M/s Sasken Technologies Ltd , Bangalore V. Deputy Commissioner of Income TAx Circle-6(1)(1), Bangalore

ITA 1170/BANG/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6463 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-10-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.1170/BANG/2018 ASSESSMENT YEAR : 2009-10 M/S SASKEN TECHNOLOGIES LTD., (FORMERLY KNOWN AS SASKEN COMMUNICATION TECHNOLOGIES LTD., NO.139/25, AMARJYOTHI LAYOUT, RING ROAD, DOMLUR, BENGALURU-560 071. PAN AAECS 6424 R. VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-6(1)(1), BENGALURU. APPELL ANT RESPONDENT ITA NO.1731/BANG/2018 ASSESSMENT YEAR : 2009-10 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-6(1)(1), BENGALURU. VS. M/S SASKEN TECHNOLOGIES LTD., (FORMERLY KNOWN AS SASKEN COMMUNICATION TECHNOLOGIES LTD., NO.139/25, AMARJYOTHI LAYOUT, RING ROAD, DOMLUR, BENGALURU-560 071. PAN AAECS 6424 R. APPELLANT RESPONDENT ASSESSEE BY : SHRI PADAM CHAND KHINCHA, C.A REVENUE BY : SHRI P.V PRADEEP KUMAR, CIT (DR) DATE OF HEARING : 10.10.2019 DATE OF PRONOUNCEMENT : 16.10.2019 ITA NO.1170/BANG/2018 PAGE 2 OF 6 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 15- 12-2017 PASSED BY LD CIT(A)-6, BENGALURU AND THEY R ELATE TO THE ASSESSMENT YEAR 2009-10. 2. IN THE APPEAL OF THE ASSESSEE, THE ONLY ISS UE URGED RELATES TO THE COMPUTATION OF DEDUCTION U/S 10A, I.E., WHETHER TELECOMMUNICATION CHARGES ETC., ARE TO BE REDUCED F ROM BOTH EXPORT TURNOVER AND TOTAL TURNOVER OR NOT? 3. IN THE APPEAL OF THE REVENUE, THE ONLY ISSUE CONTESTED IS WHETHER LD CIT(A) WAS JUSTIFIED IN HOLDING ROYALTY INCOME AS PART OF ASSESSEES EXPORT BUSINESS INCOME? 4. WE HEARD THE PARTIES AND PERUSED THE RECORD . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND EXPORT O F SOFTWARE. IT IS REGISTERED AS STP AND SEZ SCHEME. THE ASSESSEE CLAIMED DEDUCTION U/S 10A OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED ROYALTY INCOME TO THE TUNE OF RS.1861. 68 LAKHS AND DECLARED THE SAME AS PART OF ITS BUSINESS INCOME. ACCORDINGLY DEDUCTION U/S 10A WAS ALSO CLAIMED THEREON. THE AO TREATED ROYALTY INCOME AS INCOME FROM OTHER SOURCES AND ACC ORDINGLY REJECTED DEDUCTION CLAIMED U/S 10A OF THE ACT ON RO YALTY INCOME. WHILE COMPUTING DEDUCTION U/S 10A OF THE ACT, THE A O REDUCED EXPENSES INCURRED IN FOREIGN CURRENCY ONLY FROM EXP ORT TURNOVER AND NOT FROM TOTAL TURNOVER. ACCORDINGLY THE AO HE LD THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10A OF THE ACT I N EXCESS TO THE TUNE OF RS.1479.04 LAKHS AND ACCORDINGLY DISALLOWED THE SAME. ITA NO.1170/BANG/2018 PAGE 3 OF 6 5. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) NOTICED THAT THE QUESTION AS TO WHETHER ROYALTY INCOME WAS PART OF B USINESS INCOME FROM EXPORTS OR NOT WAS EXAMINED BY THE ITAT IN THE ASSESSEES OWN CASE RELATING TO AY 2010-11 IN THE ORDER PASSED IN IT(TP)A NO.397/B/2015 DATED 21-10-2016 AND THE MATTER WAS R ESTORED TO THE FILE OF THE AO TO EXAMINE THE ISSUE AFRESH FOLL OWING THE DECISION RENDERED BY THE JURISDICTIONAL HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS. WIPRO LTD (ITA NO.503 & 507 OF 2002 ). ACCORDINGLY, THE LD CIT(A) DIRECTED THE AO TO FOLLOW THE ABOVE S AID DECISION OF TRIBUNAL IN AY 2009-10 ALSO. THE REVENUE IS AGGRIE VED BY THIS DECISION. 6. WITH REGARD TO THE EXCLUSION OF EXPENSES INCU RRED IN FOREIGN CURRENCY FROM EXPORT TURNOVER AND NOT FROM TOTAL TU RNOVER, THE LD CIT(A) NOTICED THAT AN IDENTICAL ISSUE WAS CONSIDER ED BY THE ITAT IN THE ASSESSEES OWN CASE RELATING TO AY 2010-11 (REF ERRED SUPRA). ACCORDINGLY HE DIRECTED THE AO TO FOLLOW THE ORDER OF THE TRIBUNAL PASSED IN AY 2010-11 IN THE HANDS OF THE ASSESSEE. 7. THE ASSESSEE HAS FILED APPEAL ON THE APPREHE NSION THAT THE LD CIT(A) HAS FAILED TO ADJUDICATE THE ISSUE OF REDUCI NG TELECOMMUNICATION CHARGES ETC., BOTH FROM EXPORT TU RNOVER AND TOTAL TURNOVER. 8. AT THE TIME OF HEARING, THE LD A.R FURNISHED A COPY OF ORDER 21- 05-2018 PASSED BY THE ASSESSING OFFICER IN ORDER TO GIVE EFFECT TO THE ORDER PASSED BY LD CIT(A) FOR THE YEAR UNDER CONSID ERATION. HE ITA NO.1170/BANG/2018 PAGE 4 OF 6 SUBMITTED THAT THE AO, WHILE PASSING CONSEQUENTIAL ORDER, HAS EXCLUDED THE TELECOMMUNICATION CHARGES ETC., BOTH F ROM EXPORT TURNOVER AND TOTAL TURNOVER. ACCORDINGLY HE SUBMITT ED THAT THE ASSESSEES GRIEVANCE HAS BEEN ADDRESSED BY THE AO A ND HENCE THE APPEAL FILED BY THE ASSESSEE SHALL BECOME INFRUCTUO US. 9. IN VIEW OF THE ABOVE SAID SUBMISSIONS MADE B Y LD A.R, WE DISMISS THE APPEAL OF THE ASSESSEE AS INFRUCTUOUS. 10. IN THE APPEAL OF THE REVENUE, THE ONLY ISSUE URGED IS WHETHER THE ROYALTY INCOME CAN BE TREATED AS PART OF BUSINE SS INCOME FROM EXPORTS. THE LD D.R SUPPORTED THE ORDER PASSED BY THE AO. THE LD A.R SUBMITTED THAT THE TRIBUNAL HAD CONSIDERED AN I DENTICAL ISSUE IN THE ASSESSEES OWN CASE IN AY 2010-11 (REFERRED SUPRA) AND THE MATTER WAS RESTORED TO THE FILE OF THE AO TO EXAMIN E THE ISSUE AFRESH BY FOLLOWING THE DECISION RENDERED BY HONBLE KARNA TAKA HIGH COURT IN THE CASE OF WIPRO LTD (SUPRA). THE LD A.R SUBMI TTED THAT THE ASSESSING OFFICER HAS SINCE EXAMINED THE SAME AFRES H AND HAS ACCEPTED THE SUBMISSION OF THE ASSESSEE AND ALLOWED DEDUCTION U/S 10A OF THE ACT IN AY 2010-11. ACCORDINGLY THE LD A .R SUBMITTED THAT THE ORDER PASSED BY LD CIT(A) DOES NOT CALL FO R INTERFERENCE. 11. WE HEARD THE PARTIES ON THIS ISSUE. WE NOT ICE THAT THE LD CIT(A) HAS DIRECTED THE AO TO FOLLOW THE ORDER PASS ED BY ITAT IN AY 2009-10. HENCE WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD CIT(A) ON THIS ISSUE. ITA NO.1170/BANG/2018 PAGE 5 OF 6 12. IN THE RESULT, APPEALS OF REVENUE AND ASSES SEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2019. SD/ - (N.V VASUDEVAN) VICE PRESIDENT SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 16TH OCTOBER, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE.