Income Tax Officer, Bangalore V. M/s Aditi Technologies Pvt. Ltd., Bangalore

ITA 120/BANG/2012

• Counselvise Citation: 12021114 RSA 2012
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S RANGANATH
• Assessee Lawyers: FARAT HUSSAIN QURESHI
• Section: 143(3); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.120/BANG/2012 (ASSESSMENT YEAR : 2008-09) INCOME TAX OFFICER, WARD 11(1), BANGALORE. . APPELLANT. VS. M/S. ADITI TECHNOLOGIES (P) LTD., C-4 BLOCKI, WING A, MANYATA EMBASSY BUSINESS PARK, RACHANAHALLI, NAGAVARA VILLAGE, OUTER RING ROAD, BANGALORE-560 045. .. RES PONDENT. PAN AADCA 1576D APPELLANT BY : SHRI S. RANGANATH. RESPONDENT BY : SHRI FARAT HUSSAIN QURESHI. DATE OF HEARING :3.9.2012. DATE OF PRONOUNCEMENT : 07.09.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, BANGALORE DT.2.11..2011. FO R ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER: 2.1 THE ASSESSEE-COMPANY (HEREIN AFTER REFERRED TO AS THE ASSESSEE), IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND EXPORT THEREOF, FILED I TS RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 25.10.2008 DECLARING NIL INCOME. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT') AND 2 ITA NO.120/BANG/2012 THE CASE WAS TAKEN UP FOR SCRUTINY BY ISSUE OF NOTI CE UNDER SECTION 143(2) DT.17.8.2009. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY A N ORDER UNDER SECTION 143(3) OF THE ACT DT.24.12.2010 DETERMINING THE INCOME OF THE ASS ESSEE AT RS.12,39,24,812. IN DOING SO THE ASSESSING OFFICER REWORKED THE ELIGIBLE DEDUCTI ON UNDER SECTION 10A OF THE ACT BY EXCLUDING COMMUNICATION EXPENSES, TRAVELLING EXPENS ES IN FOREIGN CURRENCY AND FOREIGN BRANCH EXPENSES FROM THE EXPORT TURNOVER WITHOUT RE DUCING THE SAME FROM THE TOTAL TURNOVER OF THE ASSESSEE. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.24.12.2 010, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) DISPOSED OFF THE APPEAL BY ORDER DT.2.11.2011 GIVING THE ASSESSEE PARTIAL RELIEF IN AS MUCH AS HE DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE ELIGIBLE DEDUCTION UNDER SECTION 10A OF THE ACT AFTER REDUCING COMMUNICATION EXPENSES OF RS.54,50,077, TRAVELLING EXPENSES IN FOREIGN CURRENCY OF RS.1,85,77,752 BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE ASSES SEES OWN CASE IN ITA NO.823 OF 2009 DT.30.8.2011. 3. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A ), REVENUE HAS PREFERRED THIS APPEAL. IN THE GROUNDS OF APPEAL RAISED, IT HAS BEEN CONTEN DED AS FOLLOWS : 1. THE ORDER OF THE LEARNED CIT(A), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DIRECTI NG THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION ALLOWABLE UNDER SECTION 10 A OF I T ACT, 1961 AFTER 3 ITA NO.120/BANG/2012 REDUCING THE COMMUNICATION EXPENSES OF RS.54,50,077 , TRAVELLING EXPENSES IN FOREIGN CURRENCY OF RS.1,85,77,752 AND FOREIGN BRAN CH EXPENSES OF RS171,95,82,177 BOTH FROM THE 'EXPORT TURNOVER' AND THE 'TOTAL TURNOVER', WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LEARNED CIT(A) HAS ERRED IN NOT APPRECIAT ING THAT THERE IS NO PROVISION IN SECTIN 10A, WHICH REQUIRES THE ABOVE MENTIONED E XPENSES TO BE REDUCED FROM THE 'TOTAL TURNOVER'. 4. THE LEARNED CIT(A) ERRED IN ALLOWING THE RELIEF , RELYING ON THE DECISION OF THE HON'BLE HIGH COURT IN THE ASSESSEES CASE FOR E ARLIER YEAR, WHICH HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN RE COMMENDED TO BE FILED BEFORE THE HON'BLE SUPREME COURT UNDER SECTION 261 OF THE I T ACT, 1961 AGAINST SUCH ORDER. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED IN SO FAR AS THE ABOVE MENTIONED ISSUE IS CONCERNED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. A PERUSAL OF THE GROUNDS OF APPEAL AT S.NOS. 1, 5 AND 6 INDICATE THAT THEY ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED F OR THEREON. 5.1 THE GROUNDS RAISED AT S.NOS. 2 TO 4 ARE IN RESPECT OF THE ISSUE OF THE ELIGIBLE DEDUCTION UNDER SECTION 10A OF THE ACT. THE LEARNE D DEPARTMENTAL REPRESENTATIVE REITERATING THE GROUNDS OF APPEAL SUBMITTED THAT TH E LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE DEDUCTION UN DER SECTION 10A OF THE ACT AFTER REDUCING COMMUNICATION EXPENSES, TRAVELLING EXPENSE S INCURRED IN FOREIGN CURRENCY AND FOREIGN BRANCH EXPENSES BOTH FROM EXPORT TURNOVER A ND TOTAL TURNOVER. THIS, HE SUBMITTED WAS RAISED DESPITE THE FACT THAT THE DECI SION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE ASSESSEES OWN CASE IN ITA NO.823 OF 2009 DT.30.8.2011 BEING IN FAVOUR 4 ITA NO.120/BANG/2012 OF THE ASSESSEE ON THIS VERY POINT, AS THE DEPARTME NT HAS NOT ACCEPTED THE DECISION AND WERE IN THE PROCESS OF FILING A SLP BEFORE THE HON' BLE APEX COURT. 5.2 THE LEARNED COUNSEL FOR THE ASSESSEE SUPPO RTED THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE, WHICH HE SUBMITTED WAS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN ITA NO.823 O F 2009 DT.30.8.2011. IN VIEW OF THIS, HE PLEADED THAT THE LEARNED CIT(A) ORDER BE UPHELD AND REVENUES APPEAL DISMISSED. 5.3 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUSE D THE MATERIAL ON RECORD AS WELL AS THE JUDICIAL DECISIONS CITED. WE ARE OF THE CONSID ERED OPINION THAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HON'BLE HIGH COURT OF KARNATAKA IN THE ASSESSEES OWN CASE IN ITA NO.823 OF 2009 DT .30.8.2011. IN THIS VIEW OF THE MATTER, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE ASSESSEES OWN CASE IN ITA NO.823 OF 2009 DT.30.8.2 011, WE UPHOLD THE ORDER OF THE LEARNED CIT(A) DT.2.11.2011 WHEREIN HE HAS DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE DEDUCTION UNDER SECTION 10A OF THE ACT AFTER RE DUCING COMMUNICATION EXPENSES, TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY AN D FOREIGN BRANCH EXPENSES BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. 6. IN THE RESULT, REVENUES APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH SEPT., 2012. SD/- SD/- (N.V. VASUDEVAN) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP 5 ITA NO.120/BANG/2012 COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - B BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE