MOL GLOBAL SOFTWARE ALLIANCES P. LTD, MUMBAI v. ACIT RG 10(1), MUMBAI

CO 115/MUM/2010 | 2005-2006
Pronouncement Date: 09-03-2011 | Result: Dismissed

Appeal Details

RSA Number 11519923 RSA 2010
Assessee PAN AABCM6092Q
Bench Mumbai
Appeal Number CO 115/MUM/2010
Duration Of Justice 9 month(s) 23 day(s)
Appellant MOL GLOBAL SOFTWARE ALLIANCES P. LTD, MUMBAI
Respondent ACIT RG 10(1), MUMBAI
Appeal Type Cross Objection
Pronouncement Date 09-03-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted Not Allotted
Tribunal Order Date 09-03-2011
Date Of Final Hearing 02-11-2010
Next Hearing Date 02-11-2010
Assessment Year 2005-2006
Appeal Filed On 17-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI PRAMOD KUM AR (A.M.) ITA NO. 5738/MUM/2009 ASSESSMENT YEAR : 2005-06 ACIT 1 0 (1) ROOM NO. 455 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 VS. M/S MOL GLOBAL SOFTWARE ALLIANCES PVT. LTD. 503 KESHAVA BANDRA-KURLA COMPLEX BANDRA (E) MUMBAI- 400 051. PAN : AABCM 6092Q (APPELLANT) (RESPONDENT) C.O. NO. 115/MUM/2010 ASSESSMENT YEAR : 2005-06 M/S MOL GLOBAL SOFTWARE ALLIANCES PVT. LTD. 503 KESHAVA BANDRA-KURLA COMPLEX BANDRA (E) MUMBAI- 400 051. PAN : AABCM 6092Q VS. ACIT 10(1) ROOM NO. 455 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020 (CROSS OBJECTOR) (RESPONDENT) ASSESSEE BY : DR. K. SHIVARAM DEPARTMENT BY : MRS. ASHIMA GUPTA O R D E R PER D.K. AGARWAL J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 7.8.09 PASSED BY THE LD. CIT (A) FOR THE A.Y . 2005-06 AGAINST WHICH THE ASSESSEE HAS ALSO FILED CROSS OBJECTION. THE APPEAL AND C.O. ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE O F CONVENIENCE. ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 2 2. IT IS OBSERVED THAT THE APPEAL FILED BY THE REVE NUE IS DELAYED BY 8 DAYS. 3. IT HAS BEEN SUBMITTED BY THE ACIT THAT DELAY OF 8 DAYS IN FILING OF THE APPEAL IS DUE TO CLERICAL MISTAKE AND UNINTENTI ONAL. THEREFORE THE SAME MAY BE CONDONED WHICH WAS NOT OBJECTED TO BY T HE LEARNED COUNSEL FOR THE ASSESSEE. 4. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND KEEPING IN VIEW THAT IT HAS BEEN CONS ISTENTLY HELD BY THE HONBLE APEX COURT THAT IN THE MATTER OF CONDONATIO N OF DELAY A LIBERAL AND PRAGMATIC VIEW SHOULD BE TAKEN. THE REASON GIV EN BY THE APPELLANT FOR THE DELAY APPEARS TO BE SUFFICIENT CAUSE AND A CCORDINGLY THE DELAY IS CONDONED. 5. