DCIT, CHENNAI V. Ajuba Solutions India P Ltd., CHENNAI

ITA 2176/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8154 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B LAKSHMINARAYANAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NOS.2175 & 2176/MDS/2015 ' (' / ASSESSMENT YEARS : 2006-07 & 2007-08 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1(1), CHENNAI - 600 034. V. M/S AJUBA SOLUTIONS INDIA PVT. LTD., 12-02, TIDEL PARK, 4, CANAL BANK ROAD, TARAMANI, CHENNAI - 600 113. PAN : AACCA 8448 D (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SH.B. LAKSHMINARAYANAN, JCIT ,-*+ . / / RESPONDENT BY : SH. K. PARTHASARATHY, SR. MANAGER (FINANCE) 0 . 1$ / DATE OF HEARING : 05.01.2016 2!( . 1$ / DATE OF PRONOUNCEMENT : 22.01.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, CHENNAI, AND PERTAIN TO ASSESSMENT YEARS 2006-07 AN D 2007-08. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THESE APPEALS, 2 I.T.A. NOS.2175 & 2176/MDS/15 WE HEARD THESE APPEALS TOGETHER AND DISPOSING OF TH E SAME BY THIS COMMON ORDER. 2. THE FIRST GROUND OF APPEAL IS REGARDING REDUCTIO N OF TELECOMMUNICATION CHARGES FROM EXPORT TURNOVER AND TOTAL TURNOVER FOR COMPUTING DEDUCTION UNDER SECTION 10A OF THE IN COME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SHRI B. LAKSHMINARAYANAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE CIT(APPEALS) BY FOLLOWING THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN CIT V . SAKSOFT LTD. [313 ITR (AT) 353], DIRECTED THE ASSESSING OFFICER TO EX CLUDE THE TELECOMMUNICATION CHARGES BOTH FROM TOTAL TURNOVER AND EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UND ER SECTION 10A OF THE ACT. ACCORDING TO THE LD. D.R., THE DEPARTM ENT HAS FILED AN APPEAL AGAINST THIS ORDER OF THE SPECIAL BENCH OF T HIS TRIBUNAL BEFORE THE APEX COURT AND THE SAME IS PENDING. 4. WE HEARD SHRI K. PARTHASARATHY, SR. MANAGER (FIN ANCE) OF THE ASSESSEE-COMPANY ALSO. IN FACT, THE SPECIAL BE NCH OF THIS TRIBUNAL IN SAKSOFT LTD. (SUPRA), AFTER EXAMINING T HE PROVISIONS OF LAW, FOUND THAT BOTH NUMERATOR AND DENOMINATOR SHOU LD BE OF SAME 3 I.T.A. NOS.2175 & 2176/MDS/15 FIGURE. THEREFORE, ONCE THE TELECOMMUNICATION CHAR GES ARE EXCLUDED FROM THE EXPORT TURNOVER, THE SAME SHALL B E EXCLUDED FROM TOTAL TURNOVER. THE ONLY CONTENTION OF THE LD. D.R . IS THAT AN APPEAL IS PENDING BEFORE THE APEX COURT AGAINST THE ORDER OF THE SPECIAL BENCH OF THIS TRIBUNAL IN SAKSOFT LTD. (SUPRA). ME RE PENDENCY OF AN APPEAL BEFORE THE APEX COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY FOLL OWED THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN SAKSOFT LT D. (SUPRA). ACCORDINGLY, THE SAME IS CONFIRMED. 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF 5% OF GROSS DIVIDENDS RECEIVED BY THE ASSESSEE, AS EXPENDITURE. 6. SHRI B. LAKSHMINARAYANAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R BY APPLYING RULE 8D OF INCOME-TAX RULES, 1962 DISALLOWED A SUM OF ` 1,01,721/- FOR EARNING THE DIVIDEND INCOME WHICH IS EXEMPTED F ROM TAXATION. ACCORDING TO THE LD. D.R., RULE 8D IS MANDATORY FOR COMPUTING DISALLOWANCE FOR EARNING THE INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME, THEREFORE, THE CIT(APPEALS) IS NOT JU STIFIED IN RESTRICTING THE DISALLOWANCE TO 5% OF GROSS DIVIDEND INCOME REC EIVED, BY PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL I N CELEBRITY 4 I.T.A. NOS.2175 & 2176/MDS/15 FASHIONS IN I.T.A. NOS.1318 & 1319/MDS/2011. ACCOR DING TO THE LD. D.R., THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRIBUNAL IN CELEBRITY FAS HIONS (SUPRA) AND THE APPEAL IS STILL PENDING. 7. WE HEARD SHRI K. PARTHASARATHY, WHO APPEARED FOR THE ASSESSEE, ALSO. THE ASSESSMENT YEARS UNDER CONSIDE RATION ARE 2006-07 AND 2007-08. RULE 8D CAME INTO OPERATION FR OM THE YEAR 2008. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT RULE 8D IS NOT APPLICABLE FOR THE YEARS UNDER CONSIDERAT ION. THEREFORE, THE EXPENDITURE RELATABLE TO EARNING THE EXEMPTED I NCOME, WHICH DOES NOT FORM PART OF TOTAL INCOME, HAS TO BE ESTIM ATED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THIS TRIBUNAL IS ESTIMATING THE DISALLOWANCE 2% TO 5% FOR EARNING EXEMPTED INCOME D EPENDING UPON THE FACTS OF THE CASE. THE CIT(APPEALS), BY P LACING HIS RELIANCE ON THE DECISION OF THIS TRIBUNAL IN CELEBR ITY FASHIONS (SUPRA), ESTIMATED THE DISALLOWANCE AT 5% OF GROSS DIVIDEND INCOME. SINCE THE CIT(APPEALS) RIGHTLY PLACED HIS RELIANCE ON THE DECISION OF THIS TRIBUNAL, WE DO NOT HAVE ANY REASON TO INTERFE RE WITH HIS ORDER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MER E PENDENCY OF 5 I.T.A. NOS.2175 & 2176/MDS/15 APPEAL BEFORE THE HIGH COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THEREFORE, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED ON 22 ND JANUARY, 2016 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 22 ND JANUARY, 2016. KRI. . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-1, CHENNAI-34 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 69 ,1 /DR 6. :' ; /GF.