Torry Harris Business Solutions (P) Ltd., Bangalore V. Asst.C.I.T., Bangalore

ITA 315/BANG/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3745 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 02-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Keywords: Business income
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.315/BANG/2016 ASSESSMENT YEAR : 2007-08 M/S. TORRY HARRIS BUSINESS SOLUTIONS (P) LTD., 71, SONA TOWERS, MILLERS ROAD, BENGALURU 560 052. PAN : AAACT7287M VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-12(4), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. R. SREENIVASAN, CA REVENUE BY : SHRI. M. K. BIJU, JCIT DATE OF HEARING : 09.11.2016 DATE OF PRONOUNCEMENT : 11 .11.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS: I. THE OFFICERS BELOW WERE NOT JUSTIFIED IN IGNORIN G THE INCOME OF RS.23,43,473/- FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10 A OF THE IT ACT. ITA NO.315/BANG/2016 PAGE 2 OF 5 II. THE OFFICERS BELOW HAVE NOT PROPERLY GIVEN EFFE CT TO THE ORDER OF CIT (A) IN ITA NO. 127/DCIT C-12(4) / CIT(A)-III/BANG/2013-14 DATED 13/07/2014. III. THE OFFICERS BELOW FAILED TO APPRECIATE THAT A S LONG AS AN ITEM OF INCOME HAS BEEN ASSESSED AS BUSINESS INCOME, SUCH INCOME WILL ALSO QUALIFY FOR DEDUCTION U/S 10 A. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSE L FOR THE ASSESSEE HAD INVITED OUR ATTENTION TO THE ORDER OF THE CIT(A ) PASSED IN FIRST ROUND WITH THE SUBMISSION THAT CIT(A) HAS DIRECTED THE AO TO E XCLUDE CERTAIN EXPENSES EXCLUDED FROM THE EXPORT TURNOVER FROM THE TOTAL TURNOVER, FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF TATA ELXSI LTD., 349 ITR 98. CONSEQUENTLY THE AO HAS PA SSED AN ORDER EXCLUDING THE EXPENSES INCURRED ON TELECOMMUNICATIO N, INSURANCE AS WELL AS EXPENSES INCURRED IN FOREIGN EXCHANGE FROM THE E XPORT TURNOVER AS WELL AS THE TOTAL TURNOVER. 3. ACCORDING TO THE ASSESSEE, THE ENTIRE RECEIPT OF RS.24,43,473/- ARE TO BE EXCLUDED AS IT IS ATTRIBUTABLE TO THE BUSINES S OF THE ASSESSEE. BUT THE AO HAD NOT EXCLUDED THE SAME. THEREFORE, HE HAS NO T COMPLIED WITH THE DIRECTIONS OF THE CIT(A). ITA NO.315/BANG/2016 PAGE 3 OF 5 4. THE ASSESSEE REFERRED TO AN APPEAL BEFORE THE CI T(A) BUT DID NOT FIND FAVOUR WITH HIM AS CIT(A) HAS HELD THAT THE AO HAS PROPERLY PASSED AN ORDER IN COMPLIANCE WITH THE DIRECTIONS OF THE CIT( A). 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AND REITERATED ITS CONTENTIONS; WHEREAS THE LEARNED DR HAS SUBMITTED T HAT IN PARA 7 OF THE ORDER OF THE CIT(A) IN FIRST ROUND, THE CIT(A) HAS DEALT WITH THE EXCLUSION OF THE EXPENSES ON TELECOMMUNICATION, INSURANCE AS WEL L AS THE EXPENDITURE INCURRED ON FOREIGN EXCHANGE FROM THE TOTAL EXPORT TURNOVER, FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF TATA ELXSI (SUPRA), THE CIT(A) HAS DIRECTED THE AO TO EXCLUDE THE EXPEN SES FROM THE TOTAL TURNOVER OF EXPORT. 