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPING SEARCHING RENOVATING AMENDING MODIFYING BUYING SELLING IMPORTING EXPORTING AND DEALING I N ALL TYPES OF COMPUTER SOFTWARE HARDWARE PERIPHERALS TELECOMMUNICATION OF COMMUNICATION EQUIPMENTS/HARDWARE AND TELECOMMUNICATION AND OR CO MMUNICATION SERVICES. THE UNIT OF THE ASSESSEE WAS APPROVED AS A 100% E.O.U. FOR COMPUTER SOFTWARE. IN THE RETURN OF INCOME THE ASS ESSEE CLAIMED THAT ITS INCOME IS EXEMPT U/S 10-B OF THE I.T. ACT 1961 (TH E ACT). HOWEVER AFTER ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 3 CONSIDERING THE ASSESSEES EXPLANATION THE A.O. DI SALLOWED THE DEDUCTION CLAIMED U/S 10-B AMOUNTING TO ` 36 24 615/- ON THE FOLLOWING GROUNDS:- A) THE ASSESSEE HAS FAILED TO GIVE NAMES OF THE EMPLOY EES WHO HAD DEVELOPED THE SOFTWARE EXPORTED DURING THE YEAR . B) THE ASSESSEE FAILED TO SUBMIT DETAILS OF THE PRODUC T EXPORTED AND EVIDENCE OF HAVING EXPORTED THE SAME. C) NO EVIDENCE OF DISCUSSIONS WITH FOREIGN CLIENTS AND DETAILS OF MODIFICATION TO THE SOFTWARE WERE FILED DURING THE ASSESSMENT PROCEEDINGS. D) THE ASSESSEE DID NOT CARRY OUT ANY MANUFACTURING AC TIVITY FROM THE DESIGNATED PREMISES. THE ASSESSEE DID NOT HAVE POSSESSION OF THE DESIGNATED PREMISES DURING THE PR EVIOUS YEAR. 6. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE SU BMITTED THAT THE ASSESSEE FILED THE EVIDENCES PERTAINING TO THE EXPO RT OF SOFTWARE AND THE RECEIPT OF THE FOREIGN EXCHANGE. IT WAS FURTHER SUB MITTED THAT THE A.O. HAD ASKED FOR A WORK ORDER FROM THE CUSTOMER WHICH WAS SUBMITTED. OTHER DETAILS WERE HIGHLY TECHNICAL AND SINCE THEY WERE NOT SPECIFICALLY ASKED FOR IT DID NOT SUBMIT THE TECHNICAL DETAILS. THE ASSESSEE HAS FILED THE SAID TECHNICAL DETAILS WITH BROCHURE AND DETAIL S OF MODIFICATIONS AS REQUESTED BY THE CUSTOMER AND CARRIED OUT BY ITS DI RECTOR BEFORE THE LD. CIT(A). IT WAS CLAIMED THAT THE SOFTWARE WAS EXPOR TED BY UPLOADING THE SAME ON SERVER. IT WAS CONTENDED THAT THE COMMUNIC ATION BETWEEN THE CUSTOMER AND ASSESSEE CONFIRMS THAT A SERVER WAS RE NTED BY THE ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 4 CUSTOMER AND THE RENTAL FEES WAS DEBITED TO THE ACC OUNT. THE ASSESSEE HAS ALSO FILED THE DETAILED COMMUNICATION BETWEEN T HE CUSTOMER AND DIRECTOR MULTIPLE E-MAILS FROM THE FOREIGN CUSTOME R TO THE ASSESSEE DETAILING MODIFICATION & ACTUAL WORK DONE. IT WAS THEREFORE SUBMITTED THAT THE EXPORT OF THE COMPUTER SOFTWARE WAS GENUIN E AND HENCE CANNOT BE DOUBTED. WITH REGARD TO THE A.O.S FINDING THAT THERE WERE NO MANUFACTURING/PROCESSING ACTIVITIES IN THE YEAR UND ER ASSESSMENT AS MENTIONED IN THE PROVISIONS OF SECTION 10-B AND THA T NO MANPOWER WAS EMPLOYED IT WAS SUBMITTED THAT THE ASSESSEE HAD CA RRIED OUT THE DEVELOPMENT OF SOFTWARE IN EARLIER YEARS. EVEN BEF ORE EXPORTING THE SAID SOFTWARE THE SOFTWARE HAD TO BE MODIFIED AS PER TH E DESIRES OF THE BUYERS AND THE SAID MODIFICATIONS WERE CARRIED OUT BY THE COMPANYS DIRECTOR SINCE HE WAS TECHNICALLY QUALIFIED TO CARRY OUT SUC H MODIFICATIONS. IT WAS FURTHER SUBMITTED THAT SINCE THE ASSESSEE HAD DISCO NTINUED WITH THE MAJOR BUSINESS ACTIVITIES THE ASSESSEE HAD NOT ENG AGED ANY ADDITIONAL