The Deputy Commissioner of Income Tax, Hyderabad V. M/s Zavata India Ltd, Hyderabad

ITA 134/HYD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3165 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 28-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: PRASANT JENA
• Section: 43B; 40(a)(ia); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA-134/HYD/2010 A.Y. 200 6-07 THE DY. CIT, CIRCLE 3 (3), HYDERABAD VS M/S ZAVATA INDIA LTD., HYDERABAD (PAN AAFCS 9954 D) (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. NIVEDITA BISWAS, DR RESPONDENT BY: SHRI PRASANT JENA O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER PASSED BY THE CIT(A) IV, HYDERABAD DATED 13.11. 2009 AND PERTAIN TO THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THAT WHETHER THE COMMUNICATION CHARGES REDUCED F ROM THE EXPORT TURNOVER SHOULD ALSO BE REDUCED FROM THE TOTAL TURN OVER, EVEN THOUGH THERE IS NO PROVISION IN SEC.10A OF THE INCOME TAX ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE DECISION OF THE CIT(A) IS CORRECT IN HOLDING THAT THE DISALLOWA NCES U/S 40(A) (IA) AND SECTION 36, 40A AND 40(A)(IA) ARE ALSO ELIGIBLE FOR DEDUCTION U/S 10A OF THE IT ACT. 3. THIS ISSUE HAS SQUARELY COVERED BY THE ORDER OF THI S TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1100/HYD/2009 DATED 8 TH JANUARY, 2010 WHEREIN IT WAS HELD THAT: ITA NO.134/HYD/2010 M/S ZAVATA INDIA LTD., HYDERABAD 2 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE HAS BEEN SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL IN THE CASE OF ITO VS. SAK SOFT LTD. (313 ITR (AT) 353 ) (CHENNAI) (SPECIAL BENCH) WHEREIN IT WAS HELD THAT THE EXPENSES LIKE F REIGHT TELECOMMUNICATION CHARGES, OR INSURANCE ATTRIBUTABL E DELIVERY OF ARTICLES OR THINGS OUTSIDE INDIA WHICH ARE REQUIRED TO BE EXCLUDED FROM THE EXPORT TURNOVER AND DEFINED IN EXPLANATION 2 (I II) BELOW SECTION 10B OF THE INCOME TAX ACT SHOULD ALSO BE EXCLUDED F ROM THE FIGURE OF THE TOTAL TURNOVER WHILE APPLYING THE FORMULA PRESC RIBED BY SUB SECTION (4) OF SECTION 10(B) OF THE ACT. IN VIEW OF THIS D ECISION OF THE SPECIAL BENCH OF TRIBUNAL, WE ARE INCLINED TO UPHOLD THE OR DER OF THE CIT(A) ON THIS ISSUE AND ACCORDINGLY THIS GROUND TAKEN BY THE REVENUE IS DISMISSED. 4. RESPECTFULLY FOLLOWING THE SAME RATIO AS LAID DOW N IN THE ORDER OF THIS TRIBUNAL CITED SUPRA, THIS GROUND IN THE REVENUE APPEAL IS DISMISSED. 5. THE NEXT GROUND RAISED BY THE REVENUE IN ITS AP PEAL IS AS FOLLOWS: THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ADDITI ON ON ACCOUNT OF SECTION 40(A) (IA) AND 36 ETC. ARE NOT DERIVED FROM THE EXPORT OF SOFTWARE AND NOT ELIGIBLE FOR DEDUCTION U/S 10A IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF STERLING FOODS VS. CIT (237 ITR 579) AND LIBERTY INDIA VS. CIT CIVIL APPEAL NO.5271 /07 DATED 31.8.2009. 6. THIS ISSUE HAS ALSO BEEN SQUARELY COVERED AGAINST TH E DEPARTMENT BY THE ORDER OF THIS TRIBUNAL DATED 29.9. 2008 IN ITA NO.1016/HYD/2007 WHEREIN IT WAS HELD THAT: 5. AFTER HEARING FROM BOTH THE PARTIES WE ARE OF THE OPINION THAT THIS ISSUE HAS ALSO COVERED BY THE ORDER OF THE TRIBUNAL DATED 29.9.2008 IN ITA NO.1016/HYD/2007 FOR THE ASSESSMENT 2004-05 IN THE CASE OF DCIT, HYDERABAD VS. PLANT ONLINE (P) LTD. WHEREIN IT WAS HELD THAT THE PROFIT OF THE UNDERTAKING WHICH HAS TO BE CONSIDERED FOR COMPUTIN G DEDUCTION U/S 10B OF THE ACT, IS THE PROFIT WHICH HAS BEEN ARRIVED IN AC CORDANCE WITH THE PROVISIONS OF SEC.30 TO 34D OF THE ACT AND THUS TAKING INTO AC COUNT THE DISALLOWANCE MADE U/S 43B OF THE ACT AND THE DISALLOWANCE COVERE D UNDER THE PROVISIONS OF THE ABOVE SECTIONS HAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF ITA NO.134/HYD/2010 M/S ZAVATA INDIA LTD., HYDERABAD 3 COMPUTATION OF DEDUCTION U/S 10A OF THE IT ACT. AC CORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SA ME IS CONFIRMED. 7. RESPECTFULLY FOLLOWING THE SAME RATIO AS LAID DOWN IN THE ORDER OF THIS TRIBUNAL CITED SUPRA, THIS GROUND IN THE REVENUE APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT 5.7.2010 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 5 TH JULY, 2010 COPY FORWARDED TO: 1. M/S ZAVATA INDIA LTD., SURVEY NO.185, KONDAPUR, S ERLINGAM PALLY, HYDERABAD.500133. 2. ACIT, CIRCLE 3 (3), 7 TH FLOOR, B BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 3. CIT(A)-IV, HYDERABAD. 4. CIT, HYDERABAD 5. THE D.R., ITAT, HYDERABAD. NP