DCIT Corporate Circle 2(2), CHENNAI V. Infastech Fastening Technologies India Pvt. Ltd., CHENNAI

ITA 2794/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5166 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWIJIT RAKSHIT
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.2794/CHNY/2017 /ASSESSMENT YEAR: 2013-14 THE DY. COMMISSIONER OF- INCOME TAX, CORPORATE CIRCLE-2(2), ROOM NO.512, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.INFASTECH FASTENING TECHNOLOGIES INDIA PVT. LTD., PLOT NO.2-14, ORAGADAM, CHENNAI-602 105 [PAN:AAGCL 5415 L] ( ' /APPELLANT) ( ()' /RESPONDENT) DEPARTMENT BY : MR.AWIJIT RAKSHIT, JCIT ASSESSEE BY : MR.R.VIJAYARAGHAVAN, ADV. + /DATE OF HEARING : 31.05.2018 + / DATE OF PRONOUNCEMENT : 31.05.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE REVENUE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI, IN ITA NO.50/CIT(A )-6/2016-17 DATED 19.09.2017 FOR THE AY 2013-14. 2. M/S .INFASTECH FASTENING TECHNOLOGIES INDIA PVT. LTD., THE ASSESSEE, IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SUPPLY OF ELECTRONIC FASTENERS ITA NO.2794/CHNY/2017 :- 2 -: AND INSTALLATION PRODUCTS FOR TELECOMMUNICATION COM PANIES. IT CLAIMED DEDUCTION U/S.10AA OF THE PROFITS, EARNED FROM THE EXPORT OF ELECTRONIC AT IT SEZ, FOR THE AY 2013-14. WHILE COMPUTING THE DED UCTION U/S.10AA, THE AO HAS REDUCED THE LOSS ON FOREIGN EXCHANGE AND FOREI GN TRAVEL EXPENSES FROM THE EXPORT TURNOVER, HOWEVER, HE HAS REFUSED TO RED UCE THEM FROM THE TOTAL TURNOVER. THE ASSESSEE CLAIMED MAT CLAIM ENTITLE MENT FROM THE AY 2012-13 WHILE GIVING CREDIT FROM THE TAX PAID U/S.115JB, TH E AO ALLOWED THE TAX PORTION ALONE AND DID NOT ALLOW THE SURCHARGE AND THE EDUCA TION CESS. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A) AND T HE LD.CIT(A) ALLOWED THE ASSESSEES APPEAL . 3. AGGRIEVED AGAINST THE ORDER OF THE LD.CIT(A), TH E REVENUE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS: 1 THE ORDER OF THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1 THE CIT(A) ERRED IN DIRECTING THE AO TO RE-COMP UTE THE DEDUCTION BY REDUCING EXCLUSIONS IN THE EXPORT TURNOVER, FROM THE TOTAL TURNOVER AS WELL BY UPHOLDING THE DECISION OF ITAT CHENNAI IN THE CASE OF M/S. SAK SOFT LTD REPORTED I N 313 ITR 353, WHICH WAS NOT ACCEPTED BY THE DEPARTMENT AND PENDING FOR ADJUDICATION. 3.1. THE CIT(A) ERRED IN ALLOWING THE SURCHARGE AND CESS ALSO FOR THE PURPOSE OF MAT CREDIT. 3.2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE DECIS ION OF THE HONBLE ITAT IN THE CASE OF RICHA GLOBAL EXPORTS (P.) LTD. 25 TAXMANN.COM I (DE LHI) [2012] WHEREIN IT WAS HELD THAT SURCHARGE AND EDUCATION CESS ARE NOT PART OF MAT CR EDIT. 4 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE LD. DR PRESENTED THE CASE ON THE LINES OF TH E GROUNDS OF THE APPEAL. ON THE ISSUE OF PARITY IN COMPUTING THE EXP ORT TURNOVER AND TOTAL ITA NO.2794/CHNY/2017 :- 3 -: TURNOVER, THE LD.AR INVITED OUR ATTENTION TO PARA 2 0 OF THE HONBLE SUPREME COURTS DECISION IN THE CASE OF HCL TECHNOLOGIES L TD. & ORS. IN CIVIL APPEAL NOS.8489-8490 OF 2013 DATED 24.04.2018 WHEREIN IT I S HELD THAT THE EXPENSES EXCLUDED FROM EXPORT TURNOVER HAVE TO BE EXCLUDED F ROM THE TOTAL TURNOVER ALSO. OTHERWISE, ANY OTHER INTERPRETATION MAKES THE FORMULA UNWORKABLE AND ABSURD. IN VIEW OF THAT THE CORRESPONDING GROUNDS OF THE REVENUES APPEAL ARE DISMISSED. 5. IN RESPECT OF THE DISALLOWANCE MADE WITH REGARD TO THE SURCHARGE AND THE EDUCATION CESS FOR THE PURPOSE OF MAT CREDIT, T HE LD.AR RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. K.SRINIVASAN REPORTED IN 83 ITR 0346 (SC) AND INVITED TO THE RE LEVANT PORTION OF THE HEAD NOTE AS UNDER - THE LEGISLATIVE HISTORY OF THE FINANCE ACTS, AS AL SO THE PRACTICE INDICATES THAT THE TERM INCOME-TAX AS EMPLOYED IN S. 2 INCL UDES SURCHARGE AS ALSO THE SPECIAL AND THE ADDITIONAL SURCHARGE WHENE VER PROVIDED WHICH ARE ALSO SURCHARGES WITHIN THE MEANING OF ART.271 O F THE CONSTITUTION. AND SUBMITTED THAT THE DECISION RENDERED BY THE LD.CIT(A) DOES NOT REQUIRE ANY INTERFERENCE. 5.1 WE HEARD THE RIVAL SUBMISSIONS AND FIND NO MERI T IN THE SUBMISSIONS MADE BY THE LD.AR. IN VIEW OF THAT THE CORRESPONDIN G GROUNDS OF THE REVENUES APPEAL ARE DISMISSED. ITA NO.2794/CHNY/2017 :- 4 -: 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 31, 2018 , AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 0 /DATED: MAY 31, 2018. TLN + (12 32 /COPY TO: 1. ' /APPELLANT 4. 4 /CIT 2. ()' /RESPONDENT 5. 2 ( /DR 3. 4 ( )/CIT(A) 6. /GF