MANPOWER AND THE ENTIRE WORK WAS CARRIED OUT BY THE DIRECTOR ONLY. IT WAS ALSO ARGUED THAT THERE IS NO REQUIREMENT U/S 10 B THAT THE MANUFACTURING ACTIVITY SHOULD BE CARRIED OUT DURING THE YEAR OF SALE ONLY. IT IS SUFFICIENT IF THE ASSESSEE IS ENGAGED IN THE ELIGIBLE BUSINESS OF MANUFACTURING OF COMPUTER SOFTWARE. AS REGARDS THE OBJECTION OF A.O. THAT THE DEVELOPMENT OF SOFTWARE WAS NOT DONE IN TH E ELIGIBLE PREMISES IT WAS SUBMITTED THAT THE ASSESSEE HAD TAKEN THE PREMI SES ON LEAVE AND LICENCE BASIS AND THAT THE SAID AGREEMENT WAS EXTEN DED BY THE ASSESSEE ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 5 TILL 31.03.2005 VIDE LETTER DATED 19.3.2004 FILED B EFORE THE LD. CIT(A) ON PAGE 117 OF THE PAPER BOOK. IT WAS FURTHER SUBMITTE D THAT IN ANY CASE THERE IS NO REQUIREMENT U/S 10B OF THE I.T. ACT TO CARRY OUT SUCH ACTIVITY IN THE PREMISES ITSELF AND THAT THE DEDUCTION U/S 1 0B OF THE I.T. ACT CANNOT BE DENIED ON THIS GROUND ITSELF. IN SUPPORT OF THE SAME THE ASSESSEE HAS ALSO RELIED UPON CIRCULAR NO. 694 DAT ED 23.11.1994. 7. DURING THE COURSE OF APPELLATE PROCEEDING THE A SSESSEE HAS ALSO FILED FOLLOWING ADDITIONAL EVIDENCE ALONG WITH APPL ICATION U/R 46-A FOR PERMITTING THE SAME:- I) SOFTWARE DEVELOPMENT AGREEMENT WITH BCAS DATED 17.05.2002 IN SUPPORT OF ITS ARGUMENT THAT IT HAD DEVELOPED AN E- MAIL SERVER AND CHAT PLUS INSTANT MESSAGING SOFTWAR E. II) BOUCHER OF MAIL SERVER ADMINISTRATION INSTANT MASSAGER AND CHAT-SERVER. III) WORK ORDER DATED 10.04.2004 RECEIVED FROM M/S IWORKANYWHERE.INC. IV) TEAMING AGREEMENT DATED 10.04.2004 WITH M/S IWORKANYWHERE INC. V) REGISTRATION OF GIAS ACCOUNT. VI) GIST OF DISCUSSIONS WITH US CUSTOMERS. VII) SAMPLE COPIES OF E-MAIL EXCHANGED WITH THE US CUSTOMER. VIII) LEAVE AND LICENCE AGREEMENT WITH M/S MULTIORG ANICS LTD. IX) CORRESPONDENCE WITH MULTIORGANICS LTD. FOR EXTE NSION OF TIME FOR LEAVING AND LICENCE PERIOD. ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 6 X) COPY OF TELEPHONE BILLS AND THE PAYMENT VOUCHERS . XI) APPROVAL FROM CUSTOMS. XII) COPY OF INSURANCE POLICY GIVING DETAILS OF THE PREMISES. XIII) COPY OF FOREIGN INWARD REMITTANCE CERTIFICATE . XIV) COPY OF INVOICES RAISED. THE LD. CIT(A) ASKED FOR THE REMAND REPORT FROM THE A.O. THE A.O. IN HIS REMAND REPORT SUBMITTED THAT SUFFICIENT OPPORTUNITY WAS PROVIDED TO THE ASSESSEE BUT THE ASSESSEE DID NOT SUBMIT THE EVIDEN CE AT ASSESSMENT STAGE THEREFORE ASSESSEES CLAIM U/S 10B WAS DISA LLOWED. NOW THE ASSESSEE INTENDS TO SUBMIT THE SAID EVIDENCE AT THE APPELLATE STAGE WHICH ACCORDING TO HIM NEED NOT BE CONSIDERED. THE LD. C IT(A) AFTER CONSIDERING THE ASSESSEES APPLICATION AND THE ADDITIONAL EVIDE NCE FILED BY THE ASSESSEE AND THE A.OS OBJECTION WHILE RELYING ON T HE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. SURETECH