Deduction u/s 10A allowable where HR Services were provided in the process of providing customized electronic data was exported to USA

M.L. Outsourcing Services Pvt. Ltd. Vs. ITO (ITAT Delhi)– The notification issued by the CBDT at Serial No. 8, mentions “human resource services” as a notified service eligible for deduction u/s 10A. It was also observed that the Assessee is just processing the potentiality of candidates employable by any software development company and the customised data is prepared for the US Company. By whatever means the data is collected, once such customised data is stored in an electronic form, it becomes a customised electronic data which can be exported to qualify for deduction under section 10A.

The process of actually collecting the data need not be IT enabled.If the intention of the Legislature was that in order to qualify for deduction under section 10A, every activity should be carried out through electronic means, then the purpose of enacting section 10A would have been totally defeated. Thus, if the result of the entire exercise of recruitment is stored in an electronic device, it is not possible to say that it is not a customised electronic data. The only condition requiring fulfilment is whether there is export of any customised electronic data relating to any of the services specified by the Board or not. As the taxpayer carries out notified service i.e., Human Resource Service, the condition stands fulfilled the moment customised electronic data collected through such service is exported.

M.L. Outsourcing Services Pvt. Ltd. Vs. ITO

Decided by – ITAT Delhi

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