ABB Global Industries and Services Pvt Ltd, Bangalore V. Deputy Commissioner of Income Tax, Circle-11(1), Bangalore

ITA 1488/BANG/2017

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9511 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 27-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T SURYANARAYANA
• Keywords: Depreciation; Double taxation relief; Retrospective amendment; Additional evidence; Non-deduction of tax; TDS; Set aside
• Section: 40(a)(ia); 43(5); 195; 250; 9(1); 9(1); 9(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N V VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER IT A NO. 1488/BANG/2017 ASSESSMENT YEAR: 2010 - 11 ABB GLOBAL INDUSTRIES AND SERVICES PVT. LTD. (FORMERLY ABB GLOBAL INDUSTRIES AND SERVICES LTD.), 21 ST FLOOR, WTC, DR. RAJKUMAR ROAD, MALLESHWARAM WEST, BANGALORE 560 055. PAN: AADCA 3217B VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), BANGALORE. APPELLANT RESPONDENT IT A NO. 1 660 /B A NG/2017 ASSESSMENT YEAR: 2010 - 11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), BANGALORE. VS. ABB GLOBAL INDUSTRIES AND SERVICES PVT. LTD. (FORMERLY ABB GLOBAL INDUSTRIES AND SERVICES LTD.), BANGALORE 560 055. PAN: AADCA 3217B APPELLANT RESPONDENT APPELLANT BY : SHR I T. SURYANARAYANA, ADVOCATE RESPONDENT BY : SHRI GOPALAN GURUSWAMY , C IT(DR)(ITAT ), BENGALURU. DATE OF HEARING : 07.12 .2020 DATE OF PRONOUNCEMENT : 31 .12 . 2020 ITA NO.1488 & 1660/BANG/2017 PAGE 2 OF 16 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT ITA NO.1448/BANG/2017 IS AN APPEAL BY THE ASSESSE E, WHILE ITA NO.1660/BANG/2017 IS AN APPEAL BY THE REVENUE. BOT H THESE APPEALS ARE DIRECTED AGAINST THE ORDER DATED 12.04.2017 OF THE CIT(APPEALS)-I, BENGALURU, RELATING TO ASSESSMENT YEAR 2010-11. 2. FIRST WE SHALL TAKE UP FOR CONSIDERATION THE ASS ESSEES APPEAL WHICH IS ITA NO.1488/BANG/2017 . GROUND NO.1 WAS NOT PRESSED FOR ADJUDICATION AND HENCE DISMISSED AS NOT PRESSED. GROUND NO.2 RA ISED BY THE ASSESSEE READS AS FOLLOWS:- 2. FOREX LOSS ON DERIVATIVES 2.1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISA LLOWANCE MADE BY THE AO OF RS 1,82,04,000/- IN RESPECT OF FO REX LOSS ON DERIVATIVES BY HOLDING THE SAME AS HYPOTHETICAL AND CONTINGENT IN NATURE. 2.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT THESE EXPENSES ARE RECOGNIZED IN ACCORDANCE WITH THE ACCO UNTING TREATMENT PROVIDED IN THE ACCOUNTING STANDARD -11 A ND 30, ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. 2.3. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT THESE FOREX LOSSES ARE IN RESPECT OF BINDING OBLIGATIONS AND ARE NOT SPECULATIVE IN NATURE. 2.4. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THIS FOREX LOSS DEBITED TO PROFIT AND LOSS ACCOUNT IS ONLY A TIMING DIFFERENCE AS THE SAM E HAS BEEN REVERSED IN THE NEXT YEAR AND OFFERED TO TAX. 2.5. THE LEARNED CITA(A) ERRED IN NOT CONSIDERING T HE SUBMISSION FILED BY THE APPELLANT DURING THE COURSE OF HEARING IN THIS REGARD. ITA NO.1488 & 1660/BANG/2017 PAGE 3 OF 16 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF SOFTWARE DEVELOPMENT SERVICES. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.1 ,82,04,000 AS EXCHANGE LOSS ON FORWARD COVERED CONTRACTS. IN SUP PORT OF THE CLAIM FOR DEDUCTION, THE ASSESSEE SUBMITTED BEFORE THE AO AS FOLLOWS:- THE COMPANY REGULARLY ENTERS INTO FORWARD CONTRAC TS DURING THE NORMAL COURSE OF ITS BUSINESS TO HEDGE THE FOREIGN CURRENCY PAYABLE/RECEIVABLE BY IT ON WORKING CAPITAL ACCOUNT IN ORDER TO GUARD ITSELF AGAINST FOREIGN EXCHANGE FLUCTUATIONS. THE COMPANY HAS BEEN CONSISTENT IN ITS PRACTICE OF RECOGNIZING THE GAINS/LOSSES RESULTING OUT OF FORWARD CONTRACTS AND HAS BEEN OFF ERING THE INCOME, IF ANY, TO TAX ARISING FROM SUCH CONTRACTS IN ACCORDANCE WITH AS 11. VARIOUS COURTS HAVE HELD THAT FOR THE PURPOSES OF A SCERTAINING TAXABLE PROFITS OF A BUSINESS, THE PRINCIPLES OF AC COUNTING SHOULD BE APPLIED SO LONG AS THEY ARE NOT IN CONTRADICTION WITH ANY EXPRESS PROVISIONS OF THE STATUTE. IN THE PRESENT C ASE, ACER INDIA HAS ACCOUNTED FOR THE LOSSES ARISING ON ACCOUNT OF THE UNEXPIRED FORWARD CONTRACTS IN ACCORDANCE WITH THE REQUIREMEN TS OF AS-11 AND THE ANNOUNCEMENTS MADE BY THE INSTITUTE OF CHAR TERED ACCOUNTANTS OF INDIA (ICAI). 