HOSPITAL AND RESEARCH CENTRE LTD. [2007] 293 ITR 53 (BOM) AN D KEEPING IN VIEW THE PROVISIONS OF SUB-RULE (4) OF RULE 46A R.W. SUB -SECTION (4) OF SECTION 250 OF THE ACT OBSERVED THAT NO SPECIFIC SHOW CAUSE WAS GIVEN BY THE A.O. WITH REGARD TO THE PREMISES OCCUPIED BY THE AP PELLANT DURING THE PREVIOUS YEAR HELD THAT AS THE EVIDENCE IS NECESSA RY TO DISPOSE OF THE GROUNDS OF APPEAL ADMITTED THE SAME. ON MERITS T HE LD. CIT(A) AFTER CONSIDERING THE MATERIAL AVAILABLE ON RECORD HELD T HAT THE APPELLANT IS ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 7 ENTITLED TO DEDUCTION U/S 10-B OF THE ACT AND ACCOR DINGLY HE DELETED THE DISALLOWANCE. 8. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL :- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AS WELL AS IN LAW THE LEARNED CIT(A) ERRED IN ALLOWING THE CL AIM MADE U/S. 10B OF THE ACT AMOUNTING TO ` 36 24 615/- ON THE BASIS OF ADDITIONAL EVIDENCES FILED AT APPELLATE LEVEL AND A DMITTED IN VIOLATION OF THE PROVISIONS OF RULE 46A WITHOUT APP RECIATING THAT THE ASSESSEE FAILED TO FURNISH ANY SUBSTANTIATING E VIDENCE DURING THE ASSESSMENT PROCEEDINGS INSPITE OF SUFFICIENT OP PORTUNITIES PROVIDED. 2) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O BE RESTORE D. 9. AT THE TIME OF HEARING THE LD. D.R. SUBMITS THA T THE LD. CIT(A) HAS ERRED IN ADMITTING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO FURNISH THE SAME DURING THE ASSESSMENT PROCEEDING INSPITE OF SUFFICI ENT OPPORTUNITY PROVIDED TO THE ASSESSEE. SHE THEREFORE SUBMITS TH AT THE ORDER PASSED BY THE LD. CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 10. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASS ESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE A.O. HAS UNDERSTOOD THE IS SUE AND HENCE THE ADDITIONAL EVIDENCE WHICH WAS FILED BEFORE THE LD. CIT(A) WAS NOT FILED ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 8 BEFORE THE A.O. THE ASSESSEES CASE CLEARLY FALLS UNDER RULE 46A(1)(C) WHICH PROVIDES EXCEPTION THAT WHERE THE ASSESSEE WA S PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE A.O. ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL. RELIANCE WAS ALS O PLACED ON THE DECISION IN THE CASE OF PRABHAVATI SHAH VS. CIT (19 98) 231 ITR 1 (BOM). IT WAS FURTHER SUBMITTED THAT RULE 46A(4) STATES TH AT THE RULE SHALL NOT EFFECT THE POWER OF THE COMMISSIONER (APPEALS) TO D IRECT THE PRODUCTION OF ANY DOCUMENT OR THE EXAMINATION OF ANY WITNESS T O ENABLE HIM TO DISPOSE OF THE APPEAL OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER O N HIS OWN MOTION OR ON THE REQUEST OF THE A.O. UNDER CLAUSE (A) OF S UB-SECTION (1) OF SECTION 251. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DEC ISIONS:- 1. CIT VS. SURETECH HOSPITAL & RESEARCH CENTRE LTD. (2 007) 293 ITR 53 (BOM). 