ACIT, CHENNAI V. M/s. New Age Software & Solutions (India) Pvt. ltd., CHENNAI

ITA 2903/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3980 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MURALI MOHAN ADDITIONAL
• Keywords: Assessment record

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI , ! ' ! # . $% & '( BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO.2903/MDS./2016 / ASSESSMENT YEAR : 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2), CHENNAI 600 034. VS. M/S.NEW AGE SOFTWARE & SOLUTIONS (INDIA) PRIVATE LTD., NEW NO.257, OLD NO.125/2, FOURTH FLOOR, ANGAPPA NAICKEN STREET, PARRYS, CHENNAI 600 001. [PAN AACCN 2964 R] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : MR.MURALI MOHAN, ADDITIONAL CIT, D.R /RESPONDENT BY : MR.VIKRAM VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 01 - 06 - 2017 / DATE OF PRONOUNCEMENT : 26 - 07 - 2017 - / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-8, CHENNAI DATED 08.08.2016 PERTAINING TO ASSESSMENT YEAR 2012-13 . ITA NO.2903/MDS./16 :- 2 -: 2. THE FIRST ISSUE IN ITS APPEAL IS THAT THE LD.CI T(A) ERRED IN NOT ACCEPTING THE CONTENTION OF THE AO THAT THE ASSESSE E IS ELIGIBLE FOR 100% OF DEDUCTION U/S.10AA FOR THE FIRST FIVE YEARS BEGINNING FROM A.Y 2007-07, WHEREAS FOR A.Y 2012-13, THE ASSESSMENT YE AR UNDER CONSIDERATION BEING SIXTH YEAR OF THE BUSINESS OF T HE ASSESSEE, THE DEDUCTION U/S.10AA NEEDS TO BE RESTRICTED TO 50%. 3. THE FACTS OF THE ISSUE ARE THAT THE ASSESSEE CL AIMED DEDUCTION U/S.10AA OF THE ACT AT ` 57,45,649/-. THE AO OBSERVED THAT THIS EXEMPTION IS ALLOWABLE AT 100% FOR FIRST FIVE YEARS AND 50% FOR NEXT FIVE YEARS. ACCORDING TO LD. ASSESSING OFFICER , THE ASSESSEE CLAIMED DEDUCTION U/S.10AA OF THE ACT SINCE 2006-07 AND THE PRESENT ASSESSMENT YEAR 2012-13 IS THE SIXTH YEAR AND THE A SSESSEE IS ENTITLED FOR ONLY 50% OF DEDUCTION U/S.10AA OF THE ACT. AG GRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIE D THE APPEAL BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) OBSERVED THAT ASSESSMENT YEAR 2012-13 IS THE 5 TH YEAR OF CLAIM AND NOT 6 TH YEAR AS ALLEGED BY THE AO AND HE GRANTED FULL 100% OF THE CLAIM. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVENUE/ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, NEITHER THE AO NOR THE LD.C IT(A) NOT ITA NO.2903/MDS./16 :- 3 -: MENTIONED THE BASIS ON WHICH THEY CAME TO THE CONCL USION ABOUT THE INITIAL ASSESSMENT YEAR IN WHICH THE ASSESSEE CLAIM ED DEDUCTION U/S.10AA OF THE ACT. IN OUR CONSIDERED OPINION, TH E AO IS REQUIRED TO EXAMINE FROM THE ASSESSMENT RECORDS OF THE ASSESSEE REGARDING INITIAL ASSESSMENT YEAR FROM WHICH THE ASSESSEE CLAIMED DED UCTION U/S.10AA OF THE ACT. ACCORDINGLY, WE REMIT THE ISSUE TO THE FILE OF AO TO EXAMINE THE ISSUE AFRESH WITH REFERENCE TO THE PROF ITS AND GAINS DERIVED FROM EXPORT AND DECIDE ACCORDINGLY. HENCE, THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. THE SECOND ISSUE IS THAT THE LD.CIT(A) ERRED IN HOLDING THAT FOREIGN EXCHANGE GAIN OF ` 79,21,509/- IS RELATABLE TO EXPORT BUSINESS OF THE ASSESSEE AND HENCE THE SAME IS ELIGIBLE FOR DEDUCTION U/S.10AA OF THE ACT. 5.1 THE FACTS OF THE ISSUE ARE THAT THE AO HAD EXC LUDED THE FOREIGN EXCHANGE FLUCTUATION GAIN OF ` 79,21,509/- FOR THE PURPOSE OF COMPUTING DEDUCTION U/S.10AA OF THE ACT. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APP EAL BEFORE THE LD.CIT(A). ON APPEAL, THE LD.CIT(A) FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF PENTASOFT TECHNOLOGIES LTD. ( 347 ITR 578 (MAD.) ), CONCLUDED THAT THE GAIN FROM FOREIGN EXCHANGE ITA NO.2903/MDS./16 :- 4 -: FLUCTUATION IS DIRECTLY RELATABLE TO THE EXPORT BUS INESS OF THE ASSESSEE AND THEREFORE, THE BENEFIT OF SEC.10AA HAS TO BE EX TENDED TO SUCH GAIN. AGAINST THE ORDER OF LD.CIT(A), NOW THE REVEN UE/ASSESSEE IS IN APPEAL BEFORE US. 5.2. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, THE ISSUE TO BE EXAMINED WH ETHER THE FOREIGN EXCHANGE FLUCTUATION DERIVED FROM EXPORT PROCEEDS W ITH REFERENCE TO THE EXPORT BILLS AND BANK ACCOUNT DECIDE ACCORDINGL Y. ACCORDINGLY, WE REMIT THE ISSUE TO THE FILE OF AO TO EXAMINE THE IS SUE AFRESH WITH REFERENCE TO THE GAINS DERIVED FROM FOREIGN EXCHANG E FLUCTUATIONS AND DECIDE ACCORDINGLY. HENCE, THIS GROUND IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. 6. THE THIRD ISSUE IS THAT LD.CIT(A) ERRED IN HOLD ING THAT THE FOREIGN EXCHANGE FLUCTUATION GAIN OF ` 79,21,509/- HAS TO BE INCLUDED IN BOTH EXPORT TURNOVER AS WELL AS TOTAL TURNOVER FOR COMPUTING THE RELIEF U/S.10AA OF THE ACT. 6.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIAL ON RECORD. THIS ISSUE IS AKIN TO THE SECOND ISSUE HERE IN ABOVE. SINCE WE HAVE REMITTED THE ISSUE TO THE FILE OF AO TO EXAMIN E THE ISSUE AFRESH ITA NO.2903/MDS./16 :- 5 -: WITH REFERENCE TO GAINS DERIVED FROM EXPORT AND DEC IDES ACCORDINGLY. ACCORDINGLY, THE AO HAS TO RE-EXAMINE THE ISSUE, A ND ALSO TO TAKE INTO CONSIDERATION OF THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN THE CASE OF SAKSOFT LIMITED (313 ITR 353) (AT)(2009) AND DEC IDE ACCORDINGLY. HENCE, THIS GROUND IS PARTLY ALLOWED FOR STATISTICA L PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 26 TH JULY, 2017, AT CHENNAI. SD/ - SD/ - ! ' # . $ %& ' ( DUVVURU RL REDDY ) ) & / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER () / CHENNAI *+ / DATED: 26 TH JULY, 2017. K S SUNDARAM +,-- ./-0/ / COPY TO: - 1 . / APPELLANT 3. - 1-!' / CIT(A) 5. /23- 4 / DR 2. / RESPONDENT 4. - 1 / CIT 6. 3&-5 / GF