4. THE AO REFERRED TO CBDT INSTRUCTION NO.3/2020 D ATED 23.3.2020 WHEREIN THE CBDT TOOK THE VIEW THAT THE MARKED TO MARKET LOSSES IS IN SUBSTANCE A CONCEPT REQUIRED FROM THE POINT OF VIEW OF TRANSPARENT ACCOUNTING PRACTICES. THESE LOSSES ARE NOTIONAL LO SSES AND CAN BE ALLOWED AS A DEDUCTION ONLY IF THERE IS AN ACTUAL SETTLEMEN T THAT HAS TAKEN PLACE. THE BOARD THEREFORE OPINED THAT SUCH LOSSES WOULD B E CONTINGENT IN NATURE AND CANNOT BE ALLOWED TO BE SET OFF AGAINST TAXABLE INCOME. THE AO ALSO MADE A REFERENCE TO THE DECISION OF THE HONBLE MAD RAS HIGH COURT IN THE CASE OF INDIAN OVERSEAS BANK V. CIT, 250 ITR 146 (MAD) WHEREIN IT TOOK THE VIEW THAT A MERE CREDIT ENTRY IN THE BOOKS OF A CCOUNT WILL NOT CONSTITUTE INCOME. IN THAT CASE, THE BANK TOOK CREDIT FOR EST IMATED PROFIT ON EXCHANGE ITA NO.1488 & 1660/BANG/2017 PAGE 4 OF 16 HOLDINGS. THE HONBLE HIGH COURT HELD THAT INCOME W AS HYPOTHETICAL AND CANNOT BE TAXED. THE AO ALSO TOOK THE VIEW THAT TH E NATURE OF EXPENSES, WHETHER IT IS CAPITAL OR REVENUE ACCOUNT, HAS NOT B EEN ESTABLISHED BY THE ASSESSEE. FOR THE AFORESAID REASONS, THE AO DISALL OWED THE CLAIM OF ASSESSEE FOR DEDUCTION. 5. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONF IRMED THE ORDER OF AO. HENCE GROUND NO.2 IS RAISED BY THE ASSESSEE BE FORE THE TRIBUNAL. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE B ROUGHT TO OUR NOTICE THE DECISION OF THE SPECIAL BENCH ITAT IN THE CASE OF ACIT V. BANK OF BAHRAIN [2010] 41 SOT 290 (MUM)(SB) WHEREIN THE SB TOOK THE VIEW THAT FORWARD CONTRACT ENTERED INTO BY THE ASSESSEE TO SELL FOREI GN CURRENCY AT AN AGREED PRICE ON A FUTURE DATE FALLING BEYOND LAST DATE OF ACCOUNT PERIOD, I.E., BEFORE THE DATE OF MATURITY OF FORWARD CONTRACT, SUCH LOSS HAS TO BE ALLOWED AS A DEDUCTION. 7. OUR ATTENTION WAS ALSO DRAWN TO A DECISION OF TH E BANGALORE BENCH OF TRIBUNAL IN THE CASE OF QUALITY ENGINEERING & SOFTWARE TECHNOLOGIES (P.) LTD. V. DCIT (2014) 52 TAXMANN.COM 515 (BANG. TRIB. ) WHEREIN IT WAS HELD THAT PROVISION FOR LOSSES INCURRED ON DERIVATIVE CO NTRACTS WAS AN ALLOWABLE EXPENDITURE. IN THAT CASE, THE ASSESSEE ENTERED IN TO A FORWARD CONTRACT IN ORDER TO PROTECT ITS INTEREST AGAINST FLUCTUATIONS IN FOREIGN CURRENCY IN RESPECT CONSIDERATION FOR EXPORT PROCEEDS AND THERE WAS AN ACTUAL CONTRACT FOR SALE OF MERCHANDISE. THE TRIBUNAL HELD THAT SU CH TRANSACTIONS CANNOT BE TERMED AS SPECULATIVE TRANSACTION. 8. RELIANCE WAS ALSO PLACED BY HIM ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. D. CHETAN (2016) 75 TAXMANN.COM 300 (BOM). IN THE AFORESAID CASE, THE ASSESSEE ENTERED INTO ITA NO.1488 & 1660/BANG/2017 PAGE 5 OF 16 FORWARD CONTRACT FOR THE PURPOSE OF HEDGING IN THE COURSE OF NORMAL BUSINESS ACTIVITIES OF IMPORT AND EXPORT TO COVER U P LOSSES ON ACCOUNT OF DIFFERENCES IN FOREIGN EXCHANGE VALUATION. THE HON BLE COURT HELD THAT LOSSES ON ACCOUNT OF DIFFERENCES WOULD NOT BE A SPE CULATIVE ACTIVITY, BUT A BUSINESS ACTIVITY AND DEDUCTION CLAIMED SHOULD BE A LLOWED. THE HONBLE HIGH COURT HELD AS FOLLOWS:- 7. THE IMPUGNED ORDER OF THE TRIBUNAL HAS, WHILE UPHO LDING THE FINDING OF THE CIT (APPEALS), INDEPENDENTLY COME TO THE CONCLUSION THAT THE TRANSACTION ENTERED INTO BY THE RESPONDENT ASSESSEE IS NOT IN THE NATURE OF