TaxTMI 
TaxTMI 
2022 (5) TMI 90
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....f INR 1,84,28,269/- on account of deduction claimed under 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 rec....
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.... 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 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 accordan....
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....lanation.--The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub- section. (5) Notwithstanding anything 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 ava....
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.... working test in determining whether any activity amounts to an industry, is the co-operation which is directly involved in the production of goods or in the rendering of service. It cannot be suggested that every form or aspect of human activity in which capital and labour co-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 o....
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.... on offshore as well as onsite assignments and that the assessee shall ensure that personnel engaged under this agreement must have appropriate qualifications & competence and in all respects acceptable to Tech Mahindra Ltd. and that the assessee company shall be responsible for making appropriate deduction in 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, ....
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.... 17116 8. Wool and wool products 51.01 to 51.12 17117 9. Woven fabrics (Excisable garments) - - 6101 to 611710 10. Sports goods and articles and equipment for general physical exercise and equipment for adventure sports/activities, tourism (to be specified, by notification, by the Central Government) 9506.00 11. Paper and paper products excluding those in the Thirteenth Schedule (as per excise classification) 12. Pharma products 30.03 to 30.05 13. Information and Communication Technology Industry, Computer 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) ....
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....trument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject." 32. The Hon'ble Apex Court in the case of Bangalore Water Supply & Sewerage Board Vs A. Rajappa (supra) clearly held that the word "industry" also includes the distribution of goods and services. Therefore, it can safely be held that the activities undertaken by the assessee falls in the definition of the industry to which the provisions contained in Section 80IC of the Act applies. In the present case, nothing is brought on record to substantiate that the services provided to the clients by the assessee company were not through its employees and that the remuneration or other benefits were not provided by the assessee or there was any direct link between the clients and the employees of the assessee. It, therefore, can be safely be held 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....
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.... of the programme, it is often prepared on-site, with the software personnel going to the client's premises. Doubts have been raised whether units taking up such production of software at the client's premises would be eligible for the tax holiday. The Government's policy on tax incentive to software exports is reflected in the provisions of section 80HHE introduced in 1991. Under this provision, technical services provided outside India, for the development or production of computer software, are included for the purpose of the tax incentive. Similarly, for the purpose of section 10A or 10B, as long as a unit in the EPZ/EOU/STP itself produces computer programmes and exports them, it should not matter whether the programme is actually written within the premises of the unit. It is, accordingly, clarified that, where a unit in the EPZ/EOU/STP develops software sur place, that is, at the client's site abroad, such unit should not be denied the tax holiday under section 10A or 10B on the ground 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 t....