Case Note & Summary
The present appeal was filed under Section 260-A of the Income Tax Act, 1961 by the Income Tax Department (appellants) against the order dated 19.01.2018 passed by the Income Tax Appellate Tribunal (ITAT) 'B' Bench, Bangalore, in ITA No.1947/H/2011 for the Assessment Year 2007-08. The respondent-assessee, M/s.Quantech Global Services Ltd. (since merged with Wipro Ltd.), was engaged in the business of development of computer software aided design and engineering services for the automobile industry. The assessee claimed deduction under Section 10B of the IT Act in respect of its export profits. The Assessing Officer disallowed the deduction, holding that the assessee's activities did not amount to development of 'computer software' as defined under the Act. On appeal, the Commissioner of Income Tax (Appeals) upheld the disallowance. However, the ITAT reversed the decision and allowed the deduction, holding that the assessee's services fell within the definition of 'computer software'. Aggrieved, the Revenue filed the present appeal before the High Court. The High Court framed the substantial question of law as to whether the ITAT was correct in holding that the assessee's business qualifies as 'computer software' for deduction under Section 10B. After hearing the parties, the High Court noted that the ITAT had examined the nature of the assessee's business and concluded that it involved development of computer software. The Court held that this was a finding of fact based on appreciation of evidence, and no perversity was shown. Therefore, no substantial question of law arose. The appeal was dismissed, confirming the ITAT's order.
Headnote
A) Income Tax - Deduction under Section 10B - Computer Software - Interpretation - The assessee was engaged in development of computer software aided design and engineering services for automobile industry. The ITAT held that such services fall within the definition of 'computer software' under Section 10B of the Income Tax Act, 1961. The High Court upheld this finding, stating that no substantial question of law arises as the ITAT's conclusion is based on appreciation of facts and law. (Paras 1-5) B) Income Tax - Substantial Question of Law - Section 260-A - Scope - The High Court, while exercising jurisdiction under Section 260-A of the Income Tax Act, 1961, cannot interfere with findings of fact unless perverse. The ITAT's finding that the assessee's services qualify as 'computer software' was a finding of fact, and no substantial question of law arose. (Paras 3-5)
Issue of Consideration
Whether the Income Tax Appellate Tribunal was correct in holding that the assessee's business of development of computer software aided design and engineering services for automobile industry qualifies as 'computer software' for the purpose of deduction under Section 10B of the Income Tax Act, 1961.
Final Decision
The High Court dismissed the appeal, holding that no substantial question of law arises. The ITAT's order allowing deduction under Section 10B was confirmed.
Law Points
- Interpretation of 'computer software' under Section 10B of Income Tax Act
- 1961
- Scope of substantial question of law under Section 260-A
- Deference to ITAT's factual findings