2. CIT VS. PODDAR SWADESH UDYOG (P) LTD. (2007) 295 IT R 252 (GAU). 3. CIT VS. K. RAVINDRANATHAN NAIR (2004) 265 ITR 217 ( KER) HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) BE UPHELD. 11. WE HAVE CAREFULLY HEARD THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEV ELOPING SEARCHING ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 9 RENOVATING AMENDING MODIFYING BUYING SELLING I MPORTING EXPORTING AND DEALING IN ALL TYPES OF COMPUTER SOFTWARE HARD WARE PERIPHERALS TELECOMMUNICATION OF COMMUNICATION EQUIPMENTS/HARDW ARE AND TELECOMMUNICATION AND OR COMMUNICATION SERVICES. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE IS APPROVED AS A 100% E.O .U. FOR COMPUTER SOFTWARE. THE ASSESSEE HAS CLAIMED EXEMPTION U/S 1 0-B AMOUNTING TO ` 36 24 615/- WHICH WAS DISALLOWED BY THE A.O. ON THE GROUND THAT NO SOFTWARE DEVELOPMENT OR PRODUCTION HAD TAKEN PLACE IN THE YEAR UNDER CONSIDERATION. THEREFORE THE ASSESSEE WAS NOT ENGA GED IN THE PRODUCTION OF SOFTWARE. BEFORE THE LD. CIT(A) THE ASSESSEE HA S FILED CERTAIN ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM THAT THE ASSESSEE IS ENTITLED THE DEDUCTION U/S 10-B OF THE ACT. THE LD. CIT(A) WHILE FOLLOWING TO THE REQUIREMENT OF RULE 46-A FORWARDED THE SAME TO THE A.O. AND ASKED FOR THE REMAND REPORT. THE A.O. WHILE OBSERVING THAT TH E ASSESSEE WAS PROVIDED SUFFICIENT OPPORTUNITY TO PUT FORTH THE EV IDENCES IN SUPPORT OF HIS CLAIM U/S 10-B OF THE ACT BUT THE ASSESSEE HAS FAILED TO FILE THE SAME CONTENDED THAT THE EVIDENCE SUBMITTED BY THE ASSESSEE AT APPELLATE LEVEL IN HIS OPINION NEED NOT BE CONSID ERED. HOWEVER THE LD. CIT(A) KEEPING IN VIEW THE PROVISIONS OF SUB-RULE ( 4) OF RULE 46A AND THE PROVISIONS OF SUB-SECTION (4) OF SECTION 250 AND TH E RATIO OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SURETECH H OSPITAL & RESEARCH CENTRE LTD. (SUPRA) HELD THAT NO SPECIFIC SHOW CAUS E WAS GIVEN BY THE A.O. WITH REGARD TO THE PREMISES OCCUPIED BY THE AP PELLANT DURING THE ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 10 PREVIOUS YEAR HELD THAT AS THE EVIDENCE IS NECESSA RY TO DISPOSE OF THE GROUNDS OF APPEAL HE ADMITTED THE SAME. WE FURTHER FIND THAT THE LD. CIT(A) AFTER ADMITTING THE ADDITIONAL EVIDENCE AS A BOVE ALLOWED THE CLAIM OF THE ASSESSEE VIDE FINDING RECORDED IN PARA NO. 1 .14 & 1.16 OF HIS ORDER WHICH ARE REPRODUCED AS UNDER:- NOW COMING TO THE MERITS OF THE MATTER I FIND THAT THE APPELLANT HAD DULY EXPORTED THE COMPUTER SOFTWARE AND ALSO RECEIV ED THE AMOUNT IN FOREIGN EXCHANGE. THE APPELLANT HAS FILED THE EVID ENCES IN THE FORM OF COMMUNICATION WITH THE BUYER WHICH EXPLAINS THAT TH E APPELLANT HAD NEGOTIATED WITH THE FOREIGN BUYER FOR SALE OF HIS S OFTWARE. THE EVIDENCES FILED BY