Per Keshaw Prasad, A.M. - The appeal has been directed by the revenue against the order of the Commissioner (Appeals) dated 13-7-1998 pertaining to assessment year 1996-97. The only ground of appeal raised by the revenue relates to the deduction under section 80HHE of the Act.

2. Briefly the facts of the case are that the main business activity of the company is to make customers (mainly travel agents) online with AMADEUS CRS System. For connectivity to AMADEUS System agents are supplied with free of cost computers Systems which are being provided by GTS. The Agents are also provided with training and system usage free of charge by Amadeus India (P.) Ltd.

3. The agents receive latest information regarding schedules and availabilities of worldwide participants in the AMADEUS System, and create reservation data and records which are proceeded and exported immediately into the system, while data created is simultaneously processed in the AMADEUS Data Processing Centre abroad in Erding, Germany & confirmed through creation of a record locator.

4. Every time an agent makes an air, hotel, car or other travel related booking through AMADEUS System it is measured in terms of segments. For example a ticket booking done for Delhi-Bombay-Frankfurt-Delhi for one passenger would amount to three segments - One segment for Delhi-Bombay, second for Bombay-Frankfurt and third segment for Frankfurt-Delhi. After agent creates these segments this data is received and exported to Host System Amadeus abroad through Amadeus Computers where segments/messages are immediately processed.

5. Amadeus India (P.) Ltd. raises invoices every month to Amadeus Madrid on the basis of total No. of segments generated/exported as explained above which is remitted in hard currency by Amadeus Madrid.

6. The Assessing Officer examined the allowability of deduction under section 80HHE of the Act claimed by the assessee. He observed that such deduction was allowable when the assessee was engaged in the business of "export out of India of computer software or its transmission from India to a place outside India by any means". While relying on Explanation (b) to section 80HHE the Assessing Officer observed that it is clear that such deduction was allowable only in the case of export of computer software and such computer software means any computer programme. He felt that the activities of the assessee clearly revealed that the assessee was exporting processed data and not software. The Assessing Officer, therefore, asked the assessee to justify the claim of deduction under section 80HHE vide order-sheet entry dated 2-12-1997. In reply the assessee stated as under :—

"(a)Justification for claim of deduction under section 80HHE of Rs. 2,01,31,460 :

The note enclosed on the "Nature of activities" of the assessee company (Viz. Annexure I) clearly establishes that it is engaged in the "Export of Data processing/Software segments" on computerised reservation system. Export of Processed data/computer software is one of the qualifying activities specified in section 80HHE(1)(i).

(b)Information sent outside is "Software":

Your goodself has asked the assessee-company to establish that the information sent outside is "Software". In this connection, your attention invited to the certificate dated 5th November, 1996 of the Software Technology Parks of India (STPI) as also the Softex Form filed at pages 18 to 22 with the return of income. In annexure ‘V’ enclosed it has been explained that the description of the software exported viz., "S/W.B" means "Data processing software" and this has been duly certified by the STPI, an autonomous society of the Government of India, Department of Electronics - which is the technical body authorised to certify the software exports. The said certificate of the STPI dated 5th November, 1996 read with the explanatory note in para 6 above duly establishes the software exports on the part of the assessee-company."

7. In view of the reply of the assessee the