Case Law Details
Manhattan Associates (India) Development Centre (P.) Ltd. Vs DCIT (ITAT Bangalore)
The issue under consideration was Whether the Assessee engaged in rendition of software development services was entitled to claim deduction u/s. 80JJAA of the Income Tax Act, 1961?
Assessee company engaged in rendition of software development services claimed deduction under section 80JJAA. AO denied deduction on the ground that assessee could not be said to be Industrial Undertaking engaged in the manufacture of article or thing and also he has raised the query that whether payments made by assessee to employees is in the nature of salary or wages?
‘Industrial undertaking’ has not been defined for the purposes of section 80JJAA, however, same having been defined in the Act, though for a different statutory provision, i.e., sections 10(15) and 72A. ITAT are also of the view that the term “Industrial Undertaking” having been defined in the Act, though for a different statutory provision, can be a guiding factor to the intention of the legislature to apply that definition to statutory provision in which the said term has not been defined. In the absence of any contrary intention emanating from attending circumstances or for any other reasons, adopting the definition given in the Act, would be more appropriate.
Further, As per ITAT there is no distinction sought to be made between Salary and Wages in the provisions of Sec. 80JJAA of the Act and the reason assigned by the AO for considering remuneration received by a person employed in software industry as “Salary” and not “Wages”, is without any basis. Hence, such distinction sought to be made by the revenue authorities for denying the claim of the Assessee for deduction u/s.80JJAA of the Act is unsustainable.
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