THE APPELLANT IN THE PAPER BOOK SUBSTANT IATES THE SAID CLAIM OF THE APPELLANT THAT THE SOFTWARE WAS FINALLY EXPORTE D AND THAT FOREIGN EXCHANGE WAS RECEIVED BY THE APPELLANT. THE COPY OF THE FOREIGN EXCHANGE REMITTANCE CERTIFICATE FILED BEFORE ME SUPPORTS T HE SAID FACT. AS REGARDS THE EMPLOYMENT OF THE MANPOWER I HAVE G ONE THROUGH THE SUBMISSIONS OF THE APPELLANT. IT IS NOTICED THAT A LTHOUGH THE EMPLOYEE COST WAS NIL DURING THE YEAR AND ` 7 132/- IN THE LAST YEAR THE APPELLANT HAS SHOWN EXPENSE ON ACCOUNT OF PERSONNEL COST DURING THE EARLIER YEARS WHEN THE SOFTWARE WAS DEVELOPED AND I TS RIGHTS WERE SOLD TO VARIOUS PARTIES. MOREOVER EVIDENCES ARE ALSO FILE D BY THE AR THAT SIMILAR SOFTWARE WAS DEVELOPED DURING A.Y. 2001-02TO A.Y. 2 003-04 AND SALES AND EXPORT OF SIMILAR SOFTWARE HAS BEEN MADE IN THE PAST TO COMPANIES SUCH AS IBM INDIA IBM THAILAND IBM INDONESIA IBM INDIA INFOCLARUS INC. USA ETC. I ALSO AGREE WITH THE SUBMISSIONS OF THE APPELLANT THAT THE SOFTWARE IS REQUIRED TO BE MADE ONCE AND THAT THE R IGHTS CAN BE SOLD TO VARIOUS PARTIES OVER THE YEARS. THE LIST OF INVOICE S AND COPIES OF FOREIGN INWARD REMITTANCE CERTIFICATES SHOWING EVIDENCE OF SALES FOR SIMILAR SOFTWARE TO OTHER ARE ALSO FILED BEFORE ME. MOREOV ER SINCE THE DIRECTOR MR. ABHIJIT BIREWAR HIMSELF WAS COMPETENT NO EMPLO YEES WERE RETAINED DURING THE YEAR. IN MY VIEW THE OBJECTION OF THE ASSESSING OFFICER IS NOT TENABLE IN LAW SINCE THE SOFTWARE WAS DEVELOPED WIT H THE HELP OF EMPLOYEES DEPLOYED IN THE EARLIER YEARS AND MERELY BECAUSE NO EMPLOYEE WERE EMPLOYED DURING THE YEAR WOULD NOT MAKE THE AS SESSEE INELIGIBLE FOR DEDUCTION. THE PLAIN READING OF SECTION 10B ALSO D OES NOT SUGGEST THAT THE APPELLANT IS REQUIRED TO EMPLOY EMPLOYEES/PERSO NNEL EVERY YEAR WHEN SALE IS MADE AND WHEN THE DEDUCTION U/S 10B OF THE I.T. ACT IS CLAIMED. HENCE IN MY OPINION THE SAID OBJECTION IS NOT SUSTAINABLE. AS REGARDS THE USE OF PREMISES FOR DEVELOPMENT OF THE SOFTWARE I HAVE GONE THROUGH THE EVIDENCES PLACED BEFORE ME. T HE AR HAS FILED THE COPY OF LEAVE AND LICENSE AGREEMENT DATED 18.03.200 0 BETWEEN THE ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 11 APPELLANT AND M/S MULTI ORGANICS LTD. WHEREIN THE P REMISES WERE TAKEN ON LEAVE AND LICENSE BASIS FOR A PERIOD UPTO 19.3.2 001. THE SAID ARRANGEMENT WAS THEREAFTER EXTENDED FROM TIME TO TI ME AS PER THE LETTERS OF EXTENSION PLACED ON RECORD. THE APPELLANT HAS AL SO PLACED ON RECORD SEVERAL OTHER EVIDENCES TO PROVE THAT THE PREMISES WERE UNDER THE POSSESSION OF THE APPELLANT AT THE RELEVANT POINT O F TIME TILL: 31.3.2005 WHEN THE PREMISES WERE RETURNED TO THE LANDLORD. T HE COMPANY HAS BEEN GRANTED APPROVAL BY THE GOVT. OF INDIA UNDER S TP SCHEME (100% EOU) FOR THE DEVELOPMENT OF COMPUTER SOFTWARE AND T