ITO, Bangalore V. M/s CSR India Pvt. Ltd., Bangalore

ITA 256/BANG/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5640 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BISWARANJAN SASMAL
• Assessee Lawyers: K R VASUDEVAN
• Section: 80G; 154

Judgement Text

IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BENGALURU BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER IT (TP) A NO. 256/BANG/2015 ASSESSMENT YEAR :2010 11 THE INCOME TAX OFFICER, WARD 2(1)(2), BANGALORE. VS. M/S CSR INDIA PVT. LTD., 7 TH FLOOR, WING A, ETAMIN BLOCK, PRESTIGE TECH PARK II, MARATHAHALLI SARJAPUR OUTER RING ROAD, MARATHAHALLI, BANGALORE 560 103 PAN: AAACU4714E APPELLANT RESPONDENT IT (TP) A NO. 506/BANG/2015 & C. O. NO. 71/B/2017 (IN IT (TP) A NO. 256/BANG/2015) ASSESSMENT YEAR :2010 11 M/S CSR INDIA PVT. LTD., BANGALORE 560 103 PAN: AAACU4714E VS. THE INCOME TAX OFFICER, WARD 2(1)(2), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI K. R. VASUDEVAN, ADVOCATE REVENUE BY : SHRI BISWARANJAN SASMAL, CIT (DR) DATE OF HEARING : 13.11.2017 DATE OF PRONOUNCEMENT : 24.01.2018 IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 2 OF 11 O R D E R PER SHRI LALIET KUMAR, JUDICIAL MEMBER : THESE ARE TWO APPEALS FILED BY THE REVENUE AND THE ASSESSEE RESPECTIVELY. THE CROSS OBJECTION IS FILED BY THE ASSESSEE. ALL THE APPEALS AND CROSS OBJECTION ARE AGAINST THE ORDER OF THE IT O, WARD -2(1)(1), BENGALURU, PASSED U/S.143(3) R.W.S.144C(13) OF THE ACT, DT.29.01.2015, IN PURSUANCE TO THE DIRECTIONS OF THE DISPUTE RESOLUTI ON PANEL, FOR THE A. Y. 2010-11. IT(TP)A.256/BANG/2015 BY THE REVENUE : 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE. GROUND S RAISED ARE AS UNDER :- IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 3 OF 11 THE LD. DR OF REVENUE SUBMITTED THAT GROUNDS 1, 7 & 8 ARE GENERAL AND NO SEPARATE ADJUDICATION IS CALLED FOR IN RESPE CT OF THESE GROUNDS. REGARDING REMAINING GROUNDS, HE SUPPORTED THE DRAFT ASSESSMENT ORDER AND HE ALSO FILED WRITTEN SUBMISSIONS WHICH M AINLY SAY THAT IN T. P. ANALYSIS, THE COMPARABILITY CANNOT BE DECIDED ON THE BASIS OF PRECEDENT CASE AS THE FACTS OF EACH CASE ON RECORD NEEDS TO BE ADDRESSED. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF DRP. HE ALSO SUBMITTED THAT THE ISSUE INVOLVED IN GROUND S NO. 2 & 3 IN RESPECT OF CORPORATE TAX IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF TATA ELXSI LTD. AS REPORTED IN 349 ITR 98. REGARDIN G REMAINING GROUNDS ON T P ASPECT, HE SUBMITTED THAT IN RESPECT OF EXCLUSION OF VARIOUS COMPARABLES SUCH AS 1) INFOSYS LTD., 2) TAT A ELXSI LTD. AND 3) KALS INFORMATION SYSTEMS LTD. BEING DISPUTED BY THE REVENUE AS PER GROUND NO. 4 & 5, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF CERNER HEALT HCARE SOLUTIONS PVT. LTD. VS. ITO AS REPORTED IN 79 TAXMANN.COM 64 (BANG) COPY MADE AVAILABLE. REGARDING GROUND NO. 6 AS PER WHICH , THE REVENUE IS DISPUTING THE EXCLUSION OF 4) PERSISTENT SYSTEMS & SOLUTIONS LTD., 5) IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 