DCIT, Circle-16(1), Hyd, Hyderabad V. Nalsoft Private Ltd. Hyd, Hyderabad

ITA 1063/HYD/2015

• Counselvise Citation: 106322514 RSA 2015
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M SITARAM
• 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.1063/HYD/2015 (ASSESSMENT YEARS 2005-06) DY. COMMISSIONER OF INCOME - TAX, CIRCLE 16(1), HYDERABAD V/S M/S. NALSOFT PRIVATE LTD (FORMERLY NALS IT FUSION LTD.), HYDERABAD) (PAN - AABCN 3362 N ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.SITARAM RESPONDENT BY : NONE DATE OF HEARING 28.10.2015 DATE OF PRONOUNCEMENT 20.11.2015 O R D E R PER D.MANMOHAN, VICE PRESIDENT : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX(APPEALS)-4 , HYDERABAD AND IT PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND URGED BY THE REVENUE READS AS U NDER- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) ERRED IN DIRECTING TO EXCLUDE THE EXPENSES I NCURRED OUTSIDE INDIA IN FOREIGN EXCHANGE TOWARDS TECHNICAL SERVICES AND TELECOMMUNICATION/INTERNET CHARGES FOR DELIVERY FROM EXPORT TURNOVER IN COMPLETE DISREGARD TO THE PROV ISIONS OF CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10A OF THE INCOME TAX ACT. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF COMPUTER SOFTWARE EXPORTS. FOR THE YEAR UNDER CONSI DERATION, IT ADMITTED INCOME OF RS.2,38,410, AFTER CLAIMING EXEM PTION UNDER S.10A OF THE INCOME TAX ACT, 1961 TO THE TUNE OF R S.45,74,808. THOUGH THE ASSESSMENT WAS ORIGINALLY COMPLETED UND ER S.143(3) OF THE I.T. ACT, IT WAS SOUGHT TO BE REOPENED BY ISS UING A NOTICE UNDER ITA NO.1063/HYD/2015 M/S. NALSOFT PRIVATE LTD (FORMERLY NALS IT FUSI ON LTD.), HYDERABAD) 2 S.148 OF THE ACT, ON THE GROUND THAT THE ASSESSEE O UGHT TO HAVE EXCLUDED THE EXPENDITURE INCURRED IN FOREIGN CURREN CY FROM THE EXPORT TURNOVER. ACCORDING TO HIM, IT LEADS TO EXCESS ALLO WANCE OF DEDUCTION UNDER S.10A OF THE ACT. HE ACCORDINGLY COMPLETED TH E ASSESSMENT BY EXCLUDING THE SAME FROM EXPORT TURNOVER. 3 ON AN APPEAL FILED BY THE ASSESSEE, THE LEARNED CIT(A) OBSERVED THAT THE EXPENDITURE INCURRED IN FOREIGN E XCHANGE AND INTERNET CHARGES HAVING BEEN EXCLUDED FROM EXPORT TURNOVER, IT SHOULD ALSO BE EXCLUDED FROM TOTAL TURNOVER FOR COMPUTING DEDUCTION UNDER S.10A OF THE ACT. IN THIS REGARD, HE RELIED UPON THE FOLLOWING DECISIONS- 1. ITO V/S. SERVION GLOBAL SOLUTIONS LTD. 2. DY. CIT V/S. SRA SYSTEMS LTD. IN THE LIGHT OF THE DECISIONS OF THE TRIBUNAL CITED SUPRA, THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE. 4. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 5. LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT P OINT OUT ANY CONTRARY VIEW OF THE ITAT OR HIGH COURT TO SHOW THAT THE VIEW TAKEN BY THE LEARNED CIT(A) IS NOT IN ACCORDANCE W ITH LAW. IN FACT, THE DECISIONS CITED BY THE LEARNED CIT(A) WERE ALSO NOT PLACED BEFORE US. NONE APPEARED ON BEHALF OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DEPARTMENTAL REPRESENTATIVE AND MATERIAL ON RECORD. ON IDENTICAL FACTS AND CIRCUMSTANCES, THE HYDERABAD BENCH OF THI S TRIBUNAL IN THE CASE OF PATNI TELECOM PRIVATE LTD. (22 SOT 26) HELD THAT EXPENDITURE INCURRED OUTSIDE INDIA IN FOREIGN EXCHANGE TOWARDS TECHNICAL SERVICES ITA NO.1063/HYD/2015 M/S. NALSOFT PRIVATE LTD (FORMERLY NALS IT FUSI ON LTD.), HYDERABAD) 3 AND TELECOMMUNICATION AND INTERNET CHARGES CANNOT B E EXCLUDED FROM EXPORT TURNOVER FOR THE PURPOSES OF COMPUTING DEDUC TION UNDER S.10A OF THE ACT. IN THE ABSENCE OF ANY DECISION TO THE CONTRARY ON THIS MATTER, WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 20.11.2015 SD/- SD/- (B.RAMAKOTAIAH) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT DT/- 20 TH NOVEMBER, 2015 COPY FORWARDED TO: 1. M/S. NALSOFT PRIVATE LTD (FORMERLY NALS IT FUSION LTD.), 301,TRENDSET PYLA COMPLEX, 8-3-1091/18A, VENGAL RAO NAGAR, HYDERABAD 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 16(1) HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) 4, HYDERABAD PR. COMMISSIONER OF INCOME - TAX 7, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.