M/s Intel TYechnology India Private Limited , Bangalore V. Assistant Commissioner of Income TAx Large Tax Payer Unit Circle-1 , Bangalore

ITA 1117/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4259 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 147; 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. JASON P BOAZ , ACCOUNTANT MEMBER ITA NO. 1117 /BANG/201 8 ASSESSMENT YEAR : 20 09 - 10 M/S. INTEL TECHNOLOGY INDIA PVT. LTD., 5 FLOOR, EMBASSY PARAGON BUILDING, THOOBARAHALLI VILLAGE, ITPL ROAD, BENGALURU 560037. PAN : AAACI 5394 J VS. ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAX PAYERS UNIT, CIRCLE-1, BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. SHARATH RAO, CA REVENUE BY : MS. NEERA MALHOTRA, CIT - DR DATE OF HEARING : 0 7 . 0 8 .201 8 DATE OF PRONOUNCEMENT : 14 . 0 8 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: 1. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE REASSESSMENT ORDER PASSED BY THE LEARNED AO, WHICH IS BAD IN LAW AND ON FACTS 2. LACK OF JURISDICTION UNDER SECTION 147 OF THE ACT ITA NO. 1117/BANG/2018 PAGE 2 OF 5 2.1 THE HONOURABLE CIT (A) HAS ERRED IN LAW BY CONFIRMING THE JURISDICTION ASSUMED BY THE LEARNED AO FOR INITIATION OF PROCEEDING UNDER SECTION 147 OF THE ACT, AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT AY WITHOUT CONSIDERING THE FACTS AND WITHOUT ESTABLISHING THAT THE THERE IS A FAILURE ON PART OF THE APPELLANT IN MAKING FULL AND TRUE DISCLOSURE OF FACTS 2.2 THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY CONFIRMING THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT, ON MATTERS WHICH WERE CONSIDERED AND CONCLUDED IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT, CLEARLY DEMONSTRATING THE CHANGE OF OPINION BY THE LEARNED AO, WHICH IS OUTSIDE THE PREVIEW OF SECTION 147 OF THE ACT. 2.3. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY DISREGARDING THE FACT THAT THE ERSTWHILE LEARNED AO HAD EXAMINED THE CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT AT ITS LENGTH AND BREADTH DURING THE ORIGINAL ASSESSMENT PROCEEDINGS, THEREBY MAKING ADJUSTMENTS TO DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT ON FOLLOWING ASPECTS: EXPORT TURNOVER NOT CONSIDERED BY THE BANK; AND NON-RECEIPT OF CONVERTIBLE FOREIGN EXCHANGE WITHIN THE STIPULATED TIME LIMITS. 2.4. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY STATING THAT THE LEARNED AO HAS NOT FORMED AN OPINION IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT ON THE DEDUCTION CLAIMED BY THE APPELLANT UNDER SECTION 10A OF THE ACT, WHEREAS THE ERSTWHILE LEARNED AO HAD ALREADY EXAMINED THE DEDUCTION CLAIMED UNDER SECTION 10A OF THE ACT AND MADE AN ADJUSTMENT OF INR 7,49,70,196. 2.5. THE HONOURABLE CIT (A) HAS ERRED IN LAW BY NOT FOLLOWING THE JUDICIAL PRECEDENTS HOLDING THAT REASSESSMENT PROCEEDINGS IS VOID AB INITIO ON EXAMINATION OF SAME SET OF FACTS WHICH WERE SUBMITTED AND MADE AVAILABLE DURING THE ORIGINAL ASSESSMENT. 3. RELIEF UNDER SECTION 10A 3.1. ADJUSTMENT FOR COMMUNICATION CHARGES ITA NO. 1117/BANG/2018 PAGE 3 OF 5 3.1.1. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DISREGARDING THE APPELLANT'S SUBMISSION AND UPHOLDING THE REASSESSMENT ORDER OF THE LEARNED AO TO THE EXTENT THAT THE COMMUNICATION CHARGES AMOUNTING TO INR 7,42,39,028 SHOULD BE EXCLUDED FROM THE AMOUNT OF 'EXPORT TURNOVER' ON THE BASIS THAT THE SAME IS ATTRIBUTABLE TO DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA WITHOUT APPRECIATING THE FACT THAT THE SAID COMMUNICATION CHARGES ARE INCURRED BY THE APPELLANT IN INDIA. 3.1.2. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT FOLLOWING JURISDICTIONAL DECISIONS OF HONOURABLE KARNATAKA HIGH COURT ('KHC') IN THE CASE OF IT VS TATA ELXSI LIMITED [349 ITR 98], WHICH WAS SUBSEQUENTLY FOLLOWED IN HE APPELLANT'S OWN CASE FOR THE AY 2005-06, WHEREIN THE ISSUE OF EXCLUSION OF EXPENDITURE FROM EXPORT TURNOVER AND TOTAL TURNOVER WAS HELD IN FAVOUR OF THE COMPANY, ON THE PRINCIPLE OF PARITY. 