SPECULATIVE ACTIVI TIES. FURTHER THE HEDGING TRANSACTIONS WERE ENTERED INTO SO AS TO COV ER VARIATION IN FOREIGN EXCHANGE RATE WHICH WOULD IMPACT ITS BUSINE SS OF IMPORT AND EXPORT OF DIAMONDS. THESE CONCURRENT FINDING OF FACTS ARE NOT SHOWN TO BE PERVERSE IN ANY MANNER. IN FACT, THE AS SESSING OFFICER ALSO IN THE ASSESSMENT ORDER DOES NOT FIND THAT THE TRANSACTION ENTERED INTO BY THE RESPONDENT ASSESSEE WAS SPECULATIVE IN NATURE. IT FURTHER HOLDS THAT AT NO POINT OF TIME DID REVENUE CHALLENGE THE ASSERTION OF THE RESPONDENT A SSESSEE THAT THE ACTIVITY OF ENTERING INTO FORWARD CONTRACT WAS IN THE REGULAR COURSE OF ITS BUSINESS ONLY TO SAFEGUARD AGAINST TH E LOSS ON ACCOUNT OF FOREIGN EXCHANGE VARIATION. EVEN BEFORE THE TRIBUNAL, WE FIND THAT THERE WAS NO SUBMISSION RECORDED ON BE HALF OF THE REVENUE THAT THE RESPONDENT ASSESSEE SHOULD BE CALL ED UPON TO EXPLAIN THE NATURE OF ITS TRANSACTIONS. THUS, THE S UBMISSION NOW BEING MADE IS WITHOUT ANY FOUNDATION AS THE STAND O F THE ASSESSEE ON FACTS WAS NEVER DISPUTED. SO FAR AS THE RELIANCE ON ACCOUNTING STANDARD-11 IS CONCERNED, IT WOULD NOT BY ITSELF DE TERMINE WHETHER THE ACTIVITY WAS A PART OF THE RESPONDENT-A SSESSEE'S REGULAR BUSINESS TRANSACTION OR IT WAS A SPECULATIV E TRANSACTION. ON PRESENT FACTS, IT WAS NEVER THE REVENUE'S CONTEN TION THAT THE TRANSACTION WAS SPECULATIVE BUT ONLY DISALLOWED ON THE GROUND THAT IT WAS NOTIONAL. LASTLY, THE RELIANCE PLACED O N THE DECISION IN S. VINODKUMAR DIAMONDS (P.) LTD. ( SUPRA ) IN THE REVENUE'S FAVOUR WOULD NOT BY ITSELF GOVERN THE ISSUES ARISIN G HEREIN. THIS IS SO AS EVERY DECISION IS RENDERED IN THE CONTEXT OF THE FACTS WHICH ARISE BEFORE THE AUTHORITY FOR ADJUDICATION. MERE CONCLUSION IN FAVOUR OF THE REVENUE IN ANOTHER CASE BY ITSELF WOULD NOT ENTITLE A PARTY TO HAVE AN IDENTICAL RELI EF IN THIS CASE. IN ITA NO.1488 & 1660/BANG/2017 PAGE 6 OF 16 FACT, IF THE REVENUE WAS OF THE VIEW THAT THE FACTS IN S. VINODKUMAR ( SUPRA ) ARE IDENTICAL/SIMILAR TO THE PRESENT FACTS, THEN RELIANCE WOULD HAVE BEEN PLACED BY THE REVENUE UPON IT AT THE HEARING BEFORE THE TRIBUNAL. THE IMPUGNED ORDER DOE S NOT INDICATE ANY SUCH RELIANCE. IT APPEARS THAT IN S. VINODKUMAR DIAMONDS (P.) LTD. ( SUPRA ), THE TRIBUNAL HELD THE FORWARD CONTRACT ON FACTS BEFORE IT TO BE SPECULATIVE IN NA TURE IN VIEW OF SECTION 43(5) OF THE ACT. HOWEVER, IT APPEARS THAT THE DECISION OF THIS COURT IN CIT V. BADRIDAS GAURIDU (P.) LTD. [2003] 261 ITR 256/[2004] 134 TAXMAN 376 (MUM.) WAS NOT BROUGHT TO THE NOTICE OF THE TRIBUNAL WHEN IT RENDERED ITS DECISIO N IN S. VINODKUMAR DIAMONDS (P.) LTD. ( SUPRA ). IN THE ABOVE CASE, THIS COURT HAS HELD THAT FORWARD CONTRACT IN FOREIGN EXC HANGE WHEN INCIDENTAL TO CARRYING ON BUSINESS OF COTTON EXPORT ER AND DONE TO COVER UP LOSSES ON ACCOUNT OF DIFFERENCES IN FOREIG N EXCHANGE VALUATIONS, WOULD NOT BE SPECULATIVE ACTIVITY BUT A BUSINESS ACTIVITY. 9. IT WAS CONTENDED BY THE LD. COUNSEL FOR THE ASSE SSEE THAT THE FACTS OF THE ASSESSEES CASE ARE IDENTICAL TO THE CASE DECID ED BY THE HONBLE BOMBAY HIGH COURT AND THE DEDUCTION CLAIMED SHOULD BE ALLOWED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ORDER OF THE AO SHOWS THAT THE AO CALLED UPON THE ASSESSEE T O JUSTIFY THE ALLOWABILITY OF THE LOSSES ON ACCOUNT OF EXCHANGE L OSS ON FORWARD CONTRACTS. THE ASSESSEE GAVE TWO SUBMISSIONS DATED 8.1.2014 AN D 23.1.2014, COPIES OF WHICH ARE PLACED AT PAGE NOS. 26-27 & 28-34 RESP ECTIVELY. IN BOTH THE SUBMISSIONS, THE DETAILS OF FORWARD CONTRACTS HAS N OT BEEN MENTIONED. 