DCIT, New Delhi V. M/s. Genpact Infrastructure (Hyderabad) Pvt. Ltd., New Delhi

ITA 2574/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7708 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 06-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RINKU SINGH SENIOR
• Keywords: Set aside
• Section: 10AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2574/DEL./2016 (ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 10 (1), VS. M/S. GENPACT INFRASTRUCTUR E (HYDERABAD) NEW DELHI. PVT. LTD., (NOW MERGED WITH GENPACT INDIA), DELHI INFORMATION TECHNOLOGY PARK, SHASTRI PARK, NEW DELHI 110 053. (PAN : AACCG6568Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : MS. RINKU SINGH, SENIOR DR DATE OF HEARING : 09.04.2019 DATE OF ORDER : 24.04.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DCIT, CIRCLE 10 (1), NEW DELHI (HER EINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 01.02.2016 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-16, NEW DELHI, QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA T HAT :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS CORRECT IN REDUCING THE ITA NO.2574/DEL./2016 2 TELECOMMUNICATION EXPENSES OF RS.11,48,856/- FROM T HE TOTAL TURNOVER OF THE ASSESSEE IGNORING THE FACT THAT THE FREIGHT, TELECOM CHARGES ETC ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR THINGS, INCURRED IN PROVIDING THE SERVICES ARE TO B E EXCLUDED FROM THE EXPORT TURNOVER AND NOT FROM THE TOTAL TURNOVER AS LAID DOWN BY THE HON'BLE APEX COURT IN COMMISSIONER INCOME TA X VS. K. RAVINDRANATHAN NAIR (295 ITR 228 (SC) AND ITAT IN T HE CASE OF ITO VS. SAK SOFT LTD. CHENNAI). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) IS CORRECT IN REDUCING THE M IGRATION/ON JOB TRAINING EXPENSES OF RS.4,77,99,177/- FROM THE TOTA L TURNOVER OF THE ASSESSEE IGNORING THE FACT THAT THE FREIGHT, TE LECOM CHARGES ETC ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR THI NGS, INCURRED IN PROVIDING THE SERVICES ARE TO BE EXCLUDED FROM THE EXPERT TURNOVER AND NOT FROM THE TOTAL TURNOVER AS LAID DO WN BY THE HON'BLE APEX COURT IN COMMISSIONER INCOME TAX VS. K . RAVINDRANATHAN NAIR (295 ITR 228 (SC) AND ITAT IN T HE CASE OF ITO VS. SAK SOFT LTD. CHENNAI). 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER WHILE M AKING THE ADJUSTMENT REDUCED THE AMOUNT OF RS.11,48,856/- CLA IMED BY THE ASSESSEE ON ACCOUNT OF TELECOMMUNICATION EXPENSES F ROM EXPORT TURNOVER BUT ALLOWED TO REMAIN INCLUDED IN THE TOTA L TURNOVER. AO ALSO REDUCED EXPENDITURE OF RS.477,99,177/- ON ACCO UNT OF JOB TRAINING SERVICES AS THE EXPENSES HAVING BEEN INCUR RED IN FOREIGN EXCHANGE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL. FEE LING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.2574/DEL./2016 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 5. SO FAR AS QUESTION OF REDUCING THE AMOUNT OF RS. 11,48,856/- INCURRED ON COMMUNICATION EXPENSES FROM THE EXPORT TURNOVER BY THE AO IS CONCERNED, THE LD. CIT (A) HAS DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE BY RELYING UPON THE DECISION RENDERED BY THE HONBLE HIGH COURT IN CASE OF GENPACT INDIA 203 TAXMAN 632 , THE RATIO OF WHICH IS AS UNDER :- THE EXPORT TURNOVER IN THE NUMERATOR MUST HAVE THE SAME MEANING AS THE EXPORT TURNOVER WHICH IS THE CONSTITUENT ELEMENT OF DENOMINATOR INASMUCH AS THE EXPORT TURNOVER IS PART OF THE TOTAL TURNOVER AND T HERE SHOULD BE UNIFORMITY IN THE INGREDIENTS BOTH THE NUMERATOR AND DENOMINATOR OF THE FORMULA FOR COMPUTATION OF DEDUCTION U/S 10A. 6. HONBLE HIGH COURT FURTHER HELD THAT :- IF THE EXPORT TURNOVER IN THE NUMERATOR IS TO BE A RRIVED AT AFTER EXCLUDING CERTAIN EXPENSES, THE SAME SHOUL D ALSO BE EXCLUDED IN COMPUTING EXPORT TURNOVER AS A COMPONENT OF THE TOTAL TURNOVER IN THE DENOMINATOR SINCE THE TOTAL TURNOVER ALSO INCLUDED EXPORT TURNO VER AND THE COMPONENT EXPORT TURNOVER OF THE NUMERATOR AND DENOMINATOR CANNOT BE DIFFERENT. ITA NO.2574/DEL./2016 4 7. THE LD. CIT (A) HAS RIGHTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AS SUCH, TELECOMMUNICATION EXPENSES AM OUNTING TO RS.11,48,856/- CANNOT BE REDUCED FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10AA OF THE ACT. SO, GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 8. AO HAS REDUCED THE EXPENDITURE OF RS.477,99,177/ - ON ACCOUNT OF JOB TRAINING SERVICE ON THE GROUND THAT THE EXPENSES HAVE BEEN INCURRED IN FOREIGN EXCHANGE. 9. LD. CIT (A) HAS ALSO ALLOWED THESE EXPENSES TO B E PART OF THE EXPORT TURNOVER BY FOLLOWING THE DECISION RENDERED BY HONBLE HIGH COURT IN GENPACT INDIA (SUPRA), THE RATIO OF WHICH IS, THE EXPORT TURNOVER IN THE NOMINATOR IS TO BE ARRIVED A T AFTER EXCLUDING CERTAIN EXPENSES AND THE SAME SHOULD NOT BE EXCLUDE D IN COMPUTING THE EXPORT TURNOVER AS COMPONENT OF TOTAL TURNOVER IN THE DENOMINATOR. 10. THE AO HAS MERELY DECLINED TO INCLUDE THESE EXP ENSES IN THE EXPORT TURNOVER WHILE COMPUTING THE DEDUCTION U/S 1 0A OF THE ACT ON THE GROUND THAT THE ISSUE HAS NOT YET ATTAINED F INALITY AS SLP AGAINST THE ORDER OF HONBLE HIGH COURT IS PENDING ADJUDICATION BEFORE THE HONBLE SUPREME COURT. HOWEVER, NO SUCH JUDGMENT OF THE HONBLE SUPREME COURT HAS BEEN BROUGHT ON RECOR D BY THE ITA NO.2574/DEL./2016 5 REVENUE OVERTURNING THE DECISION OF HONBLE DELHI H IGH COURT RENDERED IN GENPACT INDIA (SUPRA). SO, WE ARE OF THE CONSIDERED VIEW THAT THE EXPENSES ON ACCOUNT OF MIGRATION/JOB TRAINING ARE TO BE REDUCED FROM THE TOTAL TURNOVER ALSO. SO, THERE IS NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT( A), HENCE GROUND NO.2 IS DETERMINED AGAINST THE REVENUE. 11. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF APRIL, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 24 TH DAY OF APRIL, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-16, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.