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| The Tax Publishers2020 TaxPub(DT) 0097 (Bang-Trib) INCOME TAX ACT, 1961
Section 263
Although assessee conducted research and development activities, but same was only a process step to provide final output to its parent company and what was developed by assessee under bio-informatics division was customised electronic data created through various research and development. No doubt, related invoices mentioned Research and Development charges but this could not impliedly mean that activities carried on by assessee under Bio-informatics segment did not amount to manufacture of computer software. A co-joint reading of definition of computer software and CBDT Circular No. 1/2013 reveals that assessee was developing a customised software in the form of bio-infirmatics tools using platforms like C++, Java which was used to analyse gene sequence, protein sequence in Silicon Valley owning, gene expression profiling, pathways development, etc. Apparently, AO called upon various details to verify claim of assessee and view taken by AO was a possible biew. Merely because, Pr. CIT had taken a different view, assessment order could not be termed as erroneous and prejudicial on the ground of AO having allowed assessee's claim of section 10B deduction for bio-informatics division.
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Revision under section 263 - Erroneous and prejudicial order - CIT questioned allowability of deduction under section 10B as regards bio-informatics division on account of research and development activities carried on by assessee in that segment which CIT held not classificable as development of computer software -
CIT held assessment order as erroneous and prejudicial to the interest of revenue on the ground of AO having allowed assessee's claim of section 10B deduction for bio-informatics division in spite of the fact that assessee was only engaged in research and development activities relating to development of software in the concerned segment. Held: Although assessee conducted research and development activities, but same was only a process step to provide final output to its parent company and what was developed by assessee under bio-informatics division was customised electronic data created through various research and development. No doubt, related invoices mentioned Research and Development charges but this could not impliedly mean that activities carried on by assessee under Bio-informatics segment did not amount to manufacture of computer software. A co-joint reading of definition of computer software and CBDT Circular No. 1/2013 reveals that assessee was developing a customised software in the form of bio-infirmatics tools using platforms like C++, Java which was used to analyse gene sequence, protein sequence in Silicon Valley owning, gene expression profiling, pathways development, etc. Apparently, AO called upon various details to verify claim of assessee and view taken by AO was a possible view. Merely because, Pr. CIT had taken a different view, assessment order could not be termed as erroneous and prejudicial.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007-08 & 2008-09
IN THE ITAT, BANGALORE BENCH
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