Appeal details
Counselvise Citation
[2019] 118 COUNSELVISE.COM (IT) 4174 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-02-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Assessment Year
2013-2014
Appeal Filed On
10-04-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 1196 & 1197 /BANG/201 8 ASSESSMENT YEAR S : 20 1 2 - 13 & 2013 - 14 THE JOINT COMMISSIONER OF INCOME-TAX (OSD), CIRCLE 4 (1) (1), BANGALORE. VS. M/S. KPMG GLOBAL DELIVER CENTER PRIVATE LIMITED, TOWER 2D, 4 TH FLOOR, PHASE I, EMBASSY TECH VILLAGE, DEVARABEESANAHALLI, OUTER RING ROAD, BANGALORE 560 037. PAN: AAACO5735D APPELLANT RESPONDENT C.O. NOS. 94 & 95/BANG/2018 (IN ITA NOS. 1196 & 1197/BANG/2018) (BY ASSESSEE) ASSESSEE BY : SHRI SAGAR NAGARAJ, CA RE VENUE BY : SHRI SMARAK SWAIN, JCIT (DR) DATE OF HEARING : 11 .0 2 .2019 DATE OF PRONOUNCEMENT : 15 . 0 2 .201 9 O R D E R PER BENCH THESE TWO APPEALS ARE FILED BY THE REVENUE AND THES E TWO C. OS. ARE FILED BY THE ASSESSEE AND THESE ALL ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A)- 4, BANGALORE BOTH DATED 02.01.2018 FOR ASSESSMENT YEARS 2012- 13 & 2013-14. 2. ALL THESE APPEALS AND C.OS. WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENI ENCE. 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT BOTH THE C.OS. FILED BY THE ASSESSEE ARE MERELY IN SUPPORT O F THE ORDER OF CIT (A) ITA NOS. 1196 & 1197/BANG/2018& C.O. NOS. 94 & 95/BANG/2018 PAGE 2 OF 4 AND HENCE, BOTH THESE C.OS. ARE NOT PRESSED AND ACC ORDINGLY BOTH THE C.OS. ARE DISMISSED AS NOT PRESSED. 4. REGARDING THE APPEAL OF THE REVENUE FOR ASSESSME NT YEAR 2012-13 IN ITA NO. 1196/BANG/2018, IT WAS SUBMITTED BY HIM THAT IN THIS YEAR, THE TAX EFFECT IN THE APPEAL OF THE REVENUE IS BELOW RS. 20 LAKHS AND THEREFORE, THIS APPEAL OF REVENUE IS NOT MAINTAINABLE BECAUSE OF LO W TAX EFFECT IN VIEW OF THE LATEST INSTRUCTIONS OF CBDT AS PER CIRCULAR NO. 3/2018 DATED 11.07.2018. REGARDING THE AMOUNT OF TAX EFFECT, HE DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER AND POINTED OUT THAT TOTAL ADD ITION MADE BY THE AO IS OF RS. 54,77,248/- ONLY OUT OF WHICH THE DISALLOWAN CE OF RS. 1,47,279/- IS UPHELD BY THE LD. CIT(A) AND ONLY TWO DISALLOWANCES ARE DELETED BY HIM OF RS. 52,84,163/- AND RS. 45,806/- TOTAL OF RS. 53,29 ,969/-. HE SUBMITTED THAT FOR THE DELETION OF BOTH THESE DISALLOWANCES, REVEN UE IS IN APPEAL BUT THE TAX EFFECT IS LESS THAN RS. 20 LAKHS AND THEREFORE, THE REVENUES APPEAL IS NOT MAINTAINABLE. IN REPLY, LD. DR OF REVENUE COULD NO T SHOW THAT TAX EFFECT IN THIS CASE IS MORE THAN RS. 20 LAKHS. HENCE IN VIEW OF LATEST CBDT INSTRUCTIONS AS PER CIRCULAR NO. 3/2018 DATED 11.07 .2018, WE HOLD THAT THIS APPEAL OF REVENUE IS NOT MAINTAINABLE BECAUSE OF LO W TAX EFFECT. 5. IN THE RESULT, THE APPEAL OF THE REVENUE FOR ASS ESSMENT YEAR 2012-13 AND BOTH THE C.OS. OF ASSESSEE ARE DISMISSED. 6. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASS ESSMENT YEAR 2013-14 IN ITA NO. 1197/BANG/2018. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER. 1. THE ORDER OF THE LD. CIT(A) IS OPPOSED TO THE LA W AND THE FACTS OF THE CASE. 2. THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE AO TO RECOMPUTE THE DEDUCTION ALLOWABLE U/S 10A OF THE ACT AFTER REDUCI NG EXPENDITURE INCURRED IN FOREIGN CURRENCY TOWARDS TELECOMMUNICAT ION EXPENSES&FOREIGN TRAVEL EXPENSES FROM THE EXPORT TU RNOVER. 3. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT TH ERE IS NO PROVISION IN SEC. 10A WHICH REQUIRES THE CONCERNED EXPENSES, WHICH ARE REQUIRED TO BE REDUCED FROM THE EXPORT TURNOVER AS PER CLAUSE (IV) OF THE EXPLANATION TO SECTION 10A TO BE REDUCED FROM T HE TOTAL TURNOVER ITA NOS. 1196 & 1197/BANG/2018& C.O. NOS. 94 & 95/BANG/2018 PAGE 3 OF 4 ALSO. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING TO FOLLOW THE RATIO LAID DOWN BY THE HONBLE HC IN THE CASE OF CIT VS. TATA ELXSI LTD WHILE COMPUTING THE DEDUCTION U/S. 10A, WHEN THE DEPARTMENT HAS FILED A SLP BEFORE THE HON'BLE SC ON THIS ISSUE WHICH IS PENDING ADJUDICATION. 5. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF TH E ASSESSING OFFICER MAY BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 7. THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). HE FURTHER POINTED OUT IN PARA 5.3 OF HIS ORDER, LD. CIT(A) HAS FOLLOWED THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . TATA ELXSI LTD. AS REPORTED IN 349 ITR 98. HE ALSO SUBMITTED THAT NOW THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGEMENT OF HONBLE APEX COURT ALSO HAVING BEEN RENDERED IN THE CASE OF CIT VS. HC L TECHNOLOGIES LTD. AS REPORTED IN [2018] 93 TAXMANN.COM 33 (SC). HE SUBM ITTED A COPY OF THIS JUDGEMENT OF HONBLE APEX COURT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ISSUE IN DISPUTE IN THIS APPEAL IS ON THIS ASPECT AS TO WHETHER FOR THE PURPOSE OF COMPUTING THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/S. 10AA, VARIOUS EXPENSES INCURRED ON TELECOMMUNICATION EXPENSES INCURRED IN FOREIGN CURRENCY FOR RENDERING SERVICES OUTSIDE INDIA IS TO BE REDUCED F ROM EXPORT TURNOVER ONLY OR FROM TOTAL TURNOVER ALSO. AS PER THE JUDGEMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. TATA ELXSI LT D. (SUPRA), IT IS HELD THAT TOTAL TURNOVER IS SUM TOTAL OF DOMESTIC TURNOVER AN D EXPORT TURNOVER AND THEREFORE, IF ANY AMOUNT IS REDUCED FROM EXPORT TUR NOVER THEN TOTAL TURNOVER ALSO GOES DOWN BY THE SAME AMOUNT AUTOMATICALLY. T HIS VIEW OF HON'BLE KARNATAKA HIGH COURT HAS BEEN APPROVED BY THE HONB LE APEX COURT IN THE CASE OF CIT VS. HCL TECHNOLOGIES LTD. (SUPRA) AND T HEREFORE, RESPECTFULLY ITA NOS. 1196 & 1197/BANG/2018& C.O. NOS. 94 & 95/BANG/2018 PAGE 4 OF 4 FOLLOWING THESE TWO JUDGMENTS OF HONBLE APEX COURT AND OF HON'BLE KARNATAKA HIGH COURT AS NOTED ABOVE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. 9. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 10. IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE AND BOTH THE C.OS. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.
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