4 OF 11 SASKEN COMMUNICATIONS TECH LTD. AND 6) PERSISTENT S YSTEMS LTD. ALSO, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY THE SAME TRIBUNAL ORDER. HE SUBMITTED THAT THE REVENUE IS DI SPUTING THE EXCLUSION OF ONE MORE COMPARABLE I.E. R S SOFTWARE INDIA LTD. AS PER GROUND NO. 6 AND FOR THIS COMPARABLE, THE GROUND OF REVENUE MAY BE ALLOWED BECAUSE THE ASSESSEE IS ALSO AGGRIEVED WITH THE EXCLUSION OF THIS COMPARABLE AS PER GROUND NO. 15 OF THE APPEAL OF THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS PER G ROUNDS NO. 2 & 3, THE ISSUE INVOLVED IS ABOUT REDUCTION OF THE EXP ENSES INCURRED IN FOREIGN CURRENCY FROM TOTAL TURNOVER FOR THE PURPOS E OF COMPUTING THE DEDUCTION TO BE ALLOWED U/S 10A BECAUSE SUCH EX PENSES WERE REDUCED BY THE AO FROM EXPORT TURNOVER. AS PER THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F TATA ELXSI LTD. (SUPRA), IT WAS HELD THAT TOTAL TURNOVER IS SUM TOT AL OF DOMESTIC TURNOVER AND EXPORT TURNOVER AND THEREFORE, IF ANY AMOUNT IS REDUCED FROM EXPORT TURNOVER THAN TOTAL TURNOVER ALSO GOES DOWN BY THE SAME AMOUNT AUTOMATICALLY. RESPECTFULLY FOLLOWING T HIS JUDGMENT, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND ACCORDINGLY, GROUNDS 2 & 3 ARE REJECTED. 4. REGARDING REMAINING GROUNDS I.E. GROUNDS 4 TO 6 IN RESPECT OF EXCLUSION OF VARIOUS COMPARABLES, THE ISSUE REGARDI NG EXCLUSION OF R S SOFTWARE INDIA LTD. IS DECIDED IN FAVOUR OF THE R EVENUE IN VIEW OF THIS FACT THAT BOTH SIDES ARE OPPOSED TO EXCLUSION OF THIS COMPARABLE. IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 5 OF 11 IN RESPECT OF THE REMAINING 6 COMPARABLES I.E. 1) I NFOSYS LTD., 2) TATA ELXSI LTD., 3) KALS INFORMATION SYSTEMS LTD., 4) P ERSISTENT SYSTEMS & SOLUTIONS LTD., 5) SASKEN COMMUNICATIONS TECH LTD. AND 6) PERSISTENT SYSTEMS LTD., WE FIND THAT THE TRIBUNAL ORDER RENDERED IN THE CASE OF CERNER HEALTHCARE SOLUTIONS PVT. LTD. VS. I TO (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE. IN THAT CASE, IN PARA 2, THE TRIBUNAL HAS NOTED THAT THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF RENDERING SOFTWARE DEVELOPMENT SERVICES TO ITS AE. IN THE PRE SENT CASE ALSO, THE TPO HAS NOTED IN PARA 4 THAT THE ASSESSEE COMPANY U NDERTAKES SOFTWARE DEVELOPMENT SERVICES UNDER A RESEARCH & DE VELOPMENT AGREEMENT WITH ITS PARENT COMPANY M/S UBINETICS VPT LTD., U. K. IN OUR CONSIDERED OPINION, THE PROFILE OF THE PRESE NT ASSESSEE AND CERNER HEALTHCARE SOLUTIONS PVT. LTD. IS SIMILAR AN D THEREFORE, THIS TRIBUNAL ORDER IS APPLICABLE IN THE PRESENT CASE AN D THERE IS NO MERIT IN THE SUBMISSIONS OF THE LEARNED DR OF THE REVENUE TH AT IN T P CASES, PRECEDENT SHOULD NOT BE FOLLOWED EVEN IF THE PROFIL E OF BOTH ASSESSES IS SIMILAR. RESPECTFULLY FOLLOWING THIS TRIBUNAL OR DER, WE DECLINE TO INTERFERE IN THE DECISION OF THE DRP ABOUT EXCLUSIO N OF 6 COMPARABLES I.E. 1) INFOSYS LTD., 2) TATA ELXSI LTD., 3) KALS I NFORMATION SYSTEMS LTD., 4) PERSISTENT SYSTEMS & SOLUTIONS LTD., 5) S ASKEN COMMUNICATIONS TECH LTD. AND 6) PERSISTENT