ACIT, CHENNAI V. M/s. Financial Software & Systems Pvt. Ltd., CHENNAI

ITA 2037/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8313 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 04-07-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . . ' #$ , % &' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ] ./ I.T.A.NO.2037/MDS/2016 / ASSESSMENT YEAR : 2006-07 THE ASSTT. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 2(1) CHENNAI VS. M/S FINANCIAL SOFTWARE & SYSTEMS PVT. LTD SARADA APARTMENTS 42, IIIRD MAIN ROAD GANDHI NAGAR ADYAR, CHENNAI 600 020 [PAN AAACF 2351 C] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI SHIVA SRINIVAS, JCIT /RESPONDENT BY : SHRI ASHIK SHAH, CA / DATE OF HEARING : 22 - 0 9 - 2016 ! / DATE OF PRONOUNCEMENT : 30 - 0 9 - 2016 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-6, CHENNA I DATED 29.4.2016 FOR ASSESSMENT YEAR 2006-07. 2. GROUND NO.1 IS GENERAL IN NATURE WHICH RE QUIRES NO SPECIFIC ADJUDICATION. ITA NO. 2037/16 :- 2 -: 3. GROUND NO. 2 AND 3 ARE RELATED TO THE EXCLUSION OF TRAVEL EXPENSES BY THE ASSESSING OFFICER FROM THE EXPORT T URNOVER. THE ASSESSEE COMPANY IS ENGAGED IN PROVIDING SOFTWARE A ND RELATED SERVICES IN BANKING AND FINANCIAL SECTOR. THE ASSES SEE IS HAVING OFFICES AT MUMBAI AND CHENNAI. WHILE MUMBAI IS ONLY A NON S TPI UNIT DEALING WITH PURCHASE AND INSTALLATION OF ATM MACHINES, THE CHENNAI BRANCH HAS GOT BOTH STPI AND NON STPI UNITS. FOR THE A.Y.2 006-07 THE ASSESSEE HAS CLAIMED THE AMOUNT OF ` 5694320/- EXPENDITURE UNDER THE FOREIGN TRAVEL EXPENSES AND ` 4439742/- RELATING TO INTERNET CHARGES. SINCE THE EXPENDITURE TOWARDS TRAVELLING A MOUNTING TO ` 5694320/- INCURRED OUTSIDE INDIA IN FOREIGN CURREN CY, THE ASSESSING OFFICER EXCLUDED THE EXPENSES FROM THE EXPORT TURNO VER. THE ASSESSING OFFICER ALSO ESTIMATED THE SUM OF ` 2219871/- 50% OF THE INTERNET CHARGES AS ATTRIBUTABLE TO THE DELIVERY OF COMPUTER SOFTWARE OUTSIDE INDIA AND EXCLUDED FROM THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 10B. HE ARGUED BEFORE THE ASSESSING OFFICER TO CONSIDER EXCLUSION OF THE EXPENSES BOTH FROM THE EXPORT TURNOVER AS WELL AS TOTAL TURNOVER. BUT THE ASSESSI NG OFFICER REJECTED THE ASSESSEES EXPLANATION. 4. THE ASSESSEE WENT ON APPEAL TO THE CIT(A ) AND THE LD. CIT(A) ALLOWED THE APPEAL AND DIRECTED THE ASSESSING OFF ICER TO EXCLUDE THE ITA NO. 2037/16 :- 3 -: TURNOVER BOTH FROM THE EXPORT TURNOVER AS WELL AS T OTAL TURNOVER. THE CIT(A) RELIED ON HONBLE SPL BENCH DECISION IN THE CASE OF ITO VS SAK SOFT LTD REPORTED IN 313 ITR 353 AND THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF LAKSHMI MACHINE WORKS REPORTED IN 290 ITR 667 AND THE HONBLE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF GEM PLUS JEWELLERY REPORTED IN 330 ITR 175. 5. THE LD.A.R DURING THE APPEAL RELIED ON THE DECISION PUNE TRIBUNAL DECISION IN THE CASE OF ACIT VS SERUM INST ITUTE OF INDIA LTD. REPORTED IN 121 TTJ 865. 6. ON THE OTHER HAND THE LD D.R RELIED ON THE ASSESSING OFFICERS ORDER. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. THE LD.CIT(A) ALLOWED THE RELIEF PLACING RELIANCE ON HONBLE SPL. BENCH DECISION IN THE CASE OF SAK SOFT LTD. CI TED SUPRA AND THE LD. DR DID NOT BRING ANY MATERIAL TO CONTROVERT THE DEC ISIONS RELIED UPON BY THE LD.CIT(A). THEREFORE WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD.CIT(A) AND UPHOLD THE ORDER OF THE CIT(A) AN D DISMISS THE REVENUES GROUNDS. ITA NO. 2037/16 :- 4 -: 8. IN THE RESULT, THE APPEAL OF THE REVENUE STA NDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( . . ' #$ ) (D.S. SUNDER SINGH) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 30 TH SEPTEMBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF