DCIT Corporate Circle 3(2), CHENNAI V. Verizon Data Services India Pvt. Ltd., CHENNAI

ITA 2403/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7393 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 29-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDI PR
• Keywords: Revenue expenditure
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2397/CHNY/2017 ' (' / ASSESSMENT YEAR : 2010-11 M/S VERIZON DATA SERVICES INDIA PRIVATE LIMITED, 8 TH FLOOR, CITIUS BLOCK, PLOT NO.1, SIDCO INDUSTRIAL ESTATE, GUINDY, CHENNAI - 600 032. PAN : AABCV 1758 N V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE III(4), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) ./ ITA NO.2403/CHNY/2017 ' (' / ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI - 600 034. V. M/S VERIZON DATA SERVICES INDIA PVT. LTD., OLYMPIA TECHNOLOGY PARK, ALTIUS BLOCK, 9 TH FLOOR, NO.1, SIDCO INDUSTRIAL ESTATE, GUINDY, CHENNAI - 600 032. (*+/ APPELLANT) (,-*+/ RESPONDENT) './ 0 1 /ASSESSEE BY : SHRI SRIRAM SESHADRI, CA 2 0 1 /REVENUE BY : SHRI SAILENDRA MAMIDI, PR.CIT 3 0 /$ / DATE OF HEARING : 26.06.2018 4!( 0 /$ / DATE OF PRONOUNCEMENT : 24.07.2018 2 I.T.A. NO.2397/CHNY/17 I.T.A. NO.2403/CHNY/17 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH ASSESSEE AND REVENUE HAVE FILED THE PRESENT APPEALS AGAINST THE VERY SAME ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -11, CHENNAI, DATED 29.06.2017 PERTAINING TO ASSESSMENT YEAR 2010-11. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. LETS FIRST TAKE REVENUES APPEAL IN I.T.A. NO. 2403/CHNY/2017. 3. THE ONLY ISSUE ARISES FOR CONSIDERATION IS COMPU TATION OF DEDUCTION UNDER SECTION 10A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 4. WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND THE LD. REPRESENTATIVE FOR THE ASSESSEE. THE ASSESSING OFF ICER INCLUDED HELP DESK SERVICE AND TRAVEL EXPENDITURE IN THE EXP ORT TURNOVER, HOWEVER, EXCLUDED THE SAME FROM TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 10A OF THE A CT. THE CIT(APPEALS) BY PLACING RELIANCE ON THE ORDER OF SP ECIAL BENCH OF THIS TRIBUNAL IN SAK SOFT LTD. (30 SOT 55), FOUND T HAT THE EXPORT 3 I.T.A. NO.2397/CHNY/17 I.T.A. NO.2403/CHNY/17 TURNOVER AND TOTAL TURNOVER SHALL BE OF THE SAME FA CTOR. ONCE, THE HELP DESK SERVICE AND TRAVEL EXPENDITURE WERE EXCLU DED FROM TOTAL TURNOVER, THE SAME SHALL ALSO BE EXCLUDED FROM EXPO RT TURNOVER. SINCE THE CIT(APPEALS) HAS FOLLOWED THE ORDER OF SP ECIAL BENCH OF THIS TRIBUNAL, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY TH E SAME IS CONFIRMED. 5. NOW COMING TO THE ASSESSEES APPEAL IN I.T.A. NO.2397/CHNY/2017, THE FIRST ISSUE ARISES FOR CONSI DERATION IS WITH REGARD TO VOLUNTARY DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. 6. BOTH THE LD. REPRESENTATIVE FOR THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY AGREED THAT THIS ISSUE WAS CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNA L IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2011-12 AND THIS TRIBUNAL BY PLACING RELIANCE ON THE JUDGMENT OF BOM BAY HIGH COURT IN GEM PLUS JEWELLERY INDIA LTD. (194 TAXMAN 192) F OUND THAT IN RESPECT OF VOLUNTARY DISALLOWANCE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10A OF THE ACT. IN VIEW OF THE ABOVE, WE 4 I.T.A. NO.2397/CHNY/17 I.T.A. NO.2403/CHNY/17 ARE UNABLE TO UPHOLD THE ORDERS OF THE LOWER AUTHOR ITIES. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE D ISALLOWANCE MADE UNDER SECTION 40(A)(IA) AND 43B OF THE ACT FOR THE PURPOSE OF DEDUCTION UNDER SECTION 10A OF THE ACT. 7. THE NEXT ISSUE ARISES FOR CONSIDERATION IS EXPEN DITURE INCURRED BY THE ASSESSEE ON PURCHASE OF RANDOM ACCE SS MEMORY CARDS FOR COMPUTER EQUIPMENTS. 8. WE HEARD THE LD. REPRESENTATIVE FOR THE ASSESSEE AND THE LD. D.R. THIS ISSUE WAS ALSO CONSIDERED BY THE CO- ORDINATE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2011-12. THIS TRIBUNAL FOUND THAT THE EXPENDITURE INCURRED ON RANDOM ACCESS MEMO RY CARDS FOR COMPUTERS IS REVENUE EXPENDITURE. SINCE THE CO-ORD INATE BENCH OF THIS TRIBUNAL FOUND THAT THE EXPENDITURE INCURRED B Y THE ASSESSEE FOR PURCHASING RANDOM ACCESS MEMORY CARDS IS REVENUE EX PENDITURE, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE COST OF RANDOM ACCESS MEMORY CARDS AS REVENUE EXPENDITUR E. 5 I.T.A. NO.2397/CHNY/17 I.T.A. NO.2403/CHNY/17 9. THE NEXT ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO INTEREST PAID ON BELATED REMITTANCE OF SERVICE TAX. 10. THIS ISSUE WAS ALSO CONSIDERED BY THE CO-ORDINA TE BENCH OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2011-12. THIS TR IBUNAL FOUND THAT THE INTEREST PAID ON THE DELAYED PAYMENT OF SERVICE TAX IS ONLY COMPENSATORY IN NATURE, THEREFORE, THE SAME HAS TO BE ALLOWED. IN VIEW OF THE DECISION OF CO-ORDINATE BENCH OF THIS T RIBUNAL IN THE ASSESSEE'S OWN CASE, THE ORDERS OF BOTH THE AUTHORI TIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO TREAT THE INTEREST PAID ON THE DELAYED PAYMENT OF SERVICE TAX AS REVEN UE EXPENDITURE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN I.T.A. NO.2403/CHNY/2017 IS DISMISSED. HOWEVER, THE ASSES SEES APPEAL IN I.T.A. NO.2397/CHNY/2017 IS ALLOWED. ORDER PRONOUNCED ON 24 TH JULY, 2018 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 24 TH JULY, 2018. KRI. 6 I.T.A. NO.2397/CHNY/17 I.T.A. NO.2403/CHNY/17 0 ,/78 98(/ /COPY TO: 1. './ /ASSESSEE 2. ASSESSING OFFICER 3. 3 :/ () /CIT(A)-11, CHENNAI-34 4. PRINCIPAL CIT-3, CHENNAI. 5. 8; ,/ /DR 6. <' = /GF.