11. AS FAR AS LAW ON THE ISSUE IS CONCERNED, IT IS VERY CLEAR THAT THE FORWARD CONTRACTS ENTERED INTO FOR THE PURPOSE OF P ROTECTING AGAINST LOSS AND WHICH HAS A NEXUS TO THE BUSINESS OF THE ASSESS EE AND WHICH ARE ON REVENUE ACCOUNT HAVE TO BE ALLOWED AS A DEDUCTION. THE DECISION CITED ON BEHALF OF LD. COUNSEL FOR THE ASSESSEE SUPPORTS THE CLAIM MADE IN THIS REGARD. WE, HOWEVER, FIND THAT THE DETAILS OF FORW ARD CONTRACTS AND NEXUS WITH THE BUSINESS OF THE ASSESSEE HAVE NOT BEEN SUB MITTED BY ASSESSEE ITA NO.1488 & 1660/BANG/2017 PAGE 7 OF 16 BEFORE THE AO. WE THEREFORE ARE OF THE VIEW THAT WH ILE UPHOLDING THE PRINCIPLE THAT LOSSES ON ACCOUNT OF EXCHANGE FLUCTU ATION ON FORWARD COVERED CONTRACTS ARE ALLOWABLE AS A DEDUCTION, WE HOLD THA T THE FACTUAL DETAILS IN THIS REGARD SHOULD BE EXAMINED BY THE AO AND FOR TH E PURPOSE WE SET ASIDE THE ORDER OF CIT(APPEALS) AND REMAND THE ISSU E TO THE AO FOR FRESH CONSIDERATION. THE ASSESSEE HAS TO SHOW THE NATURE OF FORWARD CONTRACTS AND ITS NEXUS WITH THE BUSINESS OF ASSESSEE AND ALS O THE FACT THAT SUCH CONTRACTS ARE ON REVENUE ACCOUNT AND NOT ON CAPITAL ACCOUNT. 12. GROUND NO.3 RAISED BY THE ASSESSEE READS AS FOL LOWS:- 3. PAYMENT FOR SOFTWARE LICENSE FEES 3.1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISA LLOWANCE MADE BY THE AO OF RS. 1,10,33,217/- IN RESPECT OF P AYMENTS MADE FOR SOFTWARE LICENSE FEES U/S 40(A)(IA). 3.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FA CT THAT PAYMENT FOR SOFTWARE LICENSE FEE MADE BY THE APPELL ANT IS THE CONSIDERATION NOT FOR COPYRIGHT BUT FOR COPYRIGHTED ARTICLE AND HENCE, WOULD NOT FALL UNDER THE DEFINITION OF THE R OYALTY BOTH UNDER THE ACT AND THE RESPECTIVE DOUBLE TAXATION AV OIDANCE AGREEMENTS WITH THE RESPECTIVE COUNTRIES. 13. THE AO DISALLOWED A SUM OF RS.1,10,33,217 WHICH WAS PAYMENT MADE BY THE ASSESSEE FOR ACQUIRING SOFTWARE LICENCE . THE AO WAS OF THE VIEW THAT PAYMENT IN QUESTION WAS IN THE NATURE OF ROYALTY OR FEES FOR TECHNICAL SERVICES AND THEREFORE TAXABLE IN INDIA. SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE AFORESAID PAYMENT , THE AO DISALLOWED THE CLAIM OF ASSESSEE FOR DEDUCTION OF THE AFORESAI D SUM FOR NON-DEDUCTION OF TAX AT SOURCE U/S. 195 OF THE ACT AND INVOKED TH E PROVISIONS OF SECTION 40(A)(I) OF THE ACT. THE AO PLACED RELIANCE ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. SAMSUNG ELECTRONICS CO. LTD., 345 ITR 494 (KARN) WHEREIN THE HONBLE COURT HELD THAT WHEN LICENCE IS GRANTED TO MAKE USE OF SOFTWARE BY MAKING COPY OF T HE SAME AND STORE IT IN ITA NO.1488 & 1660/BANG/2017 PAGE 8 OF 16 HARD-DISK OF DESIGNATED COMPUTER AND TO TAKE BACKUP COPY OF THE SOFTWARE, IT WILL AMOUNT TO A TRANSFER OF RIGHT TO USE SOFTWA RE AND WOULD CONSTITUTE ROYALTY WITHIN THE MEANING OF ARTICLE 12 OF DTAA BE TWEEN INDIA AND USA. 14. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CON FIRMED THE ORDER OF THE AO. BEFORE US, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT PAYMENTS IN QUESTION HAD BEEN MADE IN THE PREVIOUS YEAR RELEVANT TO AY 2010-11. HE BROUGHT TO OUR NOTICE THAT THE DECISIO N OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) WAS RENDERED ON 15.10.2011 AND PRIOR TO THE AFORESAID D ECISION, THE LAW WITH REGARD TO TDS FOR SOFTWARE LICENCES WAS IN FAVOUR O F THE ASSESSEE AND THE VIEW TAKEN WAS THAT THERE WAS NO OBLIGATION TO DEDU CT TAX ON PURCHASE OF SOFTWARE LICENCE. SINCE THE OBLIGATION TO DEDUCTION TAX AT SOURCE IS AT THE TIME OF MAKING PAYMENT OR CREDIT IN THE BOOKS OF AC COUNT OF THE ASSESSEE AND SINCE AS ON THAT DATE, THE LAW WAS THAT THERE N EED NOT BE A TDS OBLIGATION, THERE MAY NOT BE ANY DISALLOWANCE U/S. 40(A)(I). THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1. ALLEGIS SERVICES INDIA (P.) LTD. V. DCIT (2017) 86 TAXMANN.COM 63 (BENGALURU TRIB) 2. TEEKAYS INTERIOR SOLUTIONS P. LTD. V. DCIT, ORDER D ATED 15.2.2019 ITA NO.400/BANG/2017 (BANG. TRIB.) 3. CIT V. NGC NETWORKS (INDIA) P. LTD., ORDER DATED 29 .1.2018 ITA