Friday, July 18, 2014

‘Ready to print books’ exported in form of CD or email deemed as customized electronic data; eligible for sec. 10B relief

'Ready to print books' exported by assessee in form of a CD or e-mail were customized electronic data eligible for claiming benefit of deduction under section 10B.


a)The assessee was engaged in business of export of software of 'ready to print books'. It had claimed exemption under section 10B on account of export of ready to print books in form of a CD or e-mail.

b)The AO disallowed the said claim and made addition to the income of the assessee. The CIT(A) confirmed the disallowance made by AO.

c)Aggrieved by the CIT(A)’ s order, assessee filed the instant appeal before Tribunal.

The Tribunal held in favour of assessee as under:

1)Section 10B applies to an undertaking which manufactures or produces any articles or things or computer software. Clause (i) of Explanation 2 to section 10B defines ‘computer software as under- "computer software" means—

(a)any computer programme recorded on any disc, tape, perforated media or other information storage device; or

(b)any customized electronic data or any product or service of similar nature as may be notified by the Board,

which is transmitted or exported from India to any place outside India by any means.

2)Thus, the intention of the Legislature is very clear that it provides deduction under section 10B not only to enterprises engaged in manufacture or production of any article or thing but even to those assessees whose end product is any customized electronic data.

3)In the instant case, the assessee after collecting raw data and pictures had utilized its expert designing skills in producing 'a ready to print e-book'. The final product was intended for use of a particular customer and, therefore, the case under consideration would fit in the category of production of 'any customized electronic data' as per the definition of 'computer software' defined in the Explanation 2 to section 10B.

4)Thus, the AO was to be directed to allow deduction under section 10B in accordance with law.- KIRAN KAPOOR V. ITO [2014] 46 147 (Delhi - Trib.)