Assistant Commissioner of Income-Tax, Bangalore V. M/s.KPMG Global Delivery Centre Pvt. Ltd., Bangalore

ITA 1618/BANG/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5325 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 10AA; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1618 /BANG/2016 (ASST. YEAR 2010-11) THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 4(1)(1), BENGALURU. . APPELLANT VS. M/S KPMG GLOBAL DELIVERY CENTRE PVT. LTD., 4 TH FLOOR, TOWER 2D, PHASE-1, VRINDAVAN TECH VILLAGE, DEVARABEESANAHALLI, OUTER RING ROAD, BENGALURU. . RESPONDENT PAN NO.AAACO5735D. C.O NO.48/BANG/2017 (BY ASSESSEE) REVENUE BY : SMT. SWAPNA DAS, JCIT ASSESSEE BY : SHRI RONY ANTONY, C.A DATE OF HEARING : 1-6-2017 DATE OF PRONOUNCEMENT : 2-6-2017 ITA NO.1618/B/16 CO NO.48/B/17 2 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) 4, BANGALORE DATED 21/6/2016 FOR THE ASSESSMENT YEAR 2010-11. THE ASS ESSEE HAS ALSO PREFERRED CROSS OBJECTION (CO) IN RESPECT OF THE IMPUGNED ORDER. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING ITES AND CONSULTANCY SERVICES, FILED ITS RETURN OF INCOME FOR ASST. YEAR 2010-11 ON 23/9/2010 DECLARING NIL INCOME AFTER CLA IMING RS.3,33,70,100/- AS DEDUCTION U/S 10AA OF THE INCOM E-TAX ACT, 1961 (IN SHORT THE ACT). THE CASE WAS TAKEN UP FOR SC RUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 24/3/2014, WHEREIN THE ASSESSEES INCOME WAS DETERM INED AT RS.39,75,105/- IN VIEW OF THE AO DISALLOWING THE AS SESSEES CLAIM FOR DEDUCTION U/S 10AA OF THE ACT TO THE EXTENT OF RS.3 9,75,105/-. ON APPEAL, THE LD CIT(A)-4, BANGALORE ALLOWED THE ASSE SSEES APPEAL VIDE THE IMPUGNED ORDER DATED 21/6/2016, ALLOWING THE AS SESSEES CLAIM FOR DEDUCTION U/S 10AA OF THE ACT, BY FOLLOWING THE DECISION OF THE ITA NO.1618/B/16 CO NO.48/B/17 3 HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. TATA ELXSI LTD., (349 ITR 98) (KAR). 3. REVENUE BEING AGGRIEVED BY THE ORDER OF THE CIT( A), BANGALORE DATED 21/6/2016 FOR ASST. YEAR 2010-11, HAS FILED A N APPEAL BEFORE THE TRIBUNAL AND THE ASSESSEE HAS ALSO FILED A C.O IN R ESPECT OF THE AFORESAID ORDER OF THE CIT(A)-4, BANGALORE. THE AP PEAL OF REVENUE AND THE ASSESSEES C.O WILL BE DISPOSED OFF IN SERI ATUM HEREUNDER. REVENUES APPEAL IN ITA NO.1618/BANG/2016 FOR A.Y 2 010-11 4.1 IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWIN G GROUNDS:- ITA NO.1618/B/16 CO NO.48/B/17 4 4.2 IN THE GROUNDS OF APPEAL RAISED (SUPRA), REVENU E CONTENDS THAT THE LD CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER (AO) TO EXCLUDE THE REIMBURSEMENT OF EXPENDITURE INCURRED I N FOREIGN CURRENCY AMOUNTING TO RS.2,82,28,806/- FROM BOTH E XPORT TURNOVER AS WELL AS FROM TOTAL TURNOVER WHILE COMPUTING DEDUCTI ON U/S 10AA OF THE ACT, FOLLOWING THE DECISION OF THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF TATA ELXSI LTD., (349 ITR 98). IT I S CONTENDED THAT IN DOING SO, THE LD CIT(A) DID NOT APPRECIATE THAT TH ERE IS NO PROVISION IN SEC. 10A OF THE ACT THAT MANDATES THAT SUCH EXPE NSES SHOULD BE REDUCED FROM THE TOTAL TURNOVER AND THAT SUB CLAUSE (IV) OF THE EXPLANATION TO SEC. 10A PROVIDES THAT SUCH EXPENS ES ARE TO BE REDUCED FROM TOTAL TURNOVER ALSO. IT IS SUBMITTE D THAT PROVISIONS OF SEC. 10A ARE ANALOGOUS TO SEC. 10AA OF THE ACT. 4.3 PER CONTRA, THE LD AR FOR THE ASSESSEE SUBMITTE D THAT THE ISSUE IN DISPUTE IN THIS APPEAL I.E OF THE COMPUTATION OF DE DUCTION U/S 10A OF THE ACT IS SQUARELY COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TATA ELXSI LTD. (349 ITR 98) WHICH HOLDS THE GROUND AND IS BINDING. ITA NO.1618/B/16 CO NO.48/B/17 5 4.4 WE HAVE HEARD THE CONTENTIONS OF THE LD DR FOR THE REVENUE AND HAVE PERUSED AND CAREFULLY CONSIDERED THE MATE RIAL ON RECORD: AS REGARDS THE ISSUE OF REDUCTION OF THE REIMBURSEMENT OF EXPENDITURE INCURRED IN FOREIGN CURRENCY AS ARE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA AND IN RENDERING OF TECHNICA L SERVICES OUTSIDE INDIA, THE JURISDICTIONAL HIGH COURT OF KARNATAKA I N THE CASE OF TATA ELXSI LTD., (349 ITR 98) HAS HELD THAT WHEN CERTAIN EXPENSES ARE EXCLUDED FROM THE EXPORT TURNOVER FOR THE PURPOSES OF CLAIMING DEDUCTION ADMISSIBLE UNDER THE ACT, LIKE U/S. 10A OF THE ACT, SUCH EXPENSES ARE ALSO TO BE EXCLUDED FROM TOTAL TURNOVE R, AS EXPORT TURNOVER FORMS PART OF TOTAL TURNOVER. SECTION 10AA OF THE ACT BEING ANALOGOUS TO SEC. 10A OF THE ACT, THE AFORESAID DE CISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF TATA ELXSI LTD. , (SUPRA) WOULD EQUALLY APPLY IN FAVOUR OF THE ASSESSEE IN THE CASE ON HAND FOR COMPUTING ELIGIBLE DEDUCTION U/ S 10AA OF THE ACT. THE DECISION IN THE CASE OF TATA ELXSI LTD., (SUPRA) HAS ALSO BEEN FOLLOWED BY THE HONBLE COURT IN THE CASE OF DCIT VS. MOTOR INDUSTR IES CO. LTD; (ITA NO.776/2006, 744/2007 AND 1155/2006 DATED 13/6 /2014), HOLDING THAT IF ANY EXPENDITURE IS SOUGHT TO BE RED UCED FROM EXPORT ITA NO.1618/B/16 CO NO.48/B/17 6 TURNOVER, THEN IT SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER FOR THE PURPOSES OF COMPUTING THE ELIGIBLE DEDUCTION U/S 10 A OF THE ACT. IN THIS LEGAL AND FACTUAL MATRIX OF THE CASE, AS DISCU SSED ABOVE, WE FIND NO REASON/REQUIREMENT TO INTERFERE WITH OR DEVIATE FROM THE FINDING RENDERED BY THE LD CIT(A) ON THIS ISSUE AND, THEREF ORE, UPHOLD THE SAME. CONSEQUENTLY, FINDING NO MERIT IN THE GROUND S RAISED BY REVENUE (SUPRA) WE DISMISS THE SAME. 5. IN THE RESULT, REVENUES APPEAL FOR THE ASSESSME NT YEAR 2010- 11 IS DISMISSED. ASSESSEES CROSS OBJECTION IN C.O NO.48/BANG/2017 F OR A.Y 2010-11 6. IN VIEW OF REVENUES APPEAL IN ITA NO.1618/BANG/ 2016 FOR ASST. YEAR 2010-11 BEING DISMISSED, THE ASSESSEES C.O IS RENDERED INFRUCTUOUS AND IS ACCORDINGLY DISMISSED AS INFRUCT UOUS. 7. IN THE RESULT, REVENUES APPEAL AS WELL AS THE A SSESSEES CROSS OBJECTION FOR ASST. YEAR 2010-11 ARE DISMISSED. ITA NO.1618/B/16 CO NO.48/B/17 7 ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2017 . SD/- SD/- (VIJAYPAL RAO) (JASON P BO AZ) JUDICIAL MEMBER ACCOUNTANT M EMBER BANGALORE DATED : 2/6/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REG ISTRAR, ITAT, BANGALORE.