NO.397/2015 (BOMBAY HIGH COURT) 15. THE LD. DR SUBMITTED THAT THE DECISION OF THE H ONBLE HIGH COURT OF KARNATAKA IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) IS DECLARATORY IN NATURE AND THEREFORE WILL RELATE BAC K EVEN TO THE PERIOD PRIOR TO THE AFORESAID DECISION. ITA NO.1488 & 1660/BANG/2017 PAGE 9 OF 16 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE F IND THAT THE DECISION RENDERED BY THIS TRIBUNAL IN THE CASE OF A LLEGIS SERVICES INDIA (P.) LTD. ( SUPRA) , THE VERY SAME ISSUE HAS BEEN DEALT WITH AS FOLLOW S:- 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE TH AT THE TRANSACTION IN QUESTION REGARDING PAYMENT OF PURCHA SE OF SOFTWARE WAS COMPLETED IN THE F.Y. 2008-09 WHEREAS THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) WAS PASSED ON 15.10.20 11 MUCH LATER THAN THE TIME OF TRANSACTION CARRIED OUT BY THE ASS ESSEE. IT IS ALSO NOT IN DISPUTE THAT THIS ISSUE OF CONSIDERING THE P AYMENT FOR PURCHASE OF SOFTWARE AS ROYALTY IS A HIGHLY DEBATAB LE ISSUE AND VARIOUS HIGH COURTS HAVE TAKEN DIVERGENT VIEWS ON T HIS ISSUE. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AURIGENE DISCOVERY TECHNOLOGIES (P.) LTD. (SUPRA) HAS CONSID ERED AN IDENTICAL ISSUE IN PARAS 3 TO 5 AS UNDER : ' 03. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROU GH THE RELEVANT ORDERS. THE ASSESSEE RESUBMITTED THE PLEA TAKEN BEFORE THE LOWER AUTHORITIES AND PLACED ON THE RULI NG OF THE HON'BLE BANGALORE ITAT IN SONATA INFORMATION TECHNOLOGY LTD. V. ACIT (103 ITD 324) WHICH HAD HEL D THAT PAYMENTS FOR SOFTWARE LICENSES DO NOT CONSTITU TE ROYALTY UNDER THE PROVISIONS OF THE ACT AND HENCE DISALLOWANCE UNDER SECTION 40(A) (IA) OF THE ACT WO ULD NOT BE APPLICABLE. THE CHANGE IN THE LEGAL POSITION ON TAXATION OF COMPUTER SOFTWARE WAS ON ACCOUNT OF THE RULING O F THE KARNATAKA HIGH COURT IN CIT V. SAMSUNG ELECTRONICS CO. LTD. (320 ITR 209), WHICH WAS PRONOUNCED ON 15.10.1 1 THAT IS MUCH LATER THAN THE CLOSURE OF THE FY 2010- 11. SUBSEQUENTLY, THE FINANCE ACT 2012 ALSO INTRODUCED, RETROSPECTIVELY, EXPLANATION 4 TO SECTION 9(1 (VI) OF THE ACT TO CLARIFY THAT PAYMENTS FOR, INTER ALIA. LICENSE T O USE COMPUTER SOFTWARE WOULD QUALIFY AS ROYALTY. DURING THE FY 10-11, THE ASSESSEE DID NOT HAVE THE BENEFIT OF CLA RIFICATION BROUGHT BY THE RESPECTIVE AMENDMENT. AS SUCH, FOR T HE FY 2010-11, IN LIGHT OF THE PROVISIONS OF SECTION 9(1) (VI) OF THE ACT READ WITH JUDICIAL GUIDANCE ON THE TAXATION OF COMPUTER SOFTWARE PAYMENTS, TAX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. GIVEN THE PRACTICE IN PRIOR ASS ESSMENT YEARS, THE ASSESSEE WAS OF THE BONA FIDE VIEW THAT THE ITA NO.1488 & 1660/BANG/2017 PAGE 10 OF 16 PAYMENT OF SOFTWARE LICENSE FEE WAS NOT SUBJECT TO TAX DEDUCTION AT SOURCE UNDER SECTION 194J/195 OF THE A CT. IT IS SUBMITTED THAT LIABILITY TO DEDUCT TAX AT SOURCE CANNOT BE FASTENED ON THE ASSESSEE ON THE BASIS OF RETROSP ECTIVE AMENDMENT TO THE ACT (FINANCE ACT 2012 AMENDMENT TH E DEFINITION OF ROYALTY WITH RETROSPECTIVE EFFECT FRO M 01.04.1976) OR A SUBSEQUENT RULING OF A COURT (THE KARNATAKA HC IN CIT V SAMSUNG ELECTRONICS CO. LTD. (16 TAXMANN.COM 141) WAS PASSED ON OCTOBER 15, 2011). COURTS HAVE CONSISTENTLY UPHELD THIS PRINCIPLE AS S EEN IN: ITO V. CLEAR WATER TECHNOLOGY SERVICES (P.) LTD. (52 TAXMANN.COM 115) KERALA VISION LTD. V. ACIT (46 TAXMANN.COM 50) SONIC BIOCHEM EXTRACTIONS (P.) LTD. V. ITO (35 TAXMANN.COM 463) CHANNEL GUIDE INDIA LTD. V. ACIT (25 TAXMANN.COM 25) DCI V. VIROLA INTERNATIONAL (20 14(2) TMI 653) CIT V. KOTAK SECURITIES LTD. (20 TAXMANN.COM 846 ). 