Is a manufacturer and exporter of computer software eligible for deduction u/s 10A of the I.T. Act?


Quick Summary
This case concerns whether a company manufacturing and exporting computer software is eligible for a tax deduction under Section 10A of the Income Tax Act. The assessee claimed a concessional tax rate on certain expenditures, arguing its activities qualified as ITES (Information Technology Enabled Services). The Income Tax Appellate Tribunal allowed the appeal, referencing a High Court decision that confirmed the assessee's entitlement to the Section 10A deduction.

Court :
ITAT Bangalore

Brief :
This appeal was restored to the I.T.A.T. by the Hon�ble High Court in ITA No.338/2014 (judgment dated 18.01.2021).

Citation :
ITA No.814/Bang/2013 : Asst.Year 2008-2009

IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCHES “A”, BANGALORE
Before Shri George George K, JM & Shri B.R.Baskaran, AM
ITA No.814/Bang/2013 : Asst.Year 2008-2009

M/s.OnMobile Global Limited
Tower #1 94/1C and 94/2,
Veerasandra Village,
Attibele Hobli Anekal Taluk,
Electronic City Phase-I
Bangalore – 560 100.
PAN : AAACO3900E.

vs

The Commissioner of Incometax,
Bangalore III
Bangalore

Appellant by : Sri.K.R.Vasudevan, Advocate
Respondent by : Sri.Rajendrakumar Mishra, CIT-DR
Date of Hearing : 26.08.2021
Date of
Pronouncement : 01.09.2021
O R D E R

The assessee is a company. It had filed its return of income declaring fringe benefit tax (FBT) at concessional rate of 5% on expenditure on conveyance, hotel and boarding facilities. According to the assessee, it is claiming concessional rate of 5% as against the normal rate of 20% since it is a ITES company.

2. The learned AR submitted that the issue of eligibility of deduction u/s 10A of the I.T.Act has been finally held in favour of the assessee by the Hon’ble High Court by answering question No.3 in favour of the assessee in ITA No.340/2014 (In income tax cases, the question of law No.3 was answered in favour of the assessee by holding that assessee is entitled to deduction u/s 10A of the I.T.Act).

3. We have heard rival submissions and perused the material on record. The present proceedings is out of fringe benefit tax. The assessee had claimed concessional rate of tax at 5% on certain expenditure stating its activities constitute ITES as specified in CBDT Notification. The assessee had claimed deduction u/s 10A of the I.T.Act on the ground that the activities of the assessee constitute ITES, and hence, it is a ITES undertaking, eligible for deduction u/s 10A of the I.T.Act.

4. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 01st day of September, 2021.

Please find attached the enclosed file for the full judgement

FAQ :

Yes, in this case, the Income Tax Appellate Tribunal ruled in favour of the assessee, a computer software manufacturer and exporter, confirming their eligibility for deduction under Section 10A.

The assessee claimed a concessional tax rate of 5% on certain expenditures, stating that its activities constituted ITES (Information Technology Enabled Services) as specified by CBDT Notification.

The High Court had previously answered a question of law in favour of the assessee, holding that the assessee was entitled to deduction under Section 10A of the Income Tax Act, which was referenced in this appeal.

While the core issue was Section 10A deduction, the proceedings originated from a dispute regarding fringe benefit tax (FBT) and the claim for a concessional rate on specific expenditures.

 
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