Deputing manpower abroad for software development eligible for tax exemption: K'taka HC

Vartha Bharati | 26-12-2023 | 18:05:00 IST

Bengaluru: The High Court of Karnataka has set aside three reassessment notices of the Income Tax Department against EIT Services India Ltd (formerly Hewlett Packard) for three assessment years issued by the Income Tax Department and ruled that deputing manpower abroad for software development is eligible for tax exemption under Section 10A of the IT Act.

The Commissioner of Income Tax (CIT), Bengaluru had ordered for the re-examination of the claim for deduction under Section 10A/80HHE of the Income Tax Act for the assessment years 2005-06, 2006-07 and 2007-08 on the ground that ''part of the petitioner's profits was related to rendering technical services outside India which was not eligible for deduction.''

The company filed three writ petitions challenging the re-assessment notices which was heard by the bench of Justice S Sunil Dutt Yadav.

The HC in its judgement on December 19 cited a circular issued by the Ministry of Finance in 2013 which clarified that ''expenditure incurred for services to develop software outside India could be allowed under Section 10A of the IT Act if deputation is for development of software.''

The HC in its judgement said, ''It is clear that the clarification stipulates that the benefits under Section 10A deductions can be availed of, if there exists a direct and intimate nexus or connection between the development of software abroad with the eligible units setup in India.'' Citing the circular, the HC also noted that deputing technical manpower abroad is not detrimental to benefits of exemption under Section 10A of the IT Act. The HC said that in this present case the clarification issued in the circular was relevant.

''When the present facts are looked into, it is clear that the deductions sought for could fall within the scope of Section 10A of the IT Act, which however is a determination to be made on merits while this court is only considering as to whether the Assessing Officer has applied his mind to the issue of deduction under Section 10A of the IT Act, whether the assessee has made true and full disclosure of relevant primary facts. In order to come to a conclusion regarding the above two aspects, the circular would throw some light and it is in such context that the circular could be referred to,'' the HC said.

Setting aside the three reassessment notices, the HC said, ''The conclusion arrived at by the Assessing Officer for the Assessment Years 2005-2006, 2006-2007 and 2007-2008, when examined from the point of view of the circular would strengthen the case of upholding deduction under Section 10A of the IT Act and would indicate that the resort to a review in the guise of reassessment would be a futile exercise.''

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Another North Goa nightclub sealed; Kejriwal says corruption led to fire tragedy

13-12-2025 ¦ 13-12-2025 IST

AAP leader Arvind Kejriwal (PTI)

Panaji (PTI): As part of a crackdown against tourist establishments violating laws and safety norms in the aftermath of the Arpora fire tragedy, Goa authorities on Saturday sealed a renowned club at Vagator and revoked the fire department NOC of another club.

Cafe CO2 Goa, located on a cliff overlooking the Arabian Sea at Vagator beach in North Goa, was sealed. The move came two days after Goya Club, also in Vagator, was shut down for alleged violations of rules.

Elsewhere, campaigning for local body polls, AAP leader Arvind Kejriwal said the fire incident at Birch by Romeo Lane nightclub at Arpora, which claimed 25 lives on December 6, happened because the BJP government in the state was corrupt.

An inspection of Cafe CO2 Goa by a state government-appointed team revealed that the establishment, with a seating capacity of 250, did not possess a no-objection certificate (NOC) of the Fire and Emergency Services Department. The club, which sits atop Ozrant Cliff, also did not have structural stability, the team found.

The Fire and Emergency Services on Saturday also revoked the NOC issued to Diaz Pool Club and Bar at Anjuna as the fire extinguishers installed in the establishment were found to be inadequate, said divisional fire officer Shripad Gawas.

A notice was issued to Nitin Wadhwa, the partner of the club, he said in the order.

Campaigning at Chimbel village near Panaji in support of his party's Zilla Panchayat election candidate, Aam Aadmi Party leader Kejriwal said the nightclub fire at Arpora happened because of the "corruption of the Pramod Sawant-led state government."

"Why this fire incident happened? I read in the newspapers that the nightclub had no occupancy certificate, no building licence, no excise licence, no construction licence or trade licence. The entire club was illegal but still it was going on," he said.

"How could it go on? Couldn't Pramod Sawant or anyone else see it? I was told that hafta (bribe) was being paid," the former Delhi chief minister said.

A person can not work without bribing officials in the coastal state, Kejriwal said, alleging that officers, MLAs and even ministers are accepting bribes.