ACIT, Circle-16(2), Hyd, Hyderabad V. Magna Infotech Pvt.Ltd., Hyd, Hyderabad

ITA 1013/HYD/2015

• Counselvise Citation: 101322514 RSA 2015
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• Assessee Lawyers: B SATYANARAYANA MURTHY
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.995/HYD/2015 : ASSESSMENT YEARS 2007-08 ITA NO.1013/HYD/2015 : ASSESSMENT YEARS 2008-09 ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 16(2), HYDERABAD V/S M/S. MAGNA INFOTECH PVT. LTD., HYDERABAD (PAN - AACCM 0914 A ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.SITARAM RESPONDENT BY : SHRI B. SATYA N ARAYANA MURTHY DATE OF HEARING 29.10.2015 DATE OF PRONOUNCEMENT 20.11.2 0 1 5 O R D E R PER D.MANMOHAN, VICE PRESIDENT : THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE COMMISSIONER OF INCOME-TAX(APP EALS)-4, HYDERABAD AND THEY PERTAIN TO ASSESSMENT YEARS 2007 -08 AND 2008- 09. 2. FOLLOWING ARE THE GROUNDS URGED BEFORE US. 1. THE CIT(A) HYDERABAD HAS ERRED ON FACTS AND CIRCUMS TANCES BY PASSING THE ABOVE ORDER. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) IS JUSTIFIED IN HOLDING THE EXPENDITURE INCU RRED IN FOREIGN EXCHANGE IS ELIGIBLE FOR ARRIVING AT THE EX PORT TURNOVER AS DEFINED AS PER CLAUSE (IV) OF EXPLANATI ON 2 TO SEC. 10A OF THE I.T. ACT. ITA NO.995 & 1013/HYD/2015 M/S. MAGNA INFOTECH PVT. LTD., HYDERABAD 2 3. TE CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE EXP ENDITURE IN FOREIGN EXCHANGE ATTRIBUTABLE TO DELIVERY OF AR TICLE OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA IS ELIGIB LE FOR COMPLETING EXPORT TURNOVER FOR COMPUTATION OF ELIGI BLE DEDUCTION U/S. 10A. 4. THE DECISION RELIED ON BY THE CIT(A) IN THE CASE OF M/S. PATNY TELECOM PVT. LTD. VS. ITO, IS NOT ACCEPTED BY THE DEPARTMENT, AND FURTHER APPEAL IS PREFERRED BY THE REVENUE. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING.: 3. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF COMPUTER SOFTWARE DEVELOPMENT AND I T-ENABLED TECHNICAL SERVICES. FOR THE YEARS UNDER CONSIDERATI ON, THE ASSESSEE CLAIMED DEDUCTION UNDER S.10A OF THE INCOME TAX ACT , 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMIT TED THAT THE TURNOVER OF THE ASSESSEE INCLUDES EXPORT TURNOVER, WHICH WAS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE TIME ALL OWED UNDER S.10A OF THE ACT AND NO PART OF THE TURNOVER INCLUDES ANY FR EIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OR EXPENSES INCURRED IN FOREIGN EXCHANGE F OR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA. THE ASSESSING OF FICER, THEREFORE, WAS OF THE OPINION THAT THE ENTIRE EXPENDITURE INCURRED IN FOREIGN EXCHANGE WAS TOWARDS PROVIDING TECHNICAL SERVICES OUTSIDE IN DIA AND INTERNET AND TELECOMMUNICATION CHARGES DO NOT QUALIFY TO BE PART OF THE EXPORT TURNOVER. HE ACCORDINGLY, RECOMPUTED THE CLAIM OF EXEMPTION UNDER S.10A OF THE ACT. 4. ON APPEAL FILED BY THE ASSESSEE, THE CIT(A) OBS ERVED THAT IDENTICAL ISSUE WAS DECIDED BY THE ITAT IN THE CASE OF PATNI TELECOM P. LTD. (22 SOT 26)(HYD) AND ALSO IN ASSESSEES OWN CA SE FOR THE ASSESSMENT YEAR 2006-07, WHEREIN IT WAS HELD THAT T HE EXPENDITURE INCURRED IN FOREIGN EXCHANGE TOWARDS PROVIDING TECH NICAL SERVICES OUTSIDE INDIA AND INTERNET CHARGES FOR DELIVERY OF SOFTWARE SHOULD NOT ITA NO.995 & 1013/HYD/2015 M/S. MAGNA INFOTECH PVT. LTD., HYDERABAD 3 BE EXCLUDED FOR THE PURPOSE OF DEDUCTION UNDER S.10 A OF THE ACT. HE ACCORDINGLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDERS PASSED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 6. THE MAIN PLEA OF THE REVENUE IS THAT THE DE CISION RENDERED BY THE ITAT IN M/S. PATNI TELECOM P. LTD. (SUPRA) W AS NOT ACCEPTED BY THE DEPARTMENT, AND HENCE, TO KEEP THE MATER ALIVE, APPEALS WERE FILED IN THESE TWO CASES ALSO. LEARNED DEPARTMENTA L REPRESENTATIVE COULD NOT PLACE BEFORE THE TRIBUNAL AS TO WHETHER A NY APPEALS WERE FILED BY THE REVENUE IN THE CASE OF M/S. PATNI TELE COM P. LTD. (SUPRA) AND ALSO IN THE ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2006-07. HE, HOWEVER, SUBMITTED THAT THE ITAT, HYDERABAD BEN CHES HAVE BEEN CONSISTENTLY TAKING A VIEW IN FAVOUR OF THE ASSESSE E WHEREAS THE REVENUE HAS NOT BEEN ABLE TO PLACE ANY DECISION TO SHOW THAT EXPENDITURE INCURRED IN FOREIGN EXCHANGE AND INTERN ET CHARGES FOR DELIVERY OF SOFTWARE SHOULD BE EXCLUDED FOR THE PUR POSE OF DEDUCTION UNDER S.10A OF THE ACT. HE THUS, STRONGLY RELIED U PON THE ORDERS PASSED BY THE ASSESSING OFFICER. LEARNED DEPARTMEN TAL REPRESENTATIVE COULD NOT PLACE BEFORE US ANY DECISI ON OF ITAT OR HIGHER FORUM TO SHOW THAT THE ORDERS PASSED BY THE CIT(A) ARE CONTRARY TO LAW. 7. HAVING REGARD TO THE CIRCUMSTANCES OF THE CA SE AND CONSISTENT WITH THE VIEW TAKEN BY THE ITAT IN THE C ASE OF PATNI TELECOMMUNICATION P. LTD. (SUPRA), WE ARE OF THE VI EW THAT THE ORDERS PASSED BY THE LEARNED CIT(A) ARE IN ACCORDANCE WIT H LAW AND THEREFORE, WE DISMISS THE APPEALS FILED BY THE REVE NUE. ITA NO.995 & 1013/HYD/2015 M/S. MAGNA INFOTECH PVT. LTD., HYDERABAD 4 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 20 TH NOVEMBER, 2015 SD/- SD/- (B.RAMA KOTAIAH) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT DT/- 20 TH NOVEMBER, 2015 COPY FORWARDED TO: 1. M/S. MAGNA INFOTECH PVT. LTD., 6 - 2 - 47, YETURA TOWERS, A C GUARDS, HYDERABAD 500 004 2. ASST. COMMISSIONER OF INCOME-TAX CIRCLE 16(2) HY DERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) 4, HYDERABAD PR. COMMISSIONER OF INCOME-TAX 4, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.