Gofrugal Technoloigies Private Limited, CHENNAI V. ACIT Corporate Circle 3(3), CHENNAI

ITA 1366/CHNY/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3187 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-10-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N V BALAJI
• Keywords: Capital asset

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ ITA NO.1366/CHNY/2018 ( / ASSESSMENT YEAR: 2008-09) M/S. GO F RUGAL TECHNOLOGIES PVT. LTD. (FORMERLY ZOHA DEVELOPMENT CENTRE INDIA (P) LTD.), SHRI NARAYANA COMPLEX NO.11, SARATHY NAGAR, VIJAYA NAGAR CHENNAI-600 042. / VS. ACIT CORPORATE CIRCLE-3(3), CHENNAI. ./ ./PAN/GIR NO. AACCA-4341-F ($ /APPELLANT ) : ('($ / RESPONDENT ) $/ APPELLANT BY : SHRI N.V.BALAJI, ADV. '($ / RESPONDENT BY : SHRI AR.V.SREENIVASAN, ADDL.CIT / DATE OF HEARING : 12/10/2021 / DATE OF PRONOUNCEMENT : 12/10/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL IS A RECALLED MATTER FOR THE LI MITED PURPOSE OF ADJUDICATION OF GROUND NO.5. THE APPEAL WAS DISPOSE D BY THE TRIBUNAL VIDE ORDER DATED 13/05/2019. HOWEVER, VIDE MA NO.2 96/CHNY/2019, IT WAS NOTED THAT GROUND NO.5 OF THE APPEAL REMAINED T O BE ADJDUCIATED AND ACCRODINGLY, THE ORDER WAS RECALLED FOR THE LIM ITED PURPOSE OF ADJUDICATION OF GROUND NO.5. THE SAME READ AS UNDER : - 2 5) THE CIT(A) ERRED IN NOT DEDUCTING THE EXCHANGE RATE LOSS ON EXPORT OF SOFTWARE WHILE COMPUTING THE 'TOTAL TURNOVER' FOR THE PURPOS E OF DEDUCTION U/S.10A, THEREBY CREATING A DISPARITY BETWEEN THE NUMERATOR AND THE DENOMINATOR AND VIOLATING THE PROVISIONS OF THE IT ACT. 2. THE LD. AR HAS TABULATED THE DISPUTE AS UNDER: - TABLE SHOWING COMPUTATION OF EXPORT TURN OVER SL.NO. PARTICULARS AS PER ITO AS PER ASSESSEE REMARKS 1 EXPORT TURN OVER 61,64,32,670 2 ADD EXCHANGE GAIN 29,34,378 3 LESS EXCHANGE LOSS -32,45,213 ADJUSTED IN NUMERA TOR 4 (1+2+3) EXPORT TURNOVER AS RETURNED 61,61,21,835 61,61,21,835 EXCLUSIONS 5 LESS TELECOMMUNICATION CHARGES -30,30,085 -30,30, 085 ADJUSTED IN NUMERATOR 6 LESS EXPENSES IN FOREIGN EX. -74,20,200 -74,20,20 0 ADJUSTED IN NUMERATOR 7 (4-5-6) EXPORT TURNOVER DETERMINED 60,56,71,551 60,56,71,551 TABLE SHOWING COMPUTATION OF TOTAL TURN OVER SL.NO. PARTICULARS AS PER ITO AS PER ASSESSEE REMARKS 1 EXPORT TURN OVER 61,64,32,670 2 ADD EXCHANGE GAIN 29,34,378 3 ADD LOCAL TURNOVER 3,43,32,247 4 (1+2+3) TOTAL TURNOVER 65,36,99,295 65,36,99,295 5 EXPENSES INCURRED IN FOREIGN CURRENCY -74,20,200 ALLOWED VIDE ORDER DATED 13.05.2019 6 TELECOMMUNICATION CHARGES -30,30,085 ALLOWED VID E ORDER DATED 13.05.2019 7 EXCHANGE RATE LOSS -32,45,213 GROUND 5 OF ITA NO.1366/C/HNY18- PENDING ADJUDICATION TOTAL TURN OVER TO BE DETERMINED APPLYING PRINCIPLES OF HCL 64,00,03,798 THE LIMITED SUBMISSIONS OF LD. AR ARE THAT WHILE CO MPUTING DEDUCTION U/S 10A, SINCE FOREIGN EXCHANGE LOSS OF RS.32.45 LA CS HAS BEEN ADJUSTED WHILE COMPUTING EXPORT TURNOVER WHICH FORM PART OF NUMERATOR, THE SAME SHOULD ALSO BE DEDUCTED WHILE COMPUTING TO TAL TURNOVER WHICH FORM PART OF THE DENOMINATOR. 3. WE FIND THAT THIS ISSUE IS COVERED BY THE DECISI ON OF HONBLE APEX COURT IN CIT V/S HCL TECHNOLOGIES LTD. (404 ITR 719) WHEREIN IT HAS 3 BEEN HELD THAT WHEN THE OBJECT OF THE FORMULA IS TO ARRIVE AT THE PROFIT FROM EXPORT BUSINESS, EXPENSES EXCLUDED FROM EXPORT TURNOVER HAVE TO BE EXCLUDED FROM TOTAL TURNOVER ALSO. OTHERWISE, AN Y OTHER INTERPRETATION MAKES THE FORMULA UNWORKABLE AND ABSURD. THEREFORE, SUCH DEDUCTION SHALL BE ALLOWED FROM THE TOTAL TURNOVER IN SAME PR OPORTION AS WELL. DRAWING ANALOGY FROM THE SAME, WE WOULD HOLD THAT S INCE FOREIGN EXCHANGE LOSS OF RS.32.45 LACS HAS BEEN ADJUSTED WH ILE COMPUTING EXPORT TURNOVER WHICH FORM PART OF NUMERATOR, THE S AME SHOULD ALSO BE DEDUCTED WHILE COMPUTING TOTAL TURNOVER WHICH FORM PART OF THE DENOMINATOR. WE ORDER SO. 4. GROUND NO.5 OF THE APPEAL STAND ALLOWED. THE APP EAL FILED BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED ON 12 TH OCTOBER, 2021. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER 4 CHENNAI ; DATED : 12/10/2021 TLN 4 6 / COPY OF THE ORDER FORWARDED TO : 1. $ / THE APPELLANT 2. '($ / THE RESPONDENT 3. ; ( ) / THE CIT(A) 4. ; / CIT CONCERNED 5. ' , , 4 / DR, ITAT, CHENNAI 6. @ / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , 4 / ITAT, CHENNAI