04. THE RELEVANT PORTION OF THE CIT (A) ORDER IS EX TRACTED AS UNDER : ' DISALLOWANCE OF EXPENSES UNDER 40(A)(I) / 40(A)(I A) : 5.1 AS REGARDS DISALLOWANCE OF EXPENSES UNDER 40(A) (I)/40(A)(IA), IT HAS BEEN SUBMITTED THAT THE COMPANY HAD DETERMIN ED THE RATE OF TAX TO BE DEDUCTED AND FOLLOWING THE JUDGMENTS THAT WERE PREVALENT AT THE TIME OF TAX DEDUCTION, SUPREME COU RT IN THE CASE OF TATA CONSULTANCY SERVICES AND JURISDICTIONAL TRI BUNAL IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD, THE APPELLANT SUBMITTED THAT THE SAID JUDGMENT SHALL NOT BE APPLICABLE SINCE IT WAS PRONOUNCED ON 15/10/2011 AND VELANKANI MAURITIUS LTD., WHEREAS THE LIABILITY TO DEDUCT TAX FOR THE APPELLANT WAS THE F .Y. 2010-11. THE APPELLANT HAS RELIED ON THE JUDGMENT OF COCHIN TRIB UNAL IN THE CASE OF KERALA VISION LTD AND AGRA TRIBUNAL IN THE CASE OF VIROLA INTERNATIONAL, WHEREIN IT WAS HELD THAT 'THE LAW AMENDED WAS UNDOUBTEDLY RETROSPECTIVE IN N ATURE BUT SO FAR AS TAX WITHHOLDING LIABILITY IS CONCERNED, IT D EPENDS ON THE LAW AS ITA NO.1488 & 1660/BANG/2017 PAGE 11 OF 16 IT EXISTED AT THE POINT OF TIME WHEN PAYMENTS, FROM WHICH TAXES OUGHT TO HAVE BEEN WITHHELD, WERE MADE. THE TAX-DED UCTOR CANNOT BE EXPECTED TO HAVE CLAIRVOYANCE OF KNOWING HOW THE LAW WILL CHANGE IN FUTURE.' FURTHER, SOFTWARE PAYMENT WAS INCLUDED IN DEFINITIO N OF ROYALTY ONLY VIDE EXPLANATION TO SECTION 9(1)(VI)INSERTED R ETROSPECTIVELY VIDE FINANCE ACT, 2012 AND WHEN THE PURCHASE WAS MA DE, THE APPELLANT DID NOT HAVE THE BENEFIT OF CLARIFICATION BROUGHT BY THE RETROSPECTIVE AMENDMENT. IT IS IMPOSSIBLE TO FASTEN LIABILITY FOR DEDUCTING TAX AT SOURCE RETROSPECTIVELY AS TAX IS T O BE DEDUCTED AT SOURCE AT THE TIME WHEN THE PAYMENT IS CREDITED OR MADE. THIS VIEW HAS BEEN UPHELD BY THE BANGALORE TRIBUNAL IN T HE CASE OF DCIT V. M/S WS ATKINS INDIA PVT LTD (ITA NO 14671BANG12014 AND THE MUMBAI TRIBUNAL IN THE CASE OF CHANNEL GUIDE INDIA LTD. V. ACIT ([2012] 25 TAXMANN .COM 25). 5.2 THE ITAT 'C' BENCH IN THE CASE M/S WS ATKINS IN DIA PVT. LTD AND IN THE CASE OF INFOTECH ENTERPRISES LTD OF THE HYDERABAD BENCH OF THE TRIBUNAL WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOULD NOT APPLY TO DISALLOW PAYMENTS WHEN TDS WAS NOT DONE AND SUBSEQUENTLY BECOME TAXABLE ON ACCOUNT OF A RETROSPECTIVE LEGISLATION. IT HAS ALSO REFERRED TO IN THE CASE OF SONIC BIOCHEM EXTRACTIONS PVT. LTD. (SUPRA), IDENTI CAL ISSUE WAS CONSIDERED AND DECIDED BY THE MUMBAI TRIBUNAL. FOLL OWING WERE THE RELEVANT OBSERVATIONS: 'THE ASSESSEE PURCHASED SOFTWARE, CAPITALIZED THE PAYMENT TO THE COMPUTERS ACCOUNT AS THE SOFTWARE CA ME ALONG WITH THE HARDWARE OF COMPUTERS AND CLAIMED DEPRECIATION. ON THE GROUND THAT PURCHASE OF SOFTWA RE IS ESSENTIALLY PURCHASE OF COPYRIGHT WHICH ATTRACTS TA X DEDUCTION AT SOURCE UNDER SECTION 194J, THE ASSESSI NG OFFICER INVOLVED THE PROVISIONS OF SECTION 40(A)(IA ) AND DISALLOWED THE DEPRECIATION CLAIMED. THE COMMISSION ER (APPEALS), CONFIRMED THE ACTION OF THE ASSESSING OF FICER ON THE GROUND THAT THE PURCHASE OF SOFTWARE AMOUNTE D TO ACQUISITION OF INTANGIBLE ASSET AND THEREFORE, THE PAYMENT WAS ROYALTY AND DISALLOWABLE. ON APPEAL: ITA NO.1488 & 1660/BANG/2017 PAGE 12 OF 16 HELD, (I) THAT MERE PURCHASE OF SOFTWARE, A COPYRIG HTED ARTICLE, FOR UTILISATION OF COMPUTERS CANNOT BE CONSIDERED AS PU RCHASE OF COPYRIGHT AND ROYALTY. THE ASSESSEE DID NOT ACQUIRE ANY RIGHTS FOR MAKING COPIES, SELLING OR ACQUIRING WHICH GENERALLY COULD BE CONSIDERED WITHIN THE DEFINITION OF 'ROYALTY'. EXPL ANATION 2 TO SECTION 9(1)(VI) CANNOT BE APPLIED TO PURCHASE OF A COPYRIGHTED SOFTWARE, WHICH DOES NOT INVOLVE ANY COMMERCIAL EXP LOITATION THEREOF. THE ASSESSEE SIMPLY PURCHASED SOFTWARE DEL IVERED ALONG WITH COMPUTER HARDWARE FOR UTILIZATION IN THE DAY-T O-DAY BUSINESS.' 