DCIT, CHENNAI V. M/s. RR Donnelley (I) Outsource P. Ltd., CHENNAI

ITA 1664/CHNY/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61398 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 06-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA IRS
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NOS. 1489 & 1490/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 RR DONNELLEY INDIA OUTSOURCE PVT. LTD. (FORMERLY OFFICE TIGER DATABASE SYSTEMS INDIA PVT. LTD. WHICH MERGED WITH ASTRON APPELLANT DOCUMENT MANAGEMENT PVT. LTD. AND SUBSEQUENTLY RENAMED AS RR DONNELLEY INDIA OUTSOURCE PVT. LTD.), 43A, 1 ST MAIN ROAD, RA PURAM, CHENNAI 600 028. PAN AAACO3370Q VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, ... R ESPONDENT COMPANY CIRCLE-V(1), CHENNAI. AND I.T.A. NOS. 1664 & 1650/MDS/2010 ASSESSMENT YEARS : 2005-06 & 2006-07 THE DEPUTY COMMISSIONER OF INCOME-TAX, APPE LLANT CHENNAI. VS. RR DONNELLEY INDIA OUTSOURCE PVT. LTD., RESPONDENT CHENNAI-600 028. ITA 1489 & 1490/10 ETC. :- 2 -: ASSESSEE BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCATE DEPARTMENT BY : DR. S. MOHARANA, IRS, CIT DATE OF HEARING : 26 TH JULY, 2012 DATE OF PRONOUNCEMENT : 26 TH JULY, 2012 O R D E R PER DR. O.K.NARAYANAN, VICE PRESIDENT THESE FOUR APPEALS RELATE TO THE ASSESSMENT YEARS 2005-06 AND 2006-07. TWO APPEALS ARE FILED BY THE ASSESSEE AND TWO APPEALS ARE FILED BY THE REVENUE. THE APPEALS ARE D IRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS)- V AT CHENNAI DATED 27.7.2010 AND ARISE OUT OF THE A SSESSMENTS COMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1 961. 2. IN THE APPEALS FILED BY THE ASSESSEE, COMMON GRO UNDS ARE AGAINST THE EXCLUSION OF EXPENDITURE IN FOREIGN CUR RENCY INCLUDING TELECOMMUNICATION EXPENDITURE, FROM THE EXPORT TURN OVER. 3. THESE ISSUES ARE DECIDED BY THE INCOME-TAX APPEL LATE TRIBUNAL, SPECIAL BENCH, CHENNAI IN FAVOUR OF THE A SSESSEE, IN THE CASE OF ITO V. SAK SOFT LTD. REPORTED IN 313 ITR(AT ) 353. THEREFORE, THE ASSESSING AUTHORITY IS DIRECTED TO E XCLUDE THE ITA 1489 & 1490/10 ETC. :- 3 -: ABOVE ITEMS NOT ONLY FROM THE EXPORT TURNOVER BUT A LSO FROM THE TOTAL TURNOVER OF THE ASSESSEE. THE ISSUES ARE DEC IDED IN FAVOUR OF THE ASSESSEE. THE ASSESSEE SUCCEEDS IN ITS APPE ALS ON THE ABOVE ISSUES. 4. IN THE APPEALS FILED BY THE REVENUE, THE FIRST G ROUND IS THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED I N ALLOWING DEDUCTION UNDER SEC.10A BEFORE SETTING OFF OF BROUG HT FORWARD DEPRECIATION AND LOSSES. THIS ISSUE WAS CONSIDERED AND DECIDED BY THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI BENCH IN FAVOUR OF THE ASSESSEE, IN THE CASE OF M/S. SCIENTIFIC ATLAN TA INDIA TECHNOLOGY PVT. LTD. (129 TTJ 273). 5. THE REVENUE HAS REFERRED TO A DECISION OF THE KA RNATAKA HIGH COURT RENDERED IN THE CASE OF CIT V. HIMATASI NGIKE SEIDE LTD. (286 ITR 255). 6. BUT IN A RECENT DECISION, THE HONBLE KARNATAKA HIGH COURT HAS CONSIDERED THIS ISSUE AND DECIDED IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT & ANR. VS. YOKOGAWA INDIA LTD. A ND OTHERS, (2012) 246 CTR (KAR) 226. THE SPECIFIC QUESTION CON SIDERED BY THE HIGH COURT IS, WHETHER OR NOT ON THE FACTS AND IN THE ITA 1489 & 1490/10 ETC. :- 4 -: CIRCUMSTANCES, CLAIM UNDER SEC.10A IS TO BE ALLOWED ON THE PROFITS OF THE EOU WITHOUT SETTING OFF OF BROUGHT FORWARD L OSSES OF EARLIER YEARS OF THE NON EOU? THE HONBLE KARNATAKA HIGH C OURT AGAIN HAS CONSIDERED SIMILAR ISSUE AND ARRIVED AT THE SAM E CONCLUSION IN THE CASE OF CIT & ANR. VS. TATA ELXSI LTD. & OTH ERS (247 CTR 334). 7. THEREFORE, IN VIEW OF THE DECISION OF THE ITAT, CHENNAI BENCH AND THE DECISIONS OF THE HONBLE KARNATAKA HI GH COURT, WE HOLD THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) H AS ARRIVED AT A RIGHT CONCLUSION. THIS ISSUE IS DECIDED AGAINST THE REVENUE. 8. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT T HE COMMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN EX CLUDING EXPENDITURE INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURN- OVER AND TOTAL TURNOVER. THIS ISSUE ALREADY STANDS COVERED BY THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. (313 ITR(AT) 353). THE GROUNDS RAISED IN THE APPEALS FILED BY THE REVENUE FAIL. 9. IN RESULT, THE APPEALS FILED BY THE ASSESSEE AR E ALLOWED AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ITA 1489 & 1490/10 ETC. :- 5 -: ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON THURSDAY, THE 26 TH OF JULY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) JUDICIAL MEMBER (DR. O.K.NARAYANAN) VICE-PRESIDENT CHENNAI, DATED THE 26 TH JULY, 2012 MPO* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE