Asst. CIT vs. Majmudar & Co. ITAT “B” Bench, Mumbai Before Mahavir Singh (J. M.) and Rajesh Kumar (A. M.) ITA No. 3063 to 3067 and 6604 /Mum/2012 A.Ys.: 2004-05 to 2009-10. Date of order: 19th August, 2016 Counsel for Revenue / Assessee: N.P. Singh / Arvind Sonde

Facts

The assessee, a firm of  Advocate & Solicitors, is engaged in production and export of customised electronic data or legal database.  The unit of the firm was recognised as a 100% EOU by the development Commissioner SEZ, SEEPZ and its entire sale proceeds from export of such legal services was brought in india in convertible foreign exchange. according to the assessee, it has transferred the customised electronic data to its client therefore it forms part of computer software as per explanation 2 to section 10B of the act. accordingly, it claimed deduction u/s 10B of the act. However, the claim of the assessee was rejected by the AO on the grounds amongst others that, the assessee was engaged in providing legal services to its foreign clients and not engaged in exporting legal database which was one of the items notified by the CBDT for the purpose of “Computer Software” on which deduction u/s. 10B was admissible. Rendering of legal services by the assessee firm to the foreign clients cannot be termed as export of legal database from india.

Held

The tribunal noted that the services provided by the assessee i.e. legal services, are recognised by the Government of India for the various benefits under the scheme of EOU as per EXIM Policy 2002-2007.  Section 10B of the Act was introduced to give benefit to such EOU under the Income-tax Act, reflecting the intention of law to provide encouragement to the exporters of services to enhance their capacity for provision of services and in turn earn valuable foreign exchange for our country. According to the Tribunal, the assessee has fulfilled the specific requirements of Section 10B by providing legal  Services using  legal   database.  legal database  is  recognised by the Board vide its notification No. S.O.890(E) dated September 26, 2000 as one of the eligible information technology enabled services. Explanation 2(i) (b) defines computer software to include, inter alia, a “Customised Electronic Service as notified by the Board”. As legal database is notified by the Board for this purpose and the assessee has provided services by using such legal database via electronic media i.e. via emails and internet facilities, the claim of the assessee for deduction u/s. 10B of the Act in the light of Explanation 2(i) (b) is fully justified.