5.3 RELYING ON THE ABOVE DECISION, THE ITAT 'C' BEN CH, BANGALORE UPHELD THE ORDER OF THE CIT (A) WHO HAD O BSERVED THAT THE ASSESSEE DID NOT HAVE THE BENEFIT OF THE CLARIF ICATION BROUGHT ABOUT BY THE RETROSPECTIVE AMENDMENT THAT THE PAYME NTS TANTAMOUNT TO PAYMENT FOR ROYALTY AND CONSEQUENTLY TAX WAS TO BE DEDUCTED U/S 194J. THE LAW AS EXTANT ON THE DATE WHEN THE PAYMENT FOR OBTAINING THE SOFTWARE WAS MADE, HAS NO T CATEGORICALLY LAID DOWN THAT TAX IS REQUIRED TO BE DEDUCTED. IT IS IMPOSSIBLE TO FASTEN LIABILITY FOR DEDUCTING TAX AT SOURCE RETROSPECTIVELY. 5.4 IN VIEW OF THE ABOVE DECISIONS, IT IS CORRECT T O SAY THAT IT IS NOT POSSIBLE TO FASTEN LIABILITY FOR DEDUCTING TAX AT S OURCE RETROSPECTIVELY AS TAX IS TO BE DEDUCTED AT SOURCE AT THE TIME WHEN THE PAYMENT IS CREDITED OR MADE. WHEN PURCHASE OF S OFTWARE WAS MADE THE ASSESSEE DID NOT HAVE THE BENEFIT OF THE C LARIFICATION BROUGHT ABOUT BY THE RETROSPECTIVE AMENDMENT. THE C ONTENTION OF THE APPELLANT IS CORRECT THAT THE SOFTWARE PAYMENT DISALLOWED BY THE AO DID NOT WARRANT WITHHOLDING OF THE TAX U/S 4 0(A)(IA) AND 40(A)(IA) (BY AN ORDER OF CORRIGENDUM DT 20.11.2015 ) OF THE ACT. THEREFORE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF SOFTWARE PAYMENT WANT OF WITHHOLDING OF TAX IS HEREBY DELETE D.' 05. THE CIT (A) FOLLOWED THE DECISION OF THIS TRIBU NAL IN M/S WS ATKINS INDIA PVT. LTD, SUPRA, WHICH REFERRED THE DECISIONS OF HYDERABAD BENCH OF THE TRIBUNAL IN INFOTECH ENTERPRISES LTD IN ITA 115/HYD/2011 WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOU LD NOT APPLY TO DISALLOW PAYMENTS WHEN TDS WAS NOT DONE AND SUBSEQU ENTLY BECOME TAXABLE ON ACCOUNT OF A RETROSPECTIVE LEGISLATION. IT HAS ALSO REFERRED TO THE DECISIONS OF THE DELHI & MUMBAI TRIBUNAL IN SMS DEMAG PVT LTD, 132 ITJ 498 & SONIC BIOCHEM EXTRACTIONS PVT. LTD. 2 3 ITR (TRIB) 447, ITA NO.1488 & 1660/BANG/2017 PAGE 13 OF 16 RESPECTIVELY. WE UPHOLD THE DECISION OF THE CIT (A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE.' THUS IT IS CLEAR THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL WHILE DECIDING THIS ISSUE HAS TAKEN NOTE OF VARIOUS DECISIONS IN F AVOUR OF THE ASSESSEE ON THE POINT THAT THE PAYMENT FOR PURCHASE OF SOFTWARE DOES NOT FALL IN THE DEFINITION OF ROYALTY. RESPECTFULLY FOLLOWING THE D ECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL, WE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 17. FOLLOWING THE AFORESAID DECISION, WE HOLD THAT DISALLOWANCE U/S. 40(A)(I) OF THE ACT IN THE PRESENT CASE CANNOT BE S USTAINED AS THE OBLIGATION TO DEDUCT TAX AT SOURCE WAS IN RESPECT OF THE DATE AND PERIOD PRIOR TO THE DECISION RENDERED BY THE HONBLE KARNATAKA HIGH COU RT IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD. (SUPRA) . 18. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. ITA NO.1660/BANG/2019 (APPEAL BY THE REVENUE) 19. THE GROUNDS OF APPEAL RAISED READ AS FOLLOWS:- 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO F AR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S APPEAL ON THE ISSUE OF DEDUCTION CLAIMED U/S 10A WHERE THE MA TTER IS PENDING BEFORE THE HON'BLE SUPREME COURT AND THE SA ME HAS NOT REACHED FINALITY. 3. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF CONTRIBUTION TO RECOGNIZED SUPERANNUATION FUND BY A CCEPTING THE ADDITIONAL EVIDENCE IN VIOLATION OF PROVISION OF RU LE 46A WITHOUT GIVING AN OPPORTUNITY TO ASSESSING OFFICER. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE LD. CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER B E RESTORED. ITA NO.1488 & 1660/BANG/2017 PAGE 14 OF 16 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, T O AMEND OR DELETE ANY OF THE GROUNDS THAT MAY.BE URGED AT THE TIME OF HEARING OF APPEAL. 20. GROUNDS 1, 4 & 5 RAISED BY THE REVENUE ARE GENE RAL IN NATURE AND CALLS FOR SPECIFIC ADJUDICATION. 21. GROUND NO.2 IS WITH REGARD TO DEDUCTION U/S. 10 A OF THE ACT. