2021 (2) TMI 382

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....e above appeal. 2.It is the case of the appellant that they are engaged in the business of Software Development and Consultancy. For the assessment year 2003-04 under appeal, the appellant filed its return of income on 27.11.2003 admitting an income of Rs. 18,53,271/-. The case was selected for scrutiny and notice under Section 143 (2) was issued on 23.11.2004. Scrutiny assessment under Section 143(30 was completed on 28.02.2006 determining the total income at Rs. 36,73,824/-. While completing the assessment, the Assessing Officer, among others, restricted the claim of deduction under Section 10A by excluding the expenditure incurred in foreign currency and telecommunication charges from the export turnover. The expenditure incurred in f....

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....al before the CIT (Appeals) and the Appellate Authority by order dated 09.02.2007 confirmed the order and dismissed the appeal, as against which, the appellant preferred an appeal before the Income Tax Appellate Tribunal and the Tribunal, following the decision in the case of M/s.SIP Technologies Limited in I.T.A.No.2401/Mds/2005 dated 26.09.2008 held that expenditure should be excluded both from the export turnover and total turnover. Further according to the appellant, part of the expenditure cannot be excluded from the export turnover. Aggrieved over the order passed by the Income Tax Appellate Tribunal, the assessee has filed the above appeal. 3.The above appeal was admitted on the following substantial questions of law: ....

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....al, placed the entire materials as regards the development of the computer software. The assessee contended that they are engaged in the development of computer software programme, which is distinct from rendering of pure technical services, which would comprise of advice/consulting in relation to computer programmes. They are registered with STPI and as per the Registration Certificate, the assessee's activity is developing computer software and they are not considered as an exclusive technical service provider, as understood in the software industry parlance. The assessee proceeded to explain its activities, as per the agreement with its clients, for developing software, which consisted of eight steps, they are as follows: "1....

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.... software, which is essentially a computer programme and the deliverable does not comprise of any advice on the computer software/programme. The assessee produced copy of the Registration Certificate given by the STPI, sample contract for development of computer programme, sample Statement of Work (SOW) in relation to the sample contract, copies of filing with the STPI and some sample invoices and related SOFTEX filings. Thus, by placing heavy reliance on these materials, the assessee contended that it can be inferred that their business does not include rendering of any technical services on 'standalone basis'. Further, any service rendered, such as installation/training etc., is purely incidental to the activity of development of ....