Deputy Commissioner of Income tax, Bangalore V. M/s SLK Software Services P Ltd, Bangalore

ITA 1459/BANG/2014

• Counselvise Citation: 145921114 RSA 2014
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD K JT
• Assessee Lawyers: K R VASUDEVAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO. 1459/BANG/2014 ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(1), BANGALORE. VS. M/S. SLK SOFTWARE SERVICES PVT. LTD., 563/564, NIRAN ARCADE, NEW BEL ROAD, BANGALORE 560 047. PAN : AAAECS 7548E APPELLANT RESPONDENT APPELLANT BY : DR. SHANKAR PRASAD, K., JT. CIT(DR) RESPONDENT BY : SHRI K.R.VASUDEVAN, ADVOCATE DATE OF HEARING : 15.04.2015 DATE OF PRONOUNCEMENT : 14.05.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 25.08.2014 OF THE CIT(APPEALS)-III, BANGALORE RELATING TO ASSE SSMENT YEAR 2010-11. 2. THE MAIN GROUNDS OF APPEAL I.E., GROUNDS NO.2 & 3, READ AS FOLLOWS:- ITA NO.1459/BANG/2014 PAGE 2 OF 4 2. THE CIT(A) ERRED IN DIRECTING THE AO TO FOLLOW THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF TATA ELXSI LIMITED 349 ITR 98 WHILE COMPUTING THE DEDUCTION U/ S 10A BY EXCLUDING CERTAIN EXPENSES FROM THE TOTAL TURNOVER ALSO, WITHOUT APPRECIATING THE FACT THAT THERE IS NO PROVISION IN SECTION 10A THAT SUCH EXPENSES SHOULD BE REDUCED FROM THE TOTAL TURN OVER ALSO, AS CLAUSE (IV) OF THE EXPLANATION TO SECTION 10A PROVI DES THAT SUCH EXPENSES ARE TO BE REDUCED ONLY FROM THE EXPORT TUR NOVER. 3. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT TH AT THE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF TATA ELXSI LIMITED 349 ITR 98 HAS NOT BEEN ACCEPTED BY THE DEP ARTMENT AND AN APPEAL HAS BEEN FILED BEFORE THE HONBLE SUPREME COURT. 3. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO WHETHER THE CIT(APPEALS) WAS JUSTIFIED IN DIRECTING THE AO TO EXCLUDE FREIGHT, TELECOMMUNICATION, INSURANCE, LEGAL & PROF ESSIONAL AND TRAVELLING & CONVEYANCE CHARGES FROM THE EXPORT TURNOVER, WITHOU T REDUCING THE SAME FROM THE TOTAL TURNOVER ALSO, WHILE COMPUTING DEDUC TION U/S. 10A OF THE ACT. 4. ACCORDING TO THE AO, AS PER CLAUSE (IV) OF EXPLA NATION TO SECTION 10A, WHILE THESE EXPENSES SHOULD BE REDUCED FROM TH E EXPORT TURNOVER, HOWEVER, THE PROVISIONS OF SECTION 10A DO NOT PROVI DE FOR EXCLUSION OF SUCH EXPENDITURE FROM TOTAL TURNOVER. IN THE ABSENCE OF A DEFINITION FOR TOTAL TURNOVER IN SECTION 10A, THE NORMAL DEFINITION OF T OTAL TURNOVER HAS TO BE ADOPTED AND AS SUCH THE EXPENSES WHICH ARE REDUCED FROM THE EXPORT TURNOVER IN ACCORDANCE WITH THE SPECIFIC DEFINITION CANNOT BE REDUCED FROM THE TOTAL TURNOVER. ITA NO.1459/BANG/2014 PAGE 3 OF 4 5. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOLL OWING THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. TATA ELXSI LTD., 349 ITR 98 (KARN) , HELD THAT WHATEVER IS EXCLUDED FROM THE EXPORT TURNOVER, HAS ALSO TO BE EXCLUDED FROM THE TOTAL TU RNOVER. 6. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE DE CISION OF HON'BLE HIGH COURT OF KARNATAKA IN TATA ELXSI (SUPRA) HAS NOT ATTAINED FINALITY AND AN APPEAL BY THE DEPARTMENT IS PREFERRED BEFORE THE HON'BLE SUPREME COURT. WE ARE OF THE VIEW THAT AS OF TODAY, LAW DE CLARED BY THE HON'BLE HIGH COURT OF KARNATAKA WHICH IS THE JURISDICTIONAL HIGH COURT IS BINDING ON US. WE THEREFORE HOLD THAT THE ORDER OF CIT(A) DOE S NOT CALL FOR ANY INTERFERENCE AND ACCORDINGLY THE SAME IS CONFIRMED. 8. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF MAY, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASU DEVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 14 TH MAY, 2015. /D S/ ITA NO.1459/BANG/2014 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.