TaxTMI 
TaxTMI 
2022 (5) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....der section 80IC as made by the Learned Joint Commissioner of Income Tax Range- 2, Dehradun, ("Ld. AO"). 2) The Ld. CIT (A) has erred on facts and in law in holding that the appellant is not rendering services in the field of Information and Communication Technology ("ICT") industry required for claiming deduction u/s 80-IC of the Act. 3) The Ld. CIT (A) has erred on facts is not appreciating the business model of the appellant and holding the appellant is engaged in the business of manpower recruitment and supply to entities engaged in ICT industry and the entire business model of the appellant is mere an arrangement so that the entities to whom the appellant is providing its services could be free from statutory obligation attached with an employer and could focus on their core competencies. 4) The Ld. CIT (A) has erred on facts and in law in holding that business of the appellant is not carried out within the State of Uttarakhand as required for claiming deduction u/s 80-IC of the Act. 5) The Ld. CIT (A) has erred in law and on facts in holding that the appellant has merely undertaken a reconstruction of its existing business and is therefore, not allowed to claim deduct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10A or section 10B, in relation to the profits and gains of the undertaking or enterprise. (6) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section 80-IB or under section 10C, as the case may be, exceeds ten assessment years. (7) The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible undertaking or enterprise under this section." 28. From the above provisions, it is clear that the deduction u/s 80IC of the Act is available where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business of manufacturing or production of any article or thing not being article or thing specified in Thirteenth Schedule or commenced....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-operate or employer and employees assist each other is an industry. The distinguishing feature of an industry is that for the production of goods or for the rendering of service, co-operation between capital and labour or between the employer and his employees must be direct and must be essential." [Emphasis Supplied]. 29. Similarly, the Hon'ble Apex Court in the case of Banglore Water Supply & Sewerage Board Vs A. Rajappa (supra) held as under: ....the word "industry" has a wide import and it is (i) systematic activity, (ii) organised by co-operation between employer and employee (the direct and substantial element is chimerical), (iii) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss, e.g., making on a large scale, prasad or food), prima facie there is an industry" in that enterprise. It was further observed that the true focus is functional and the decisive test is the nature of the activity with special emphasis on the employer-employee relations." From the ratio laid down by the Hon'ble Apex Court in the af....
X X X X Extracts X X X X
X X X X Extracts X X X X
....respect of Income Tax and other statutory deductions under laws in which the services are provided, meaning thereby all the payments of salaries, related taxes and other statutory obligation towards employees were the responsibility of the assessee and not that of the clients. Similar, agreement was entered with M/s Nokia India Pvt. Ltd. (copy of which is placed at page nos. 258 to 263 of the assessee's paper book). In the said agreement also, the similar conditions were there. Similarly, there was an agreement with IBM Ltd. and scope of work was also defined which is evident from page no. 266 of the assessee's paper book wherein the scope of work (SOW) was as has been defined as under: "Under this SOW, Supplier will provide software support development activities, including but not limited to, software development, software resting, publication development, program maintenance, software development support and/or such other activities as may be defined by the Buyer to the Supplier in the relevant WA. Supplier will also provide to Buyer the Deliverables and Services described in Section 3.0 of this SOW." From the aforesaid agreements entered between the assessee and i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mputer hardware, Call Centres 84.7 130006/7 14. Bottling of mineral water 2201 15. Eco-tourism including hotels, resorts, spa, entertainment/amusement parks and ropeways - 55101 16. Industrial gases (based on atmospheric fraction) 17. Handicrafts 18. Non-timber forest product-based industries.] 31. From the aforesaid part (C) of Schedule Fourteenth, it is clear that the Information and Communication Technology Industry, Computer hardware, call centers are placed at No. 13. The assessee is also engaged in the similar type of activities because it provides Software Support Development activities, programme maintenance services, software development support and software testing. Therefore, the activities undertaken by the assessee falls in category no. 13 of part C of Schedule Fourteenth of the Income Tax Act. In the present case, the AO while disallowing the claim of the assessee riled upon the decision of the Hon'ble Supreme Court in the case of MSCO Pvt. Ltd. Vs Union of India AIR 1985 SC 76. However, in the said deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the assessee provided the services to its clients and the operations undertaken by the assessee falls in the category of Information and Communication Technology Industry which is included in "Clause No. 13" of part C of the "Schedule Fourteenth" to the Income Tax Act, 1961. The assessee is situated at Dehradun which is the part of the State of Uttaranchal to which part C of "Schedule Fourteenth" applies. The SDE Telephones, Dehradun also issued a certificate copy of which is placed at Page No. 216 of the assessee's paper book which states that the assessee had been provided datacom links by them which was being used for transmission of data for development of Software for export purposes since 17 th January 2006. The said certificate is placed at page no. 216 of the assessee's paper book and read as under: "CERTIFICATE BY DATACOM SERVICE PROVIDER Certified that M/s IMSI (India) Pvt. Ltd. have been provided datacom links by us referred in para "4" of Back-up Form. The link is being used by them for transmission of data for development of Software for export purposes since 17 Jan. 2006." Sd/- J.T.O. Telephones Clement Town Dehradun Sd/- S.D.E Telephones Clement To....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that it was prepared on-site, as long as the software is a product of the unit, i.e., it is produced by the unit." 35. If an analogy is drawn with reference to the said Circular then there is no territorial limitation to provide or render services for getting the benefit u/s 80IC of the Act. Particularly when, the assessee is situated and based in Dehradun within the State of Uttaranchal which is established from the following documents furnished by the assessee before the authorities below: i) copy of electricity meter sealing certificate and electricity bill; ii) certificate from BSNL certifying the date of connection of Broadband; iii) registration with STPI, Dehradun (the STPI scheme is administered by the Department of Electronics, Govt. of India through Software Technology Parks of India); iv) registration with the Office of the Commissioner of Provident Fund, Dehradun." 36. In this present case, the assessee controlled and provided all the facilities to its clients from Dehradun and the activities undertaken by the assessee falls in Item No. 13 of Part C of Schedule Fourteenth to the Income Tax Act, 1961. The assessee has its operational unit at Dehradun, paying ....