HE COMPANY HOLDS A VALID GREEN CARD ISSUED BY STPI WHICH IS VALID UP TO 12/4/2005. ON PAGE 131 OF THE PAPER BOOK IS A LETTER ISSUED BY AS STT. COMMISSIONER OF CUSTOMS DATED 22-04-2002 GIVING PERMISSION TO THE APPELLANT TO MANUFACTURE COMPUTER SOFTWARE FROM THE SAID PREMISE S TILL 15-04-2003. THIS LETTER HAS SEVERAL ENDORSEMENTS VIDE WHICH THE PERMISSION HAS BEEN EXTENDED. THE LAST ENDORSEMENT IS DATED 30-04-2004 VIDE WHICH THE PERMISSION FOR THE PREMISES HAS BEEN EXTENDED TILL 14-04-2005. IN OTHER WORDS THE SAID LICENSE WAS ALSO IN FORCE DURING TH E YEAR UNDER APPEAL. THE FACTUAL MATRIX OF THE APPELLANTS CASE SUGGEST THAT THE PREMISES WERE UNDER THE POSSESSION OF THE APPELLANT FOR USE OF TH E ELIGIBLE ACTIVITY DURING THE PERIOD WHEN THE COMPUTER SOFTWARE WAS EX PORTED AND HENCE IT CANNOT BE SAID THAT THE PREMISES WERE SURRENDERED L ONG BACK. IN THE ABSENCE OF ANY MATERIAL PLACED ON RECORD BY THE REVENUE TO SHOW THAT THERE IS NO POWER WITH THE LD. CIT(A) TO ADMIT THE ADDITIONAL EVIDENCE OR THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE HA S NOT BEEN PROVIDED TO THE A.O. OR NO SUCH OPPORTUNITY WAS PROVIDED TO THE A.O. OR THERE WAS NO SUCH REASONABLE CAUSE WITH THE ASSESSEE WE ARE OF THE VIEW THAT THE LD. CIT(A) IN EXERCISE OF HIS POWER UNDER SUB-RULE (4) OF RULE 46-A R.W. SUB- SECTION (4) OF SECTION 250 OF THE ACT AFTER RECORDI NG HIS REASONS FOR ADMISSION OF THE ADDITIONAL EVIDENCE HAS ADMITTED T HE SAME. THIS BEING SO AND KEEPING IN VIEW THAT ON MERITS ALSO THE REVE NUE HAS FAILED TO BRING ON RECORD ANY CONTRARY MATERIAL AGAINST THE FINDING S RECORDED BY THE LD. CIT(A) WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LD. CIT(A) DOES NOT ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 12 CALL FOR ANY INTERFERENCE. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 12. NOW WE SHALL TAKE UP THE ASSESSEES C.O. NO. 1 15/MUM/10. 13. IN VIEW OF OUR FINDING RECORDED IN THE REVENUE S APPEAL AS ABOVE WE ARE OF THE VIEW THAT ALL THE THREE GROUNDS TAKEN BY THE ASSESSEE IN ITS C.O. DO NOT CALL FOR ANY FRESH ADJUDICATION AND ACC ORDINGLY THE SAME ARE REJECTED. 14. IN THE RESULT THE REVENUES APPEAL AND THE ASS ESSEES C.O. STAND DISMISSED. ORDER PRONOUNCED ON THIS 9 TH DAY OF MARCH 2011. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI DATED 9 TH MARCH 2011. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- X MUMBAI 4. COMMISSIONER OF INCOME TAX MC X- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH F MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO.5738/MUM/2009 & C.O. 115/MUM10 M/S MOL GLOBAL SOFTWARE ALLIA NCES PVT. LTD. 13 1 DRAFT DICTATED ON 1 7 . 2 .11 23.2.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 23 . 2 .11 24.2.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS