ACIT, CHENNAI V. California Software Company Ltd., CHENNAI

ITA 1091/CHNY/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4666 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.1091/MDS/2013 ASST. YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI. (APPELLANT ) V. M/S. CALIFORNIA SOFTWARE COMPANY LLLIMITED, ROBERT V CHANDRAN TOWER, 7 TH FLOOR, 149, VELACHERY- TAMBARAM MAIN ROAD, PALLIKARANAI CHENNAI 600 100. PAN : AABCC8506B. (RESPONDENT) DEPARTMENT BY : SHRI T.N, BETGERI, JCIT ASSESSEE BY : NONE DATE OF HEARING : 29 AUG 2013 DATE OF PRONOUNCEMENT : 29 AUG 2013 O R D E R PER S.S. GODARA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE FOR THE ASSESSME NT YEAR 2006-07 IS DIRECTED AGAINST THE ORDER OF THE C OMMISSIONER ITA 1091/MDS/2013 2 OF INCOME TAX (APPEALS)-IX, CHENNAI DATED 21.2.2013 , PASSED IN APPEAL NO.800/09-10 IN PROCEEDINGS UNDER SEC.143(3) READ WITH SEC.92CA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THE COURSE OF HEARING, THE REVENUE VEHEMENT LY ARGUES THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) HAS WRONGLY DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UNDER SEC.10B OF THE ACT AFTER EXCLUDING EXPENDITURE INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT AS WE LL AS TOTAL TURN OVER OF THE ACT BY PLACING RELIANCE ON THE CAS E LAW OF SPECIAL BENCH, CHENNAI TRIBUNAL ITO V. SAKSOFT LTD 20 DTR 514 (CHENNAI) (SB), DESPITE THE FACT THAT ITS APPEA L UNDER SEC.260A OF THE ACT AGAINST THE SAME IS PENDING. ACCORDINGLY, IT PRAYS FOR ACCEPTANCE OF THE APPEAL. 3. EVEN AFTER RECEIPT OF NOTICE UNDER RPAD AS EVID ENCED BY THE POSTAL ACKNOWLEDGEMENT CARD PLACED ON RECORD , NONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. THEREFORE , WE PROCEED TO DECIDE THE APPEAL EX-PARTE AFTER HEARING THE REV ENUE. ITA 1091/MDS/2013 3 WE HAVE HEARD THE CONTENTIONS OF THE REVENUE AND PERUSED THE CASE FILE. 4. THE ASSESSEE IS AN COMPANY, ENGAGED IN THE BUSINESS OF 100% EXPORT OF COMPUTER SOFTWARE. FO R THE IMPUGNED ASSESSMENT YEAR, IT HAD FILED ITS RETURN ON 28.11.2006 DISCLOSING TOTAL INCOME OF ` .11,52,178/-. THE GROSS TOTAL INCOME OF ` .7,96,40,522/- WAS REDUCED TO THE INCOME DECLARED HEREINABOVE AFTER COMPUTING DEPRECIATION OF ` .1,32,35,127/- AS WELL AS CALCULATING DEDUCTION UNDER SEC.10B OF THE ACT OF ` .6,49,93,217/-. 6. IN THE COURSE OF SCRUTINY, THE ASSESSING OFFICE R FINALIZED REGULAR ASSESSMENT IN ASSESSEES CASE VI DE ORDER DATED 31.12.2009. IN THE SAME, INTER ALIA, HE HELD THAT FOREIGN EXCHANGE EXPENDITURE OF ` .9,29,16,165/- WAS LIABLE TO BE EXCLUDED FROM THE EXPORT TURN OVER OF THE YEAR. IN HIS OPINION, SINCE THE ASSESSEE DID MAINTAIN A FULL-FLEDGED UNI T ABROAD AND INCURRED EXPENDITURE FOR THE SAME, THE AFORESAID EX PENSES COMPRISING OF TRAVEL EXPENSE, SALARY AND ALLOWANCES , OTHER ITA 1091/MDS/2013 4 EXPENSES, RENT, WORK PERMIT EXPENSES ETC. HAD TO BE EXCLUDED. HE WAS ALSO OF THE VIEW THAT THE TELECOMMUNICATION EXPENSES WERE NOT LIABLE TO BE EXCLUDED FROM THE EXPORT TUR NOVER IN VIEW OF THE FACT THAT THE SAME HAD BEEN INCURRED IN INDI AN CURRENCY. ACCORDINGLY, HE RECOMPUTED ASSESSEES DEDUCTION EXC LUDING THE AFORESAID AMOUNT OF ` .92,916,165/- FROM THE TOTAL EXPORT TURN OVER OF ` .34,85,69,818/-. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. IT I S EVIDENT THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) HAS FOLLOWED THE CASE LAW OF ITO V. SAKSOFT LTD 20 DTR 514 (CHENNAI) (SB) HOLDING THAT WHATEVER EXPENSES ARE E XCLUDED FROM THE EXPORT TURNOVER, THE SAME HAVE ALSO TO BE TAKEN OUT FROM THE COMPUTATION OF TOTAL TURNOVER. FURTHER H E HAS PLACED RELIANCE UPON THE DECISION OF THE TRIBUNAL IN ASS ESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 IN GRANTING RELIEF TO T HE ASSESSEE. THEREFORE, THE REVENUE IS IN APPEAL. 8. AS ALREADY STATED HEREINABOVE, THE ONLY CONTENT ION OF THE REVENUE IS THAT THE DECISION OF ITO V. SAKSOFT LTD 20 DTR ITA 1091/MDS/2013 5 514 (CHENNAI) (SB) HAS NOT BECOME FINAL. WE MAKE I T CLEAR THAT THERE IS NO GROUND RAISED BY THE REVENUE DISTINGUIS HING THE FACTS OF THE INSTANT CASE VIS--VIS THOSE INVOLVED IN AS SESSEES CASE FOR ASSESSMENT YEAR 2003-04 AS WELL AS SAK SOFT LTD. I N THIS VIEW OF THE CIRCUMSTANCES, WE HOLD THAT THE CONTENTION OF T HE REVENUE THAT MERELY BECAUSE ITS APPEAL IS PENDING UNDER SEC .260 OF THE ACT, CANNOT BE A VALID REASON SO AS TO ADOPT A DIFF ERENT APPROACH IN THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE FI NDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) UNDER CHALLENG E ARE CONFIRMED. 8 CONSEQUENTLY, THE APPEAL STANDS DISMISSED. ITA 1091/MDS/2013 6 ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 29 TH DAY OF AUGUST 2013, AT CHENNAI. SD/- SD/- ( DR. O.K. NARAYANAN ) ( S.S. GODARA ) VICE PRESIDENT JUDICIAL M EMBER CHENNAI, DATED : 29 TH AUGUST 2013 JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT(A) CHENNAI (4) CIT, CHENNAI (5) D.R. (6) GUARD FILE.