M/s. Syven Global Services Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 2183/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3538 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISHA KUMARI
• Assessee Lawyers: V K GUPTA
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO. 2183 /DEL/2015 : ASSTT. YEAR : 2010 - 11 M/S SYVEN GLOBAL SERVICES PVT. LTD., 502, MADHUBAN, 55, NEHRU PLACE, NEW DELHI - 110019 VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 7(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A LCS0276Q ASSESSEE BY : SH. V. K. GUPTA, ADV. & SH. NEM SINGH, ADV. REVENUE BY : SMT. MANISHA KUMARI , SR. DR DATE OF HEARING : 17 .01 .201 8 DATE OF PRONOUNCE MENT : 12 .02 .201 8 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 02.12.2013 OF LD. CIT(A) - X , NEW DELHI 2 . THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL READS AS UNDER: THAT THE LD. CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF CLAIM OF RS.3,52,804/ - MADE BY THE AO WITHOUT APPRECIATING FACTS OF THE CASE AND THE LEGAL POSITION IN THIS REGARD. 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF RENDERING IT RELATED EXPORT SERVICES AND FILED THE RETURN OF INCOME ON 30.09.2010 THROUGH E - FILING DECLARING AN INCOME OF RS.14,96,070/ - UNDER THE NORMAL PROVISION OF INCOME AND RS.6,75,97, 109/ - U/S 115JB OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE WAS SELECTED FOR SCRUTINY AND THE AO MADE THE ADDITION OF RS.3,52,804/ - BY OBSERVING IN PARA 2 OF THE ASSESSMENT ORDER DATED 17.08.2012 AS UNDER: ITA NO . 2183 /DE L/201 5 SYVEN GLOBAL SERVICES PVT. LTD. 2 2. PERUS AL OF P&L A/C AND BALANCE SHEET REV EALS THAT ASSESSEE HAS CLAIMED EXEMPTION OF RS.6,64,52,990/ - ON EXPORT TURNOVER OF RS.13,51,66,094/ - . IT WAS NOTICED THAT THE ASSESSEE HAD INCURRED FOREIGN CURRENCY EXPENSES AMOUNTING TO RS.7,17,607/ - ON ACCOUNT OF TRAVEL LING EXPENSES, WHICH HAVE NOT BEEN REDUCED FROM THE EXPORT TURNOVER. THE EXPORT TURNOVER OF THE ASSESSEE AFTER REDUCING THE EXPENDITURE IN THE FOREIGN CURRENCY AMOUNT TO RS.13,44,48,487/ - AGAINST TOTAL TURNOVER OF RS.13,51,66,094/ - . THE PROPORTIONATE EXEMP TION COMES TO RS.6,61,00,186/ - IN PLACE OF RS.6,64,52,990/ - CLAIMED BY THE ASSESSEE. THUS THE ASSESSEE HAS CLAIMED AN EXCESS EXEMPTION OF RS.3,52,804/ - WHICH IS REQUIRED TO BE ADDED BACK TO THE INCOME UNDER THE NORMAL PROVISIONS. ACCORDINGLY A SUM OF RS.3, 52,804/ - IS THEREFORE, BEING ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE COMPANY. (ADDITION RS.3,52,804/ - ) 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE EXPENSES OF FOREIGN EXCHANGE SHOULD NOT BE DEDUCTE D FROM THE EXPORT TURNOVER AND THAT THE SIMILAR EXPENSES HAD NOT BEEN CONSIDERED FOR ANY DEDUCTION WITH RESPECT TO ARRIVING AT THE EXPORT TURNOVER. THE LD. CIT(A), HOWEVER, DID NOT FIND MERIT IN THE SUBMISSION OF THE ASSESSEE BY OBSERVING IN PARAS 2.3 AND 2.4 OF THE IMPUGNED ORDER AS UNDER: 2. 3. AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, THESE GROUNDS ARE FINALIZED AFTER MAKING THE FOLLOWING OBSERVATION: (I) THE A.R. HAS MADE THIS DISALLOWANCE BY ARGUING THAT WHILE CONSIDERING THE EXPORT TURNOVER, THE NET FOREIGN EXCHANGE EARNINGS SHOULD BE CONSIDERED ONLY AFTER THE AMOUNT OF FOREIGN EXCHANGE INCURRED ON TRAVELLING EXPENSES BY THE ASSESSEE. ACCORDINGLY, THE LOGIC OF THE ASSESSING OFFICER WAS THAT THE PURP OSE OF THIS SECTION WAS TO PROMOTE THE INFLOW OF FOREIGN EXCHANGE. ON THE BASIS OF ITA NO . 