when STPI approval was granted to the assessee to manufacture and produce within the custom bonded area?" 4. Substantial question of law No.2:- From the aforesaid material on record it is clear that the assessee is in the business of transcribing medical transcription. It has outsourced portion of its work and made payment of Rs. 31,20,152/-. The work done by the sub contractor is in crude form and cannot be delivered in such form to the overseas customers. The assessee has to process the said product so as to make it marketable. In other words, as rightly pointed out by the appellate authorities value addition has to be done.   It is only when that value addition is made, the said product is exported, foreign exchange is....