TaxTMI 
TaxTMI 
2008 (4) TMI 332
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.... (in short 'OVI') were taken out by the Assessing Officer, since according to him these were not software exports. The list of such items relating to M/s. OVI not considered by the Assessing Officer as software exports is verbatim reproduced hereunder: ------------------------------------------------------------------- Sr. Invoice No. Date AMT(Cur) Amount in Description of work No. Rs. ------------------------------------------------------------------- 1. DSS/OV/001 30-3-00 6000 USD 2,60,085 OVISS Maintenance contract Correction &nb....
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....p; possible bugs in AP. Direction will perform maintenance services on call for repairing errors or other  ....
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....10,66,788 ------------------------------------------------------------------- 3.2 Assessee had given explanation that it was obliged under contracts with M/s. OVI to modify the software called 'OVISS' in order to ensure full and proper functioning of such software, and also had to support M/s. OVI in the event of faults and damages due to improper use of the software, handle queries, make master data management and handle monitoring and trouble shooting. According to the assessee, the abovesaid activities would fall within the purview of section 10A. However, learned Assessing Officer excluded the above receipts of Rs. 10,66,788 from M/s. OVI and allowed exemption under section 10A to the assessee only for the balance amount of Rs. 52,28,642. 3.3 In its appeal before CIT(A) assessee pointed out to the contracts it had entered with OVI and copies of bills raised by it to substantiate its contention that it had fulfilled all the relevant conditions under section 10A of the Act and, therefore, entitled for exemption on the amounts received from M/s. OVI, as well. Assessee also submitted before the learned CIT(A) that it was registered with relevant Government authorities as eligibl....
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....iming deduction under section 10A of the Act in respect of receipts from such party. 7. We have perused the orders of the authorities mentioned the submissions made and the copies of records filed. 7.1 The undisputed facts that emerge are as follows. Assessee had claimed exemption under section 10A for total amount of Rs. 62,95,430 of which except for Rs. 10,66,788 received from M/s. OVI the Assessing Officer allowed the claim. Assessee was doing work relating to all its clients from its unit in India and transmitting the same to its clients abroad for which consideration was received by it from the clients as per respective contracts. Assessing Officer has no case, whatsoever that such transmission of software to clients outside India, would not be export of computer software. The only dispute was with regard to the type of work rendered by the assessee for M/s. OVI. The Assessing Officer has stressed that the work rendered by the assessee for M/s. OVI were activities which would not fall under purview of section 10A. This was sustained by CIT(A) since according to him the work done by assessee for M/s. OVI would not be production of software. So, the issue narrows down to the p....
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....pu Tact Software Services. It is also clear that said client of the assessee was not confident about this OVISS software for its use worldwide and hence contracted with the assessee for making modifications therein. 7.2 In the software development life cycle, maintenance is known as last phase of development and, therefore, it is inherent part of such development. It is necessary to distinguish 'software maintenance' from 'maintenance' as understood in common parlance, i.e. maintenance of a tangible asset like plant and machinery. ICAI in its publication 'Information System Audit Reference Book' Modules 4 to 7 which describe the recommended steps for systems development methodology, defines, 'system maintenance', as the last part of the system development life cycle, which is preceded by feasibility study, requirement definition, software acquisition, programming, testing and implementation. It is clearly stated herein that 'maintenance' is nothing but ongoing development which continues till the system is replaced or discontinued. While the term 'maintenance' in relation to a tangible asset would mean those activities which are required to keep it useful, 'maintenance' of a softw....