Case Law Details
RELEVANT PARAGRAPH
5. I have duly considered the rival contentions and the material on record. The issue to be considered is whether the profit earned by the assessee from the activity of recruitment and training of personnel and supplying the data thereof to its parent company in US is eligible for deduction under sec. 10A or not read with the Board’s Circular dated 26.09.2000. In this connection, it would be worthwhile to consider first the role of the circulars issued by the Board.
ROLE OF BOARD’S CIRCULARS
6. This is best explained by the Supreme Court in the case of UCO Bank vs. CIT in 237 ITR 889. After referring to the various provisions of sec. 119 of the Act, at page 896 of the report, the Court observed that the Board has power, inter alia, to tone down the rigour of the law and ensure a fair forcement of its provisions, by issuing circulars in exercise of its statutory powers under sec. 119 of the Act, which are binding on the authorities in the administration of the Act. It is also observed on the same page that the power is given for the purpose of just, proper and efficient management of the work of assessment and in public interest. It is a beneficial power given to the Board for proper administration of fiscal law so that undue hardship may not be caused to the assessee and the fiscal laws may be correctly applied. Again, at page 898 of the report, it is observed that the task of interpretation of the laws is the excessive domain of the Courts. However, the Board has the statutory power under sec. 119 to tone down the rigour of the law for the benefit of the assessee by issuing circulars to ensure a proper administration of the fiscal statute and such circulars would be binding on the authorities administering the Act.
7. Let us consider the above role of the circulars in the context of sub-clause (b) of clause (i) of Explanation 2 to sec. 10A of the Act. The said clause (i) gives the meaning of the term “Computer Software”. One of the meanings given is “any customised electronic data or any product or service of similar nature, as may be notified by the Board”. In other words, if the assessee is engaged in the export of any customised electronic data, then, profit earned from such export would qualify for deduction under sec. 10A of the Act. It may be noted that whereas sub-clause (a) refers to any computer programme, sub-clause (b) refers to any customised electronic data. Computer programme referred to in sub-clause (a) may or may not be customised and may be useful for general application. On the other hand, the electronic data referred to in sub-clause (b) has necessarily to be customised. By the word “customised” is meant that the data is suitable for a specific customer only. Considering the fact that the expression “customised electronic data” is quite general in nature and also considering the fact that computer applications are fast expanding, one cannot visualise as to what type of products or services will come up in future. Considering this ever-expanding horizon of software products and services, the Board has been given the power to notify such products and services which in its opinion should qualify for deduction under section 10A. In other words, this power of the Board when exercised, it will ensure proper administration of the fiscal statute as observed by the Supreme Court in UCO Bank’s case supra. It is in this sense the Id. A.M. has observed that the Board’s circular has made the job of the Assessing Officer quite simple. Thus, it is this role, as explained by the Supreme Court, which is played by the Board by issuing the circular dated 26.9.2000.
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