DIRECT INFORMATION (P) LTD Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.

(2.) By two notices dated 18 March 2011 the Assessing Officer has sought to reopen assessment for Assessment Years 2006-07 and 2007-08. These proceedings under Article 226 of the Constitution have been instituted in order to question the validity of the action initiated by the Assessing Officer of reopening the assessments.

(3.) The Petitioner filed its return of income tax for Assessment Year 2002-3 and claimed a deduction under Section 10A of the Income Tax Act, 1961. During the course of the assessment proceedings, queries were raised by the Assessing Officer, inter alia, on 7 March 2005. The Petitioner was called upon to explain how the services rendered by the Petitioner while engaged in Domain name registrations and Web Hosting Services were covered within the meaning of the expression 'web-site services' under a circular issued by the Central Board of Direct Taxes. The Petitioner responded by a letter dated 14 March 2005 clarifying the circumstances in which it provides web-site services within the meaning of a CBDT circular dated 26 September 2000. The circular was issued, inter alia, in exercise of powers conferred by clause (b) of item (i) of Explanation 2 of Section 10A. By the circular several information technology enabled products or services came to be specified. The specified services included 'Web-site Services'.