CIT Vs. AJAY AUTOMATION (P) LTD

JUDGEMENT

(1.) This appeal under Section 260A of the Income Tax Act, 1961 (for short, 'the Act') has been admitted on the following two substantial questions of law:

(2.) The assessee carries on the business of developing computer software. For the relevant assessment year 1989-90, it claimed a deduction to the extent of Rs.21.55 crores under Section 80HHC of the Act.

(3.) The assessing officer accepted the claim made by the assessee, but the Commissioner of Income Tax, exercising powers under Section 263 of the Act, revised the order of the assessing officer on the ground that computer software recorded on magnetic tapes cannot be considered as "goods" for the purposes of Section 80HHC of the Act. The Commissioner also took note of the fact that Section 80HHE was introduced in the Income Tax Act with effect from 1.4.1991 and that Section specifically intended to cover exports of computer software.