SYSTEMS LTD. BECAUSE IT WAS HELD BY THE TRIBUNAL IN THIS CASE THAT THESE AR E NOT GOOD COMPARABLES FOR THE REASONS GIVEN BY THE TRIBUNAL I N THIS ORDER AND NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LEA RNED DR OF THE IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 6 OF 11 REVENUE. ACCORDINGLY, GROUND NO. 4 & 5 ARE REJECTED AND GROUND NO. 6 IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. CO NO.71/BANG/2017 BY THE ASSESSEE : 6. REGARDING THE C. O. OF THE ASSESSEE, LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE C. O. IS NOT PRESSED AND ACCORDI NGLY, THE C. O. IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE C. O. OF THE ASSESSEE IS DISMISS ED. IT(TP)A NO.506/BANG/2015 BY THE ASSESSEE : 8. THE ASSESSEE HAS RAISED AS MANY AS 23 GROUNDS BUT I T WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT ONLY GROUNDS NO. 12, 13, 15, 18.1 AND 23 ARE PRESSED AND REMAINING GROUNDS ARE N OT PRESSED. ACCORDINGLY, THESE 5 GROUNDS BEING PRESSED ARE REPR ODUCED AND THESE GROUNDS WILL BE DECIDED ON MERIT AND REMAINING GROU NDS ARE REJECTED AS NOT PRESSED. THESE 5 GROUNDS ARE AS UNDER:- IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 7 OF 11 9. REGARDING GROUND NO. 12 I.E. WORKING CAPITAL ADJUST MENT, IT WAS POINTED OUT BY THE BENCH THAT NO OBJECTION WAS RAIS ED BEFORE DRP ON THIS ASPECT AND AS PER PARA 11.1 OF THE ORDER OF TP O, IT IS STATED THAT THE DETAILED WORKING IS ANNEXED TO THAT ORDER AS AN NEXURE C BUT THAT ANNEXURE HAS NOT BEEN ANNEXED WITH THE ORDER OF TPO FILED WITH THE APPEAL MEMO. IN REPLY, LEARNED AR OF THE ASSESSEE H AD NOTHING TO SAY. HE COULD NOT SHOW THAT ANY OBJECTION WAS RAISED BY THE ASSESSEE ON THIS ISSUE BEFORE DRP. HE ALSO COULD NOT PRODUCE AN NEXURE C TO THE ORDER OF TPO. HENCE, THIS GROUND IS REJECTED BECAUS E THIS OBJECTION WAS NOT RAISED BEFORE DRP AND RELEVANT ANNEXURE TO THE ORDER OF TPO IS NOT MADE AVAILABLE TO US. GROUND NO. 12 IS REJEC TED. IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 8 OF 11 10. REGARDING GROUND NO. 13 I.E. IN RESPECT OF THE ASSE SSEES CLAIM FOR EXCLUSION OF L & T INFOTECH LTD., LEARNED AR OF TH E ASSESSEE PLACED RELIANCE ON THE SAME TRIBUNAL ORDER RENDERED IN THE CASE OF CERNER HEALTHCARE SOLUTIONS PVT. LTD. VS. ITO (SUPRA) AND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA 13 & 14 OF THIS TRIBUNA L ORDER. HE POINTED OUT THAT AS PER THIS TRIBUNAL ORDER, THE TRIBUNAL H AS NOTED THE FINDING OF DRP HYDERABAD IN THE CASE OF SUMTOTAL SYSTEMS INDIA PVT. LTD.AS PER WHICH, THE DRP HELD IN THAT CASE THAT L & T INFOTEC H LTD. SHOULD BE EXCLUDED MAINLY IN VIEW OF HUGE TURNOVER AND HUGE B RAND VALUE. HE SUBMITTED THAT AS PER THIS TRIBUNAL ORDER, THIS IS NOT A GOOD COMPARABLE. LEARNED DR OF THE REVENUE SUPPORTED THE DRP ORDER IN THE PRESENT CASE. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE A LREADY SEEN WHILE DECIDING THE APPEAL OF THE REVENUE THAT THIS TRIBUNAL ORDER IS APPLICABLE IN THE PRESENT CASE. HENCE, RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE DIRECT THE AO/TPO TO EXCLUDE L & T INFOTECH LTD. FROM THE FINAL LIST OF COMPARABLES. GROUND NO. 13 I S ALLOWED. 