3.1.3. THE HONOURABLE CIT (A), HAVING CONSIDERED THE JURISDICTIONAL HONOURABLE KHC DECISION OF TATA ELXSI LIMITED (SUPRA), HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADJUSTMENT MADE BY THE LEARNED AO ON PROTECTIVE BASIS, STATING THAT REVENUE HAS PREFERRED SPECIAL LEAVE PETITION ('SLP') AGAINST THE DECISION OF HONOURABLE KHC, WHICH IS PENDING FOR ADJUDICATION. 3.2. EXPENDITURE INCURRED IN FOREIGN CURRENCY 3.2.1. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DISREGARDING THE APPELLANT'S SUBMISSION AND UPHOLDING THE REASSESSMENT ORDER OF THE LEARNED AO TO THE EXTENT THAT THE EXPENDITURE INCURRED IN FOREIGN CURRENCY FOR AN AMOUNT OF INR 31,14,44,842 SHOULD BE EXCLUDED FROM THE AMOUNT OF 'EXPORT TURNOVER' ON THE BASIS THAT SUCH EXPENSES ARE INCURRED FOR RENDERING TECHNICAL SERVICES OUTSIDE INDIA, WHEREAS THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT IN INDIA. 3.2.2. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY DISREGARDING THE JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT WHEREIN IT HAS BEEN HELD THAT THE IF AN ASSESSEE IS NOT ENGAGED IN RENDERING TECHNICAL SERVICES OUTSIDE INDIA, EXCLUSION OF EXPENDITURE INCURRED IN FOREIGN CURRENCY FROM EXPORT TURNOVER AND TOTAL TURNOVER IS NOT WARRANTED. ITA NO. 1117/BANG/2018 PAGE 4 OF 5 3.2.3. THE HONOURABLE CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT FOLLOWING JURISDICTIONAL HONOURABLE KHC DECISIONS OF TATA ELXSI LIMITED (SUPRA), WHICH WAS SUBSEQUENTLY FOLLOWED IN THE APPELLANT'S OWN CASE FOR THE AY 2005-06, WHEREIN THE ISSUE OF EXCLUSION OF EXPENDITURE FROM EXPORT TURNOVER AND TOTAL TURNOVER WAS HELD IN FAVOUR OF THE COMPANY, ON THE PRINCIPLE OF PARITY. 3.2.4. THE HONOURABLE CIT(A), HAVING CONSIDERED THE JURISDICTIONAL DECISION OF TATA ELXSI LIMITED (SUPRA), HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADJUSTMENT MADE BY THE LEARNED AO ON PROTECTIVE BASIS, STATING THAT REVENUE HAS PREFERRED SLP AGAINST THE DECISION OF HONOURABLE KHC, WHICH IS PENDING FOR ADJUDICATION. 4. OTHER GROUNDS THE LEARNED AO HAS ERRED IN COMPUTING INTEREST UNDER SECTION 220(2), SECTION 234B AND SECTION 234C OF THE ACT. EACH OF THE ABOVE OBJECTIONS IS INDEPENDENT AND WITHOUT PREJUDICE TO THE OTHER GROUNDS OF OBJECTIONS PREFERRED BY THE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. EACH OF THE ABOVE OBJECTIONS IS INDEPENDENT AND WITHOUT PREJUDICE TO THE OTHER GROUNDS PREFERRED BY THE APPELLANT. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS OPTED NOT TO PRESS GROUND NO. 2 RELATING TO LACK OF JURISDICTION UNDER SECTION 147 OF THE ACT. THEREFORE, THIS GROUND IS DISMISSED BEING NOT PRESSED. THE OTHER GROUNDS ARE SQUARELY COVERED BY THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LTD., 349 ITR 98, THE VIEW TAKEN BY THE KARNATAKA HIGH COURT HAS ALSO BEEN APPROVED BY THE APEX COURT IN THE CASE OF CIT VS. HCL TECHNOLOGIES LTD., (2018) 93 TAXMANN.COM 33 (SC) IN FAVOUR OF THE ASSESSEE. THE LEARNED DR DID NOT RAISE ANY DISPUTE IN THIS REGARD. ITA NO. 1117/BANG/2018 PAGE 5 OF 5 3. HAVING CAREFULLY EXAMINED THE ORDERS OF AUTHORITIES BELOW, WE FIND THAT CIT(A) HAS DECIDED THE ISSUE IN THE LIGHT OF JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI (SUPRA) AND HELD THAT WHATEVER EXPENSES ARE REDUCED FROM THE EXPORT TURNOVER, THE SAME MAY ALSO BE REDUCED FROM THE TOTAL TURNOVER. THEREFORE, WE DIRECT THE AO TO RECOMPUTE THE DEDUCTION UNDER SECTION 10A OF THE ACT IN TERMS INDICATED ABOVE AND ALSO IN THE LIGHT OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI (SUPRA). 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2018. SD/- SD/- BANGALORE. DATED: 14 TH AUGUST, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( JASON P BOAZ ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER