Case Law Details
RELEVANT PARAGRAPH
3.5 We have heard rival contentions on this aspect. The taxpayer company was incorporated on 10.6.1988 . The taxpayer is stated-to be engaged in the business of software development since 1994 and its unit has been granted the status of 100% export oriented software technology park on 31.8.1995 under the software export scheme of Department of Electronics and thus, has been granted the status of 100% EOU. As per annexure-A to the assessment order, the company was granted license [license no. 2/95/100% EOU(STP)] for private bonded ware house by the Assistant commissioner, Central Excise on 19.12.1995 in the name of Solmac Solution Machines. Copies of export declarations for export of consultancy services are also annexed to the assessment order as Annexure C-2 to C-5. The agreement dated 1.4.2000 between the taxpayer and the purchaser e-infochips Inc. stipulates provision for suitable qualified personnel for providing services concerning computer programming, software development and computer software and is enclosed as Annexure B-2 to the assessment order. Annexure D is an application form for conversion of an existing software export unit to STP unit while Annexure F is an agreement executed on 8.9.1995 for software export technology park. Both the parties are in unison when they say that what is to be examined is the nature of activities actually undertaken in the light of the objects clause. In the case under consideration, main object clause in the Memorandum of Association reads as under:
“To provide, supply, maintain, and operate for the benefit of individual, firm, society, trust, company body corporate, corporation, government or any other person actual or artificial, technical, executive engineering consultancy services in the filed of data processing, computer, micro processor, process control equipments, telecommunication, mass communication, development for chemical, power, computer, instrumentation and telecommunication industries.”
The AO held that the aforesaid clause does not talk of software development while the Id AR vehemently argued that the said objects entitle them to undertake software development. As is apparent from the aforesaid objects, taxpayer company was set up to provide for technical, executive engineering consultancy services in the filed of data processing, computer, micro processor, process control equipments, telecommunication, mass communication, development for chemical, power, computer, instrumentation etc. By virtue of these objects, taxpayer claims to have undertaken manufacture or production of software programmes for the computer. Now how far objects are relevant in deciding the actual activities under taken? Here we may refer to the decisions relied upon in this connection. Hon’ble Supreme Court in the case of Oriental Investment Company Limited, vs Commissioner Of Income-Tax, Bombay,32 ITR 664(SC) observed.
“.In the instant case the Appellate Tribunal in its appellate order has set out the amount of profits made by the assessee company in the years of assessment 1943-44 to 1948-49. It has also mentioned the inconsistent positions taken up by the assessee in first claiming to be a dealer and then to be an investor which according to the Tribunal was due to the fact that it was incurring losses in the earlier years and had begun making profits when the claim of being an investor was put forward. But the two basic facts on which the Tribunal has based its findings are :
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