ACIT, CHENNAI V. M/s. Sutherland Global Services Pvt. Ltd., CHENNAI

ITA 1342/CHNY/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1073 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-03-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAJI P JACOBADDL
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1342/MDS/2011 ASST. YEARS : 2007-08 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(4), CHENNAI 600 034. (APPELLANT) V. M/S. SUTHERLAND GLOBAL SERVICE PVT. LTD., NO.383, VELACHERY. TAMBARAM MAIN ROAD, VIJAYANAGARAM, CHENNAI 600 042. PAN : AAECS8093A. (RESPONDENT) APPELLANT BY : MR. SHAJI P. JACOB, A DDL.CIT RESPONDENT BY : MR. S. SRIDHAR, ADVOCATE DATE OF HEARING : 05 MAR 2013 DATE OF PRONOUNCEMENT : 08 MAR 201 3 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, CHENNAI, DATED 04.5.2011 FOR THE ASST. YEAR 2007-08. THE ONLY GRI EVANCE OF THE DEPARTMENT IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX ITA 1342/MDS/2011 2 (APPEALS) ERRED IN HOLDING THAT THE EXCESS AMOUNT R ECEIVED BY THE ASSESSEE ON REIMBURSEMENT RECEIVED FROM DEL CORPORA TION, USA., ON ACCOUNT OF ASSETS PURCHASED AND USED FOR M/S. DEL C ORPORATION, USA., AS CAPITAL RECEIPT AS AGAINST THE STAND OF TH E ASSESSING OFFICER THAT IT IS INCOME FROM OTHER SOURCES. 2. AT THE TIME OF HEARING, THE DEPARTMENTAL REPRES ENTATIVE SUBMITTED THAT ON IDENTICAL FACTS THIS TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER ASST. YEAR IN ITA NO.542/MDS/2011 DATED 26.7.2012 HELD THAT THE REIMBURSEMENT RECEIVED BY THE ASSESSEE ON ACCOUNT OF PURCHASE AND TRANSFER OF ASSETS WAS HELD TO BE CAPI TAL RECEIPT AND AT THE SAME TIME THIS TRIBUNAL DIRECTED THAT SUCH REIM BURSEMENT SHALL BE EXCLUDED FROM THE PROFITS OF THE ASSESSEE FOR TH E PURPOSE OF COMPUTATION OF DEDUCTION UNDER SEC.10A OF THE ACT. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE DECISION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS IN T UNE WITH THE ORDER PASSED BY THIS TRIBUNAL IN ASSESSEES OWN CAS E FOR THE ASST. YEAR 2006-07 IN ITA NO.542/MDS/2011 DATED 26.7.2012 . ITA 1342/MDS/2011 3 4. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. THE ASS ESSING OFFICER, WHILE COMPLETING THE ASSESSMENT EXCLUDED E27,75,183 /- BEING THE REIMBURSEMENT MADE BY M/S. DEL CORPORATION, USA., T OWARDS PURCHASE AND TRANSFER OF ASSETS BY THE ASSESSEE FRO M OUT OF THE PROFITS ELIGIBLE FOR DEDUCTION UNDER SEC.10A OF THE ACT. THE ASSESSING OFFICER TREATED SUCH REIMBURSEMENT RECEIVED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. ON APPEAL, THE COMM ISSIONER OF INCOME TAX (APPEALS) AGREED WITH THE VIEW OF THE AS SESSING OFFICER THAT THE REIMBURSEMENT OF EXPENSES ON PURCHASE AND TRANSFER OF ASSETS SHALL HAVE TO BE EXCLUDED WHILE COMPUTING DE DUCTION UNDER SEC.10A OF THE ACT. HOWEVER, THE COMMISSIONER OF I NCOME TAX (APPEALS) HELD THAT SUCH REIMBURSEMENT OF EXPENSES ARE TO BE TREATED AS REIMBURSEMENT OF CAPITAL ASSETS PURCHASE D FOR CLIENTS AND NOT TO BE TREATED AS INCOME FROM OTHER SOURCES. 5. WE HAVE PERUSED THE ORDER OF THIS TRIBUNAL IN A SSESSEES OWN CASE FOR EARLIER ASST. YEAR. THIS TRIBUNAL, I N ITS ORDER HELD THAT THE REIMBURSEMENT FOR ASSETS PURCHASED CANNOT BE CO NSIDERED AS ITA 1342/MDS/2011 4 PROFITS DERIVED BY THE ASSESSEE FROM ITS EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE AND, THEREFORE, DEDUCTION UNDER S EC.10A OF THE ACT IS NOT ALLOWABLE. THE TRIBUNAL HELD THAT THE C OMMISSIONER OF INCOME TAX (APPEALS) WAS ABSOLUTELY CORRECT IN HOLD ING THAT THE SUMS RECEIVED FOR REIMBURSEMENT CAN ONLY BE CONSID ERED AS CAPITAL RECEIPTS SINCE THE REIMBURSEMENTS WERE ADMITTEDLY A GAINST CAPITAL ASSETS. FOLLOWING THE ORDER OF THE CO-ORDINATE BEN CH OF THIS TRIBUNAL, WE HOLD THAT THE REIMBURSEMENT FOR ASSETS WAS RIGHT LY EXCLUDED FROM THE PROFITS OF BUSINESS OF THE ASSESSEE FOR THE PUR POSE OF COMPUTATION OF DEDUCTION UNDER SEC.10A OF THE ACT. WE ALSO FIND THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) IN HOLDING THAT THE REIMBURSEMENT FOR ASSETS IS CAPITA L RECEIPT IS IN TUNE WITH THE ORDER OF THIS TRIBUNAL. IN THE CIRCUMSTAN CES, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS) AND THE GROUNDS RAISED BY THE DEPARTMENT ON THIS ISSUE ARE REJECTED. ITA 1342/MDS/2011 5 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 7. ORDER PRONOUNCED ON FRIDAY, THE 8 TH DAY OF MARCH 2013, AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (CHALLA N AGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 08 TH MARCH 2013. JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), (4) C.I.T., (5) D.R. (6) GUARD FILE