12. GROUND NO. 15 IS ABOUT INCLUSION OF R S SOFTWARE (I NDIA) LIMITED. AS PER GROUND NO. 6 OF THE APPEAL OF THE REVENUE ALSO, IT IS THE REQUEST OF THE REVENUE THAT THIS COMPARABLE SHOULD NOT BE EXCL UDED. SINCE BOTH SIDES WANT INCLUSION OF THIS COMPARABLE IN THE FINA L LIST OF COMPARABLE, WE HAVE ALLOWED GROUND NO. 6 OF THE REVENUES APPEA L REGARDING THIS COMPARABLE AND WE HAVE HELD THAT THIS COMPARABLE SH OULD NOT BE IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 9 OF 11 EXCLUDED. ACCORDINGLY, GROUND NO. 15 OF THE ASSESSE ES APPEAL IS ALLOWED. 13. REGARDING GROUND NO. 18 IN RESPECT OF NOT ALLOWING OF DEDUCTION OF RS. 25,652/- U/S 80G IN RESPECT OF CONTRIBUTION AMO UNTING TO RS. 151,234/- MADE TOWARDS CALAMITY RELIEF FUND OF KARN ATAKA, LEARNED AR OF THE ASSESSEE SUBMITTED THAT THIS DEDUCTION WA S CLAIMED BUT NOT ALLOWED. THE BENCH POINTED OUT THAT THERE IS NO DIS CUSSION ON THIS ASPECT IN THE DRAFT ASSESSMENT ORDER, ORDER OF DRP AND IN FINAL ASSESSMENT ORDER AND THEREFORE, IT IS NOT CLEAR AS TO WHETHER ANY SUCH DEDUCTION WAS CLAIMED OR NOT. THE BENCH OBSERVED TH AT IF SUCH DEDUCTION IS CLAIMED IN THE RETURN OF INCOME AND IT IS NOT ALLOWED WITHOUT ANY DISCUSSION/OBJECTION, THIS CLAIM CAN BE RAISED U/S 154 BECAUSE IN THAT SITUATION, IT IS AN APPARENT MISTAK E. LEARNED AR OF THE ASSESSEE HAD NOTHING TO SAY. WE DISMISS THIS GROUND WITH THE OBSERVATION THAT THE ASSESSEE CAN RAISE BEFORE THE AO THIS ISSUE U/S 154 AS PER LAW. 14. REGARDING GROUND NO. 23 I.E. IN RESPECT OF INTEREST U/S 234D OF RS. 158,674/-, LEARNED AR OF THE ASSESSEE SUBMITTED THA T IN THE PRESENT CASE, REFUND WAS NOT GRANTED BUT ADJUSTED AGAINST O LD DEMAND AND THEREFORE, SECTION 234D IS NOT APPLICABLE. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 10 OF 11 15. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS PER SE CTION 234D, WHERE ANY REFUND IS GRANTED TO THE ASSESSEE UNDER S ECTION 143 (1) AND NO REFUND IS DUE ON REGULAR ASSESSMENT OR REFUND SO GRANTED U/S 143 91) EXCEEDS THE REFUND AS PER REGULAR ASSESSMENT, T HE ASSESSEE IS LIABLE FOR INTEREST U/S 234D. IN OUR CONSIDERED OPINION, F OR APPLICABILITY OF SECTION 234D, ISSUE OF REFUND VOUCHER IS NOT A PRER EQUIREMENT AND ADJUSTMENT OF REFUND AGAINST OLD DEMAND IS ALSO GRA NTING OF REFUND AND SECTION 234D IS APPLICABLE IF SUCH REFUND IS MO RE THAN THE REFUND ALLOWABLE ON REGULAR ASSESSMENT. IN THIS VIEW OF TH E MATTER, GROUND NO. 23 IS REJECTED. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. 26. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE IS PARTLY ALLOWED, C. O. FILED BY THE ASSESSEE IS DISMISSED AND APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (ARUN KUMAR GARODIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 24 TH JANUARY, 2018. MCN IT (TP) A NOS. 256 & 506/BANG/2015 & C.O. NO. 71/BANG/2017 PAGE 11 OF 11 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.