DCIT 7(3), MUMBAI V. TATA INFOTECH LTD, MUMBAI

ITA 3105/MUM/2010

• Counselvise Citation: 310519914 RSA 2010
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM INGLE
• Assessee Lawyers: FIROZE B A NDHYARUJINA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI RAJENDRA SI NGH(AM) ITA NO.3105/M/2010 ASSESSMENT YEAR 2005-06 THE DCIT 7(3), MUMBAI M/S.TATA INFORTECH LTD. ROOM NO.615, 6 TH FLOOR, C/O.TATA CONSULTANCY SERVICES LTD. AAYAKAR BHAVAN, M.K.ROAD, NIRMAL BUILDING, 9 TH FLOOR, MUMBAI 400 020. NARIMAN POINT, MUMBAI 400 021. PAN : AAACT 0176 F APPELLANT RESPONDENT REVENUE BY : MS KUSUM INGLE ASSESSEE BY : SHRI FIROZE B.ANDHYARUJIN A O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 9.12.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING THE REDUCTION OF EXPENSES RELAT ING TO FREIGHT, TELECOMMUNICATION CHARGES AND INSURANCE EXPENDITURE ATTRIBUTABLE TO DELIVERY OF ARTICLES, THINGS OR COMPUTER SOFTWARE INCURRED O UTSIDE INDIA FROM THE TOTAL TURNOVER WHILE WORKING OUT DEDUCTION UNDER SECTION 10A OF THE INCOME-TAX ACT. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FOR THE RELEVANT YEAR WHILE COMPUTING DEDUCTION UNDER SECTION 10A HA D EXCLUDED EXPENSES RELATING TO FREIGHT, TELECOMMUNICATION CHARGES AND INSURANCE EXPENDITURE 2 ATTRIBUTABLE TO THE DELIVERY OF ARTICLE THINGS OR C OMPUTER SOFTWARE INCURRED OUTSIDE INDIA BOTH FROM EXPORT TURNOVER AND TOTAL T URNOVER. AO HOWEVER OBSERVED THAT THOUGH EXPORT TURNOVER HAD BEEN DEFIN ED IN SECTION 10A THE TOTAL TURNOVER HAD NOT BEEN DEFINED AND THEREFORE HE DID NOT EXCLUDE THE ABOVE EXPENSES FROM THE TOTAL TURNOVER. IN APPEAL CIT(A) REFERRED TO THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF SAK S OFT LTD. (121 TTJ 865) IN WHICH THE SPECIAL BENCH HELD THAT FOR THE PURPOSE O F APPLYING THE FORMULA IN SUB SECTION 4 OF SECTION 10B, THE FREIGHT, TELECOMM UNICATION CHARGES OR INSURANCE CHARGES ATTRIBUTABLE TO THE DELIVERY OF A RTICLE OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR THE EXPENSES IF INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA ARE TO BE EXCLUDED BOTH FROM THE EXPORT TURNOVER AND FROM THE TOTAL TURNOVER WHICH A RE THE NUMERATOR AND DENOMINATOR RESPECTIVELY IN THE FORMULA. CIT(A) FOL LOWING THE SAID DECISION OF THE SPECIAL BENCH ALLOWED THE CLAIM OF THE ASSESSEE AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE SUBMIT TED THAT THE ISSUE WAS COVERED THE DECISION OF THE SPECIAL BENCH IN CASE O F SAK SOFT LTD. (SUPRA). THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF K. RAVINDRANATHAN NAIR (29 5 ITR 228). IN REPLY THE LEARNED AR FOR THE ASSESSEE POINTED OUT THAT THE SA ID JUDGMENT OF HONBLE SUPREME COURT HAD ALSO BEEN CONSIDERED BY THE SPECI AL BENCH IN CASE OF SAK SOFT LTD. (SUPRA). 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING REDUCTION OF EX PENSES RELATING TO FREIGHT TELECOMMUNICATION CHARGES AND INSURANCE EXPENSES AT TRIBUTABLE TO THE DELIVERY 3 OF ARTICLE, THINGS OR COMPUTER SOFTWARE INCURRED OU TSIDE THE INDIA FROM TOTAL TURNOVER WHILE WORKING OF DEDUCTION UNDER SECTION 1 0A OF THE INCOME-TAX ACT. THE DEDUCTION UNDER SECTION 10A IS COMPUTED BASED O N THE PROFIT OF BUSINESS IN THE RATIO OF EXPORT TURNOVER TO TOTAL TURNOVER. THE EXPLANATION 2(IV) BELOW SECTION 10A PROVIDES THAT EXPENSES INCURRED IN FORE IGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA OR FREIGHT, TELECO MMUNICATION CHARGES AND INSURANCE CHARGES ATTRIBUTABLE TO DELIVERY OF GOODS OUTSIDE INDIA HAS TO BE EXCLUDED FROM THE EXPORT TURNOVER. THE PHRASE TOTA L TURNOVER HAS NOT BEEN DEFINED. HOWEVER THE SPECIAL BENCH IN CASE OF SAK S OFT LTD. (SUPRA) HAS HELD THAT THE EXPENSES MENTIONED ABOVE HAVE TO BE DEDUCT ED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. IN ARRIVING AT THE SAI D DECISION THE SPECIAL BENCH HAS ALSO CONSIDERED THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF K. RAVINDRANATHAN NAIR (SUPRA) WHICH HAS BEEN RELIED U PON BY THE LEARNED DR. THEREFORE IN OUR VIEW THE CASE OF THE ASSESSEE IS C OVERED BY THE DECISION OF THE SPECIAL BENCH (SUPRA). WE THEREFORE RESPECTFULLY FO LLOWING THE DECISION OF THE SPECIAL BENCH, DO NOT SEE ANY INFIRMITY IN THE ORDE R OF CIT(A) AND THE SAME IS UPHELD. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. 6. ORDER WAS PRONOUNCED IN THE OPEN COURT 20.04.201 1. SD/- SD/- ( D. K. AGARWAL ) (RAJEND RA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 20.04.2011 AT :MUMBAI 4 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CITY CONCERNED 5. THE DR J BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ALK