The central legal point established in the judgment is the wide scope of 'information technology enabled products or services' covered under the notification No. S.O. 890(E) dated 26th September, 2000, and the legislative intent to enable the Board to include various services or products of similar nature in the ambit of the provision.

Sanjiv Khanna, J.

1. Revenue, through Commissioner of Income Tax-II, has preferred this appeal relating to the Assessment Year 2007-08, on the following substantial question of law:-

“Whether the Income Tax Appellate Tribunal was right in holding that the services provided by the respondent-assessee are covered by Section 10A of the Income Tax Act, 1961 read with Notification bearing No. SO 890(E) dated 26th September, 2000?”

2. This appeal arises out of the order dated 27th May, 2011, passed by the Income Tax Appellate Tribunal (‘Tribunal’, for short) allowing the appeal of the respondent-assessee, “M/s ML Outsourcing Services (P) Limited”.

3. Return, declaring ‘nil’ income, filed on 27th October, 2007, became a subject matter of regular assessment order under Section 143(3) of the Income Tax Act, 1961 (‘Act’, for short) dated 30th November, 2009. The Assessing Officer disallowed the claim under Section 10A and held that the net profit of Rs.88,49,972/-, mentioned in the tax audit report, should be brought to tax by denying exemption under Section 10A of the Act. Disallowance of Rs.21,351/- was also made, but we are not concerned with the said disallowance in the present appeal.

4. One of the reasons given by the Assessing Officer to disallow the claim under Section 10A of the Act was that the respondent-assessee was rendering services as an employment agent, like any other employment agency, and merely forwarded list of shortlisted candidate to their overseas clients. There was a minimum use of computers or information technology enabled tools. The respondent-assessee was, therefore, not involved in the development of computer software or information technology enabled services as the use of technology was not quintessential for the nature of services rendered and the core activity was that of an employment agent. It was recorded that the investment in computers initially was of a paltry amount of Rs.36,106/- though subsequently computers worth Rs.24,50,000/- were acquired for the Bangalore unit. The respondent-assessee had generated a turnover of Rs.62.92 lacs from its Gurgaon office, which had remained in operation till 30th September, 2006. Subsequently, the operations were embarked at Bangalore and invoices for Rs.1,47,28,800/- were raised on 31st March, 2007 after obtaining Software Technology Parks of India (STPI) approval for the said unit at Bangalore.

5. Commissioner of Income Tax (Appeals) referred to the notification S.O. 890(E) under which in clause (vii) human resource services were included under clause (b) of item No. 1 of Explanation to Section 10A but observed that the respondent-assessee simply identified prospective candidates and forwarded their bio-data to the foreign company and, therefore, the said exercise cannot be called a human resource service. The respondent-assessee was merely engaged in business of transmitting data for recruitment of manpower to a company in USA. The said business activity was not a service or a product similar to customised electronic data and, therefore, not covered under the CBDT notification mentioned above, including the sub-heading “human resource service”. Principle of ejusdem generis would apply to clause (b) of Explanation 2(1) to Section 10A. He relied upon the opinion given by Judicial Member in the case of Income Tax Officer versus Accurum India Private Limited, (2010) 128 TTJ 249 and observed that the third member had not agreed with the view expressed by the Judicial Member/ majority decision. The respondent-assessee’s case was identical to the case of Accurum India Private Limited (supra) as they were involved in a similar business activity; i.e. activity of recruitment. Keeping in view the manner in which the same was conducted, it would not fall under ‘human resource management’. The contention that the process was information technology enabled service was rejected. It was observed that the respondent-assessee had transmitted data of the eligible can