COMMISSIONER OF INCOME TAX Vs. SOFFIA SOFTWARE LTD.

JUDGEMENT

(1.) The appeal filed against the order of the Income-tax Appellate Tribunal, Chennai "C" Bench in I.T.A. No. 279/Mds/2005, dated September 5, 2008, for the assessment year 2000-01. The respondent-assessee is engaged in software development and export. In respect of the financial year 1999-2000 and the assessment year 2000-01 the assessee filed the returns. The assessment of the assessee-company for the assessment year 2000-01 was completed under section 143(3) of the Income-tax Act on March 24, 2003, determining the book profit under section 115JA at Rs. 1,91,10,174. The assessee filed a revised return of income on June 27, 2001, claiming deduction under section 10A of the Act at Rs. 1,37,72,884, instead of deduction under section 80HHE claimed in the original return.

(2.) The Assessing Officer held that the assessee is not eligible for deduction under section 10A. The assessee, in support of the plea for claiming deduction under section 10A, filed a copy of the communication dated March 4, 2000, from the Software Technology Parks of India (STPI) (an autonomous society under the Government of India, Ministry of Information and Technology) according permission for setting up of 100 per cent. EOU to bear the claim of total export turnover of Rs. 5,46,77,452, and submitted that the profits thereon are entitled to the benefit under section 10A of the Act. According to the Department, the assessee is entitled to the benefit of deduction under section 10A only from March 4, 2000.

(3.) In so far as the claim for export turnover prior to March 4, 2000, the Department contended that the assessee will be entitled to seek deduction under section 80HHE. The Assessing Officer, considering the total turnover and export turnover total from STPI, allowed the expenditure attributable to STPI unit as enumerated by the appellate authority is as follows: