Deputy Commissioner of Income TAx Circle-7(1)(2), Bangalore V. M/s Yahoo Software Development Pvt Ltd , Bangalore

ITA 2512/BANG/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5447 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 23-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: UMASHANKAR GAUTAM
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO.2512/BANG/2017 (ASST. YEAR 2010-11) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-7(1)(2), BANGALORE. . APPELLANT VS. M/S YAHOO SOFTWARE DEVELOPMENT PVT. LTD., TORREY PINES, EMBASSY GOLF LINKS, BUSINESS PARK, OFF INDIRANAGAR, KORAMANGAL INTERMEDIATE RING ROAD, BANGALORE. . RESPONDENT APPELLANT BY : MS. NEERA MALHOTRA, CIT RESPONDENT BY : SHRI UMASHANKAR GAUTAM, ADVOCATE DATE OF HEARING : 20-3-2018 DATE OF PRONOUNCEMENT : 21-3-2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORD ER OF THE CIT(A)-7, BANGALORE DATED 1.9.2017 FOR ASSESSMENT Y EAR 2010-11. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- ITA NO.2512/B/20 17 2 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINES S OF SOFTWARE DEVELOPMENT AND PROVIDING SOFTWARE SOLUTIONS TO ITS CLIENTS, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 8.1 0.2010 DECLARING TOTAL INCOME OF RS.1,44,00,490/- AFTER, INTER ALIA, CLAIMING DEDUCTION U/S. 10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). BOOK PROFITS U/S 115JB OF THE ACT WERE COMPUTED AT RS.1,30,61,04,398/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY . THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DAT ED 20.03.2015 WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT RS. 6,59,61,950/- IN VIEW OF, INTER ALIA, THE RESTRICTION OF THE ASSESSE ES CLAIM FOR DEDUCTION U/S. 10A OF THE ACT. ON APPEAL, THE CIT(A)-3, BANG ALORE PARTLY ALLOWED THE ASSESSEES APPEAL VIDE ORDER DATED 1.9. 2017. IN DOING SO, THE LD. CIT(A) ALLOWED THE ASSESSEES CLAIM FOR DED UCTION U/S. 10A OF THE ACT FOLLOWING THE DECISION OF THE HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT V TATA ELXSI LTD. (349 ITR 98) ( KAR). ITA NO.2512/B/20 17 3 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-7, BANGALO RE DATED 1.9.2017 FOR ASSESSMENT YEAR 2010-11, REVENUE HAS FILED THIS APPEAL, RAISING THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED IT(A) IS OPPOSED TO LA W AND FACTS OF THE CASE. 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CITA) WAS JUSTIFIED IN LAW IN HOLDING THA T THE EXPENDITURE INCURRED TOWARDS DATA LINK CHARGES/ TELECOMMUNICATION CHARGES AND FOREIGN TRAVEL EXPENSES ATTRIBUTABLE TO DELIVERY OF COMPUTER SOFTWARE FOR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S IOA OF THE ACT, WHEREAS SUCH EXCLUSION IS PERMITTED TO ARRIVE AT THE EXPORT TURNOVER ONLY AS PER THE DEFINITIONS GIVEN IN SEC. 1 OA OF THE ACT AND TOTAL TURNOVER HAS NOT BEEN DEFINED IN THE SECTION?' 3. 'WHETHER THE CIT(A) IS CORRECT IN LAW IN FOLLOWI NG THE JUDGMENTS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CH' VS. TATA ELXSI LTD., WHICH HAS NOT BECOME FINAL SINCE THE SAME HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLPS ARE PENDING BEFORE THE HON'BLE APEX COURT'? ITA NO.2512/B/20 17 4 4. FOR THESE AND OTHER GROUNDS THAT MAY HE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. THE LD. DR WAS HEARD IN SUPPORT OF THE GROUNDS RA ISED. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENT CITED. AS REGARDS THE ISSUE OF REDUC TION OF THE ITEMS OF EXPENDITURE INCURRED IN FOREIGN CURRENCY SUCH AS DATA LINK TELECOMMUNICATION CHARGES, AND FOREIGN EXPENSES ETC .; WHICH ARE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE IN DIA, THE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF CIT V TATA E LXSI LTD (349 ITR 98) (KAR) HAS HELD THAT WHEN CERTAIN EXPENSES ARE E XCLUDED FROM THE EXPORT TURNOVER FOR THE PURPOSES OF COMPUTING DEDUC TION ADMISSIBLE UNDER THE ACT; LIKE U/S. 10A OF THE ACT, SUCH EXPEN SES ARE ALSO TO BE EXCLUDED FROM TOTAL TURNOVER AS EXPORT TURNOVER IS A PART OF TOTAL TURNOVER. THE DECISION IN THE CASE OF TATA ELXSI L TD (SUPRA) HAS ALSO ITA NO.2512/B/20 17 5 BEEN FOLLOWED BY THE HONBLE COURT IN ITS ORDER IN THE CASE OF DCIT V MOTOR INDUSTRIES CO. LTD., (ITA NO. 776/2006, 744/2 007 AND 1155/2006 DATED 13.06.2014), HOLDING THAT IF ANY EX PENDITURE IS SOUGHT TO BE REMOVED FROM EXPORT TURNOVER, THEN IT SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER ALSO FOR THE PURPOSES O F COMPUTING THE ELIGIBLE DEDUCTION U/S. 10A OF THE ACT. IN THIS LE GAL AND FACTUAL MATRIX OF THE CASE, AS DISCUSSED ABOVE, WE FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE FINDING RENDERED BY THE LD. CIT(A) ON THIS ISSUE, AND THEREFORE UPHOLD THE SAME. CONSEQUENTLY, THE GROUN DS S.NOS. 1 TO 5 RAISED BY REVENUE ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH, 2018 . (LALIET KUMAR) (JA SON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : /3/2018 VMS ITA NO.2512/B/20 17 6 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVA TE SECRETARY, ITAT, BANGALORE