Dy.CIT, Circle-2(3), Hyderabad V. M/s Tanla Solutions Limited, Hyderabad

ITA 234/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69741 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 25-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Services rendered outside India

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 234/HYD/2013 ASSESSMENT YEAR : 2006-07 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 2(3), HYDERABAD. VS. M/S TANLA SOLUTIONS LTD., RESPONDENT HYDERABAD. (PAN AABCT5004H) APPELLANT BY : SHRI Y.V.S.T. SAI RESPONDENT BY : SHRI MOHD. AFZAL DATE OF HEARING : 27/08/2013 DATE OF PRONOUNCEMENT : 27/08/2013 ORDER PER CHANDRA POOJARI, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIREC TED AGAINST THE ORDER PASSED BY THE CIT(A)-III, HYDERABAD DATED 28 /12/2012, FOR ASSESSMENT YEARS 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER FOUND THAT VARIOUS EXPENSES HAD TO BE REDUCED FROM EXPORT TURNOVER. THEREFORE, HE REDUCED FOREIGN TRAVEL EXPENSES, COST OF SERVICES AND PROFESSIONAL CHARGES FROM EXPORT TURNOVER AND R ECALCULATED THE EXEMPTION U/S 10A OF THE ACT. 2 ITA NO. 234/HYD/13 M/S TANLA SOLUTIONS LTD. 3. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE CIT(A) AND IT WAS SUBMITTED DURING APPEAL PROCE EDINGS WITH RESPECT TO FOREIGN TRAVEL EXPENSES THAT THE SAME WE RE INCURRED FOR TRAVEL TO FOREIGN COUNTRIES AS A PART OF THE EX PORT BUSINESS. IT WAS FURTHER STATED THAT THE COST OF SERVICES WAS IN CURRED TOWARDS PREPARATION OF EXPORT OF SERVICES AND NOT FOR DELIV ERY OF SERVICES. FURTHER, HE FILED A WRITTEN SUBMISSION, THE CONTENT S OF WHICH WERE EXTRACTED BY THE CIT(A) IN HIS ORDER AT PAGES 4 & 5 . THE ASSESSEE RELIED UPON THE ORDERS OF THE ITAT IN THE CASES OF DY CIT VS. SOFTOL INDIA LTD., ITA NO. 757/HYD/2006 AND PATNI T ELECOM (P) LTD. VS. ITO, 308 ITR 414. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSE E, THE CIT(A) FOLLOWING THE DECISION OF THE ITAT IN CASE O F PATNI TELECOM (P) LTD. (SUPRA) HELD THAT FOREIGN TRAVEL EXPENSES, COSTS OF SERVICES AND PROFESSIONAL CHARGES RELATED TO THE SO FTWARE EXPORT ARE TO BE REDUCED FROM EXPORT TURNOVER AS HAS BEEN CORRECTLY DONE BY THE ASSESSING OFFICER, BUT, THE SAME ARE AL SO TO BE REDUCED FROM THE TOTAL TURNOVER. ACCORDINGLY, HE DI RECTED THE ASSESSING OFFICER TO REDUCE FOREIGN TRAVEL EXPENSES , COST OF SERVICE AND PROFESSIONAL CHARGES FROM THE TOTAL TU RNOVER. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN DS OF APPEAL: 1. THE LD. CIT(A) ERRED IN LAW IN GRANTING RELIEF T O THE ASSESSEE. 2. THE CIT(A) ERRED IN LAW IN DIRECTING THE ASSESSI NG OFFICER TO REDUCE FOREIGN TRAVEL EXPENSES, COST OF SERVICE AND PROFESSIONAL CHARGES FROM TOTAL TURNOVER THOUGH THE RE IS NO SPECIFIC PROVISION IN LAW FOR SUCH REDUCTION. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RD AND 3 ITA NO. 234/HYD/13 M/S TANLA SOLUTIONS LTD. HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY TH E DECISION OF THE COORDINATE BENCH IN THE CASE OF PATNI COMPUTERS LTD. (SUPRA) AND ALSO SPECIAL BENCH OF THE CHENNAI TRIBUNAL IN T HE CASE OF ITO VS SAKSOFT LTD (313 ITR AT 353) WHEREIN IT WAS HELD THAT EXPENSES EXCLUDED FROM EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER . THE HONBLE KARNATAKA HIGH COURT HAS ALSO TAKEN SIMILAR VIEW IN THE CASE OF CIT VS. TATA ELXSI LTD. & OTHERS, 247 CTR 334 (KAR.). RESPECTFULLY FOLLOWING THE SAID DECISIONS CITED SUPRA WE UPHOLD THE ORDER OF THE CI T(A) IN DIRECTING THE ASSESSING OFFICER TO REDUCE FOREIGN T RAVEL EXPENSES, COST OF SERVICE AND PROFESSIONAL CHARGES FROM TOTAL TURNOVER AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS RE GARD. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27/08/2013. SD/- SD/- (SAKTIJIT DEY) JUDICIAL MEMBER (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 27 TH AUGUST, 2013 KV COPY TO:- 1) DCIT, CIRCLE 2(3), 8 TH FLOOR, B BLOCK, IT TOWERS, MASAB TANK, HYDERABAD 500 004. 2) M/S TANLA SOLUTIONS LTD., TANLA TECHNOLOGY CENTR E, HI- TECH CITY ROAD, MADHAPUR, HYDERABAD 500 081. 3) THE CIT (A)-III, HYDERABAD 4) THE CIT-II, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.