2183 /DE L/201 5 SYVEN GLOBAL SERVICES PVT. LTD. 3 THIS LOGIC, THE CLAIM U/S 10A H AD BEEN REDUCED BY RS. 3,52,804/ - . (II) THE A.R. OF THE APPELLANT HAS ARGUED THAT ON THE BASIS OF VARIOUS SIMILAR CASES, IT HAS TO BE CONSIDE RED THAT IF THIS AMOUNT HAS TO BE REDUCED FROM THE EXPORT TURNOVER, THE SAME FIGURE SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER. HOWEVER, THE A.R. OF THE APPELLANT DID NOT POINT OUT ANY SPECIFIC CASE WHERE THE FACTS WERE SIMILAR TO THE CASE OF THE APPEL LANT. THE MAIN LOGIC OF THE ASSESSING OFFICER REGARDING THE NET FOREIGN EXCHANGE BENEFIT, HAS NOT BEEN CONSIDERED OR COUNTERED BY THE A.R. OF THE APPELLANT. THE A.R. HAS NOT BEEN ABLE TO PLACE RELIANCE ON ANY OF THE JURISDICTIONAL HIGH COURT DECISION, WHER E THIS ISSUE OF TRAVELLING EXPENSES MADE IN FOREIGN EXCHANGE HAD BEEN EXCLUDED FOR T HE PURPOSE OF TOTAL TURNOVER. 2.4. IN VIEW OF THE FACTS OF THE CASE AND THE ARGUMENTS OF THE ASSESSING OFFICER, I AM INCLINED TO AGREE WITH THE ADDITION MADE BY THE A.O. ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 5 . NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE FOREIGN TRAVELLING EXPENSES WERE REDUCED FROM THE EXPORT TURNOVER, THE SAME ARE TO BE REDUCED FROM THE TOTAL TURNOVER. TH E RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITO VS FIS GLOBAL RECOVERY SERVICES INDIA PVT. LTD. (2017) 59 ITR (TRIB) 485 (DEL.) CIT VS M/S MPHASIS LTD. IN ITA NO. 1075/2008 ORDER DATED 01.08.2014 (A.P.) M/S TATA ELXI LTD. VS ACIT IN ITA NO. 142/2008 ORDER DATED 20.10.2 0 1 4 (KAR.) M/S SASKEN COMMUNICATION TECHNOLOGIES LTD. VS DCIT IN ITA NOS. 1645 & 1646/BANG/2012 ORDER DATED 04.05.2015 (BANG.) PR. CIT VS STERIA INDIA LTD. IN ITA NO. 380/2017 ORDER DATED 10.07.2017 (DEL.) CIT VS M/S GEM PLUS JEWELLERY I NDIA LTD. (2011) 330 ITR 175 (BOM.) ITA NO . 2183 /DE L/201 5 SYVEN GLOBAL SERVICES PVT. LTD. 4 6 . IN HIS RIVAL SUBMISSIONS, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN ID ENTICAL ISSUE HAS BEEN DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CASE PR. CIT - 8 VS STERIA INDIA LTD. VIDE ORDER DATED 10.07.2017 (SUPRA) WHEREIN IT HAS BEEN HELD IN PARA 4 OF THE SAID ORDER AS UNDER: 4. HAVING PERUSED THE SAID JUDGMENTS, THE COURT IS NOT PERSUADED TO TAKE A VIEW DIFFERENT FROM THAT TAKEN BY THE ITAT OR THE BOMBAY HIGH COURT THAT THE TOTAL TURNOVER ALWAYS INCLUDES THE EXPORT TURNOVER AND THAT IF A PARTICULAR ITEM IS NOT PART OF THE EXPORT TURNOVER, IT CANNOT CONSTITUTE A PART OF THE TOTAL TURNOVER EITHER. 8 . SO, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON BLE JURISDICTIONAL HIGH COURT, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE AO IS DIRECTED TO REDUCE THE FOREIGN TRAVELLING EXPENSES OUT OF THE TOTAL TURNOVER A S WELL AS EXPORT TURNOVER WHILE DETERMINING THE DEDUCTION U/S 10A OF THE ACT. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER P RONOUNCED IN THE COURT ON 12 /02 /2018 ) SD/ - SD/ - ( BEENA A. PILLAI ) ( N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 /02 /2018 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR