JCIT, Bangalore V. SLK Software Services Pvt. Ltd., Bangalore

ITA 186/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63703 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SARAVANA
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.186/BANG/2012 (ASSESSMENT YEAR : 2008-09) JOINT COMMISSIONER OF INCOME TAX (OSD), CIRCLE 12(3), BANGALORE-560 001. . APPELLANT. VS. SLK SOFTWARE SERVICES PVT LTD., 563-564, NIRAN ARCADE, NEW BEL ROAD, SANJAYNAGAR, BANGALORE-560 094 . . RESPONDENT. PAN AAECS 7548E APPELLANT BY : S HRI B.SARAVANA . RESPONDENT BY : NONE. DATE OF HEARING : 27.9.2012. DATE OF PRONOUNCEMENT : 12.10.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-III, BANGALORE DT.29.11.2011 FOR ASSE SSMENT YEAR 2005-06. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE-COMPANY (HEREIN AFTER REFERRED TO AS THE ASSESSEE), IN THE BUSINESS OF SOFTWARE DEVELOPMENT SERVICES, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 ON 30.10.2005. THE ASSESSMENT WAS COMPLETED BY AN ORD ER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS 'THE ACT ') ON 30.8.2006. SUBSEQUENTLY, 2 ITA NO.186/BANG/12 PROCEEDINGS WERE INITIATED UNDER SECTION 147 OF THE ACT INTER ALIA IN REGARD TO THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 10A OF THE ACT, A S THE ASSESSING OFFICER WAS OF THE VIEW THAT THE CLAIM WAS NOT IN ORDER AS IT WAS ARRIVED A T WITHOUT EXCLUDING TELECOMMUNICATION EXPENSES AND TRAVEL EXPENSES INCURRED IN FOREIGN CU RRENCY FROM EXPORT TURNOVER, NON- DEDUCTION OF TAX ON PAYMENTS OF LEGAL AND PROFESSIO NAL CHARGES AND ON REMUNERATION TO AUDITORS. THE REASSESSMENT WAS COMPLETED BY AN ORD ER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT ON 27.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.47,04,610. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.27.12.2 010, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). THE LEARNED CIT(APPEALS) DISPOSED OFF THE APPEAL BY ORDER DT.29.11.2011 ALLOWING THE ASSESSEE PARTIAL RELIEF. 3.0 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEA LS) DT.29.11.2011, REVENUE IS NOW IN APPEAL BEFORE US. IN THE GROUNDS RAISED IN THIS APP EAL, IT HAS BEEN CONTENDED AS UNDER : 1. THE ORDER OF THE LEARNED CIT (APPEALS) IN SO FAR AS IT RELATES TO THE FOLLOWING GROUNDS IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT TELECOMMUNICATION EXPENSES OF RS. 70,95,452 AND TRAVEL EXPENSES OF RS. 1,27,33,15 7 ARE TO BE EXCLUDED FROM 'TOTAL TURNOVER' AS WELL WHEREAS SUCH EXCLUSION IS PERMIT TED TO ARRIVE AT THE EXPORT TURNOVER ONLY AS PER THE DEFINITIONS GIVEN IN SECTI ON 10A OF THE ACT AND TOTAL TURNOVER HAS NOT BEEN DEFINED IN THE SECTION. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (APPEALS) IN SO FA R AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING O FFICER MAY BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 4. THE GROUNDS OF APPEAL RAISED AT S.NOS.1, 3 & 4, ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 3 ITA NO.186/BANG/12 5.1 THE SOLE ISSUE OF DISPUTE IN THIS APPEAL IS RAI SED AT GROUND NO.2 , IN THIS GROUND, REVENUE HAS CONTENDED THAT THE LEARNED CIT(APPEALS) ERRED I N HOLDING THAT TELECOMMUNICATION CHARGES AND TRAVEL EXPENSES INCURRED IN FOREIGN EXCHANGE AR E TO BE EXCLUDED BOTH EXPORT TURNOVER AS WELL AS TOTAL TURNOVER WHEREAS THE DEFINITION IN E XPLANATION 2(IV) TO SECTION 10A OF THE ACT PERMITS EXCLUSION OF SUCH EXPENSES FROM EXPORT TURN OVER ONLY. THE LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, FAIRLY CONCEDED THAT THIS ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE KARNATAKA H IGH COURT IN THE CASE OF TATA ELXSI LTD IN ITA NO.70/2009 DT.30.8.2011. 5.2 WE HAVE PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TATA EL XSI LTD IN ITA NO.70/2009 DT.30.8.2011 SQUARELY COVERS THE ISSUE IN DISPUTE IN FAVOUR OF T HE ASSESSEE. RESPECTFULLY FOLLOWING THIS DECISION OF THE HON'BLE KARNATAKA HIGH COURT (SUPRA ), WE UPHOLD THE DECISION OF THE LEARNED CIT(APPEALS) AND, DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE DIRECTING THE ASSESSING OFFICER TO EXCLUDE TELECOMMUNICATION AND TRAVEL EXPENSES IN CURRED IN FOREIGN CURRENCY FOR RENDERING SOFTWARE SERVICES OUTSIDE INDIA BOTH FROM EXPORT TU RNOVER AND TOTAL TURNOVER FOR THE PURPOSES OF COMPUTING THE ELIGIBLE DEDUCTION UNDER SECTION 1 0A OF THE ACT. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2012 . SD/- SD/- (GEORGE GEORGE K) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP