TaxTMI 
TaxTMI 
2021 (10) TMI 977
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....hat it was formed in 1992-93 with object of earning income through business of development of software running training institute by appointing Shri C.L. Deshpande as Technical Director and initially, revenue was earned only by running training institute. Subsequently, one of the partners of assessee firm came into contact with one Shri S. M. Gupta, Director of M/s Lee & Nee Software (Export) Ltd. as they were in the same field. Shri S.M. Gupta proposed the business of developing software for M/s Lee & Nee Software (Export) Ltd., which was accepted by assessee firm in consultation with technical Director, Shri C.L.Deshpande and the first contract was entered into on or about 28th December 1999 as a test case and was completed successfully. 3. On successful completion of the same, one large contract was received by respondent. The details of the contract are as under:- Name of the Party Date of contract M/s. Lee & Nee Software (Exports) Ltd. (LNSEL) 28.07.2000 M/s L.T.Soft & Services 28.07.2000 M/s Raj Soft & Services 28.07.2000 M/s. M S Soft & Services 28.07.2000 Out of the above four parties, M/s L T Soft & Services, M/s Raj Soft & Services and ....
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.... is a US based company, for developing a portal of Aapkidukaan.com. The main object of the said portal was to grab US market for Indian goods and services and thus to create the largest online shopping mall for Indian goods in US Market an Indian company, Aapkidukaan.com Pvt. Ltd., was established in 2001, which was engaged in the marketing of the said portal in India by procuring clients in India to have their virtual shops on the portal through its offices/associates in Kolkata, Pune, Bangalore, Bhubhaneshwar or its franchises. 8. LNSEL itself designed the main portal of Aapkidukaan.com and decided to outsource designing of various modules and templates for the said software. For said purpose, orders were placed with various other software developers apart from respondent. Once the work outsourced was completed and received by LNSEL through email, the various parts outsourced to different developers were assembled and linked with the main portal. To this extent, there was a value addition by LNSEL. On the said value addition, exemption u/s 10B was claimed by LNSEL and same was accepted by the department in ITAT. 9. Subsequently, assessee claimed deduction u/s 80HHE of the A....
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....ade with the persons to whom respondent had claimed to have paid job work charges, denied having worked for them. Further letter received from STPI, Bhubaneshwar, also states that no activity had been carried out. 12. The assessment was completed on 28th December 2007. Being aggrieved by the decision of the Assessing Officer, respondent filed an appeal before CIT(A) Mumbai. CIT(A) by an order dated 5th January 2009 partly allowed the appeal filed by respondent. CIT(A) deleted the addition made disallowing the deduction claimed under Section 80HHE on the ground that the conclusions drawn against respondent by the Assessing Officer were mainly presumptions and surmises and not substantiated by any cogent evidence. 13. Aggrieved by this order of CIT(A), appellant preferred an appeal before ITAT. ITAT by its very well reasoned order dated 18th August 2016 dismissed the appeal filed by appellant. Infact, respondent had also preferred an appeal to ITAT which also came to be dismissed. 14. The substantial questions of law proposed in both appeals are identical except that the amounts vary. The same read as under: INCOME TAX APPEAL NO.1200 OF 2017 "(i) Whether on facts....
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.... deduction u/s 80HHE of Rs. 10,33,88,045/- without considering the facts brought on records which clearly established that the assessee did not conduct any software development and the assessee failed to establish the genuineness of the software development charges so paid as evidence from the replies to the summons issued to the persons to whom the assessee purportedly paid software development charge and the assessee even failed to produce the source code of the purported software developed and exported ? (ii) Whether on facts and circumstances of the case and in law the Hon'ble ITAT was correct in confirming order of CIT(A) allowing deduction u/s 80HHE of Rs. 10,33,88,045/- without considering the facts brought on records which clearly establishes that person, i.e., Apkidukaan.com in USA for whom the purported software was developed was not active in the business as confirmed by USA revenue authorities in response to reference made? (iii) Whether on facts and circumstances of the case and in law the Hon'ble ITAT was correct in confirming order of CIT(A) allowing deduction u/s 80HHE of Rs. 10,33,88,045/- without considering the facts revealed during the course o....
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....ion could be made on the basis of such statement unless and until it is corroborated with evidence. 17. It has also been observed factually by ITAT that the software for which supply was made by respondent has actually been transmitted and exported and the export value declared has been found in order and accepted by designated official of department of electronics of Government of India. LNSEL has also claimed deduction under Section 10B of the Act on the value addition and LNSEL issued disclaimer certificate in Form 10CCAG to respondent with respect to respondent's share in the software export. It is also noted that CIT (A) had corresponded with the Assessing Officer of LNSEL, who has informed CIT(A) that there was no dispute pending with regard to the claim of deduction under Section 10B of the Act by LNSEL and no recourse was taken to the provisions of Section 147 of the Act for AY 2000-2001 to 2002-2003. ITAT has come to the factual finding that on the basis of material on record the claim of respondent under Section 80HHE of the Act was in order. ITAT has also come to the factual finding that the source code of softwares developed have been provided by respondent to the As....