Income Tax Appellate Tribunal Mumbai Tangerine Exports vs IncomeTax Officer on 3 December, 1993 Equivalent citations: [1994]49ITD386(MUM) ORDER R.D. Agrawala, Judicial Member 1. This is an appeal by the assessee. They are a firm. During the relevant accounting period which ended on 31st March, 1990 the assesseefirm exported software to Moscow to the tune of Rs. 1,60,52,617. The assessee claimed exemption under Section 80HHC of the Incometax Act, 1961 (referred as 'Act' for brief) in respect of their export earnings. It was denied by the Assessing Officer on the premises that the software which was exported by the assessee was neither "goods" nor "merchandise", which alone were entitled to this beneficial provision. On appeal, the learned CIT (Appeals) affirmed the above view. Hence the present appeal under Section 253 of the Act. 2. This second appeal thus raises an interesting issue which although lies in a narrow compass. 3. The fact that the assesseefirm exported Computer Software to Moscow to earn foreign exchange is not under dispute. 4. The Computer programme so sold was recorded on tapes/discs, which were produced before us as sample and to show that this had considerable weight and mass which occupied sufficient space and thus tangible like any other goods. 5. Section 80HHC(l) of the Act runs asunder: (relevant portion extracted). 80HHC(l). Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee from the export of such goods or merchandise. 6. The argument of the Assessing Officer in repelling the assessee's plea that the software exported by them fell within the purview of Section 80HHC emanates from the aid taken by him of another provision is subsection (1) of Section 80HHE introduced by the Finance (No. 2) Act, 1991. The relevant portion of this statutory provision reads as under : 80HHE(l). Where an assessee, being an Indian company or a person (other than a company) resident in India is engaged in the business of (i) export out of India of Computer software or its transmission from India to a place outside India by any means; (ii) providing technical services outside India in connection with the development or production of computer software, there shall, in accordance with a subject to the provisions of this section, be allowed, in computing the total income of the assessee a deduction of the profit derived by the assessee from such business: Provided that no such deduction shall be allowed in relation to the assessment year commencing on the 1st day of April, 1994 or any subsequent assessment year; 7. The Assessing Officer thereafter hops on to the speech of the Hon'ble Finance Minister, the mover of the Bill for the enactment of Section 80HHE, delivered by him on the floor of the House on 24th July, 1991, a part of the Annual Budget, as per which Section 80HHE was introduced with a view to encourage export of a software and providing exemption to thef income earned therefrom. In the opinion of the Assessing Officer this being the objective achieved by Section 80HHE, computer software could not be said to fall within the phrase 'goods or merchandise* appearing in Section 80HHC. In appeal, the CIT(A) affirmed this view. 8. Strenuously challenging the stance of the department, Shri R.K. Tandon, the learned counsel for the assessee contended that the revenue authorities misdirected themselves in basing their decision on the strength of a subsequent provision of law, which had not taken birth till the end of the current accounting period and as such bore no relevance for the present adjudication. In his submission, the assessee's case could not be stymied by whipping up a nonexistent provision (Section 80HHE came into force with effect from 141991) which ought to have been decided on the strength of the bare provision of relevant law (Section 80HHC), if not by adopting a beneficial construction thereon. According to him, there were no legal premises entitling the authorities below in applying a law posterior in time which vitiated their findings. The learned Departmental Representative, however, argued that Section 80HHE though a subsequent provision could be sought assistance of and the view taken by the learned CIT(A) was tenable. 9. We have given a very careful consideration to the issue before us. 10. As is obvious, the primary controversy for our adjudication rests on the view taken by us as to whether or not Section 80HHE which had not seen the sunshine during the relevant accounting period could be made the basis for resolving the dispute appearing for that accounting period. 11. One of the fun