Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 7249 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 3 month(s) 5 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-11-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
27-07-2017
Assessment Year
2009-2010
Appeal Filed On
18-08-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1506 /BANG/2016 (ASST. YEAR 2009-10) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 5(1)(1), BENGALURU. . APPELLANT VS. M/S NUWARE SYSTEMS PVT. LTD., NO.60, AASHRYA, 4 TH MAIN, 1 ST CROSS, HAL 3 RD STAGE, BENGALURU. . RESPONDENT PAN AABCN0515F. APPELLANT BY : SHRI PRADEEP KUMAR, JCIT RESPONDENT BY : SHRI C RAMESH, C.A DATE OF HEARING : 21-11-2017 DATE OF PRONOUNCEMENT : 23-11-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-12, BANGALORE DATED 1.6.2016 FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- ITA NO.1506/B/16 2 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINE SS OF DEVELOPMENT AND EXPORT OF COMPUTER SOFTWARE, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 20.09.2009 DE CLARING TOTAL INCOME OF RS.45,54,134/- AFTER, INTER ALIA, CLAIMI NG DEDUCTION U/S. 10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ) TO THE TUNE OF RS.18,11,36,634/-. THE CASE WAS TAKEN UP FOR SCRU TINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VID E ORDER DATED 27.12.2012 WHEREIN THE ASSESSEES INCOME WAS DETERM INED AT RS.1,05,87,919/- IN VIEW OF, INTER ALIA, THE ASSE SSING OFFICER (AO) DISALLOWING THE ASSESSEES EXCESS CLAIM FOR DEDUCTI ON U/S. 10A OF THE ACT TO THE EXTENT OF RS.60,33,785/-. ON APPEAL, THE CIT(A)-6, BANGALORE PARTLY ALLOWED THE ASSESSEES APPEAL VIDE ORDER DATED 1.6.2016. IN DOING SO, THE LD. CIT(A) ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION U/S. 10A OF THE ACT FOLLOWING THE DECISIO N OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V TATA ELXS I LTD. (349 ITR 98) (KAR). 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-12, BANGAL ORE DATED 1.6.2016 FOR ASSESSMENT YEAR 2009-10, REVENUE HAS F ILED THIS APPEAL, RAISING THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) - 5, BANGALORE, IS OPPOSED TO THE LAW AND NOT ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.1506/B/16 3 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) ERRED IN LAW IN DIRECTING THE ASSESSING OFFICER TO REDUCE THE EXPENDITURE INCURRED IN TRAV EL, TELECOMMUNICATION ETC, BOTH FROM THE EXPORT TURNOVE R AS WELL AS THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.10A OF THE IT ACT WITH OUT APPRECIATING THE FACT THAT THE STATUE ALLOWS EXCLUS ION OF SUCH EXPENDITURE ONLY FROM THE EXPORT TURNOVER BY W AY OF SPECIFIC DEFINITION OF EXPORT TURNOVER AS ENVISA GED BY SUB-CLAUSE(4) OF EXPLANATION 2 BELOW SUBSECTION 8 OF SECTION 10A. ON THE OTHER HAND, THERE IS NO SPECIFI C PROVISION IN SECTION 10A WARRANTING EXCLUSION OF AB OVE EXPENSES FROM TOTAL TURNOVER ALSO. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED UPON, THE ORDER OF THE GIT(A) MAY BE REVERSED AND T HAT ASSESSMENT ORDER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OTHER GROUNDS ON OR BEFORE HEARING OF TH E APPEAL. THE LD. DR WAS HEARD IN SUPPORT OF THE GROUNDS RA ISED. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENT CITED. AS REGARDS THE ISSUE OF REDUC TION OF THE ITEMS ITA NO.1506/B/16 4 OF EXPENDITURE INCURRED IN FOREIGN CURRENCY SUCH AS TELECOMMUNICATION CHARGES, PROFESSIONAL AND CONSULT ATION FEES, TRAVELLING AND CONVEYANCE EXPENSES ETC.; WHICH ARE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA AND IN RENDERING OF TECHNICAL SERVICES OUTSIDE INDIA, THE JURISDICTIONAL HIGH COU RT OF KARNATAKA IN THE CASE OF CIT V TATA ELXSI LTD (349 ITR 98) (KAR) HAS HELD THAT WHEN CERTAIN EXPENSES ARE EXCLUDED FROM THE EXPORT TURNOVER FOR THE PURPOSES OF COMPUTING DEDUCTION ADMISSIBLE UNDER TH E ACT; LIKE U/S. 10A OF THE ACT, SUCH EXPENSES ARE ALSO TO BE EXCLUD ED FROM TOTAL TURNOVER, AS EXPORT TURNOVER IS A PART OF TOTAL TUR NOVER. THE DECISION IN THE CASE OF TATA ELXSI LTD (SUPRA) HAS ALSO BEEN FO LLOWED BY THE HONBLE COURT IN ITS ORDER IN THE CASE OF DCIT V MO TOR INDUSTRIES CO. LTD., (ITA NO. 776/2006, 744/2007 AND 1155/2006 DAT ED 13.06.2014), HOLDING THAT IF ANY EXPENDITURE IS SOUGHT TO BE REM OVED FROM EXPORT TURNOVER, THEN IT SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER FOR THE PURPOSES OF COMPUTING THE ELIGIBLE DEDUCTION U/S. 1 0A OF THE ACT. IN THIS LEGAL AND FACTUAL MATRIX OF THE CASE, AS DISCU SSED ABOVE, WE FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE FIN DING RENDERED BY THE LD. CIT(A) ON THIS ISSUE, AND THEREFORE UPHOLD THE SAME. CONSEQUENTLY, THE GROUNDS S.NOS. 1 TO 4 RAISED BY R EVENUE ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. ITA NO.1506/B/16 5 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2017 . SD/- SD/- (SUNIL KUMAR YADAV) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED : 23/11/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVAT E SECRETARY, ITAT, BANGALORE
Mehul