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TAKING INTO CONSIDERATION THE DECISION RENDERED BY THE HONBLE HIGH COURT OF KARN ATAKA IN THE CASE OF CIT V. TATA ELXSI LTD [2012] 349 ITR 98 (KARN) , WE ARE OF THE VIEW THAT COMMUNICATION CHARGES SHOULD BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. WE ARE OF THE VIEW THAT AS OF TODAY, LAW DECLARED BY THE HON'BLE HIGH COURT OF KARNATAKA WHICH IS THE JURISD ICTIONAL HIGH COURT IS BINDING ON US. MOREOVER, THE ORDER OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. HCL TECHNOLOGIES LTD. IN CIVIL APPEAL NO.8489-98490 OF 2013 & ORS. DATED 24.04.2018 . HENCE THIS GROUND IS REJECTED. 22. WITH REGARD TO GROUND NO.3 RAISED BY THE REVENU E ON THE DISALLOWANCE OF CONTRIBUTION TO SUPER ANNUATION FUN D OF RS.3,72,61,000/-, THE ASSESSEE HAS SUBMITTED THAT DURING THE PREVIOUS YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11, THE ASSESSEE MADE A CON TRIBUTION OF RS. 3,72,61,000/- TO APPROVED SUPERANNUATION FUND I.E. M/S ASEA BROWN BOVERI SENIOR EXECUTIVE SUPERANNUATION SCHEME. DURING THE COURSE OF ASSESSMENT, THE AO ASKED THE ASSESSEE TO SUBMIT THE COPY OF APPROVAL FOR THE AY 2010-11 BY THE APPROPRIATE AUTHORITY AS ENVI SAGED IN THE PROVISIONS OF 'THE FOURTH SCHEDULE -PART B' OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS PRODUCED THE COPY OF APPROVALS BY THE SAID AUTHORITY FOR EARLIER YEAR AND SUCCEEDING YEAR, HOWEVER COULD NOT PRODUCE THE CERTIFICATE ITA NO.1488 & 1660/BANG/2017 PAGE 15 OF 16 FOR THE FINANCIAL YEAR 2009-10 RELEVANT TO ASSESSME NT YEAR 2010-11. HENCE, THE AO DISALLOWED THE SAID CONTRIBUTION U/S 40A(7). 23. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT THE SAID PAPERS WERE NOT AVAILABLE WITH THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS DUE TO THE FACT THAT THE SAM E WAS KEPT IN THEIR OLD RECORD ROOM BECAUSE OF SPACE CONSTRAINT. BY THE TIM E THE SAID DOCUMENTS WERE LOCATED, THE AO HAD ALREADY PASSED HIS ORDER B Y DISALLOWING THE SAID SUM. HENCE, THE ASSESSEE WAS PREVENTED BY SUFFICIEN T REASON FROM PRODUCING THE SAID DOCUMENTS BEFORE THE ASSESSING O FFICER. FURTHER, THE ASSESSEE HAS FURNISHED THE COPY OF THE APPROVAL FOR THE AY 2010-11 BY THE COMMISSIONER OF INCOME TAX (LTU) AND ALSO COPY OF T HE DEED OF SUPERANNUATION FUND EXECUTED ON 06.07.2009 AS ADDIT IONAL EVIDENCE VIDE THEIR SUBMISSION DATED 7 FEBRUARY 2017. IN VIEW OF THIS, ASSESSEE SUBMITTED THAT THE SAID ADDITIONAL EVIDENCE MAY BE ACCEPTED AND THE RELIEF TO BE GIVEN IN THIS REGARD. AS THE ASSESSEE HAS FUR NISHED COPY OF APPROVAL BY CIT(LTU) AND AS THE CONCERNED APPROVAL HAS EXIST ED FOR THE PERTINENT ASSESSMENT YEAR, THE CIT(APPEALS) OBSERVED THAT THE CLAIM OF CONTRIBUTION TO PROVE SUPERANNUATION FUND HAS TO BE ALLOWED AND DELETED THE DISALLOWANCE MADE BY THE AO. 24. THE LD. DR REITERATED THE STAND OF REVENUE AS C ONTAINED IN GROUND NO.3. WE ARE OF THE VIEW THAT THE STAND TAKEN BY T HE REVENUE CANNOT BE SUSTAINED. THE RECOGNITION OF SUPERANNUATION FUND GRANTED BY THE CIT, LTU IS A DEPARTMENTS OWN DOCUMENT AND THEY CANNOT BE ALLOWED TO DISPUTE THE SAME. 25. THE ONLY GROUND ON WHICH DISALLOWANCE WAS MADE BY THE AO WAS THAT SUPERANNUATION FUND WAS NOT APPROVED. NOW THA T THE APPROVAL IS GRANTED BY THE CIT, LTU, WE ARE OF THE VIEW THAT TH ERE IS NO MERIT IN GROUND NO.3 RAISED BY THE REVENUE. ACCORDINGLY THE SAME I S DISMISSED. ITA NO.1488 & 1660/BANG/2017 PAGE 16 OF 16 26. THE APPEAL BY THE REVENUE IS DISMISSED. 27. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED, WHILE THE APPEAL BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF DECEMBER, 2020. SD/- SD/- ( CHANDRA POOJARI ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 31 ST DECEMBER, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.