6. PURSUANCE TO THESE DIRECTIONS, THE AO HAS PASSED THE CONSEQUENTIAL ORDER. FROM THE READING OF THE PARA 7 IN THE CIT(A ), IT IS ABUNDANTLY CLEAR THAT CIT(A) HAS ISSUED DIRECTIONS FOR THE EXCLUSION OF THE EXPENDITURE ON TELECOMMUNICATION, INSURANCE AS WELL AS THE EXPENDI TURE INCURRED ON FOREIGN EXCHANGE FROM THE EXPORT TURNOVER AS WELL A S FROM THE TOTAL TURNOVER. THEREFORE THERE IS NO AMBIGUITY IN THE A SSESSMENT ORDER PASSED CONSEQUENT TO THE ORDER OF THE CIT(A). 7. HAVING CAREFULLY EXAMINED THE ORDER OF THE CIT(A ) PASSED IN FIRST ROUND, WE FIND THAT CIT(A) HAS ISSUED DIRECTIONS FO R THE EXCLUSION OF THE EXPENSES INCURRED ON TELECOMMUNICATION, INSURANCE A S WELL AS EXPENDITURE INCURRED ON FOREIGN EXCHANGE FROM THE EXPORT TURNOV ER AND ALSO FROM THE ITA NO.315/BANG/2016 PAGE 4 OF 5 TOTAL TURNOVER FOLLOWING THE JUDGMENT OF THE JURISD ICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LTD., (SUPRA). FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PARA 7 OF CIT(A) AS UNDER: GROUND NO. 7 TO 11 ARE AGAINST THE REWORKING OF DE DUCTION U/S 10A, AO IN THE ASSESSMENT ORDER HAS EXCLUDED THE EX PENSES ON TELECOMMUNICATION, INSURANCE AS WELL AS EXPENDITURE INCURRED IN FOREIGN EXCHANGE FROM THE EXPORT TURNOVER. HOWEVER THIS AMOUNT IS NOT EXCLUDED FROM THE TOTAL TURNOVER. IN THIS REGA RD APPELLANT HAS RELIED ON THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE TATA ELXSI LIMITED 349 ITR 98. I FIND THIS ISSUE I S SQUARELY COVERED IN FAVOUR OF THE APPELLANT BY THE JURISDICTIONAL HI GH COURT WHICH HAS HELD AS FOLLOWS: IN OTHER WORDS, IF THE EXPORT TURNOVER IN THE NUMER ATOR IS TO BE ARRIVED AT AFTER EXCLUDING CERTAIN EXPENSES, THE SA ME SHOULD ALSO BE EXCLUDED IN COMPUTING THE EXPORT TURNOVER AS A COMP ONENT OF TOTAL TURNOVER IN THE DENOMINATOR. THE REASON BEING THE TOTAL TURNOVER INCLUDES EXPORT TURNOVER. THE COMPONENTS OF THE EX PORT TURNOVER IN THE NUMERATOR AND THE DENOMINATOR CANNOT BE DIFFERE NT. THEREFORE, THOUGH THERE IS NO DEFINITION OF THE TERM TOTAL TUR NOVER IN SECTION 10A, THERE IS NOTHING IN THE SAID SECTION TO MANDATE THA T WHAT IS EXCLUDED FROM THE NUMERATOR THAT IS EXPORT TURNOVER WOULD NE VERTHELESS FORM PART OF THE DENOMINATOR. ITA NO.315/BANG/2016 PAGE 5 OF 5 8. FROM CAREFUL READING OF THE AFORESAID PARA OF THE CIT(A), WE FIND THAT THE CIT(A) HAS NOT GIVEN ANY DIRECTION WITH RESPECT TO OTHER EXPENDITURES INCURRED AND WERE EXCLUDED FROM THE EXPORT TURNOVER . THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS CONFIR MED THE ORDER OF THE AO, PASSED CONSEQUENT TO THE DIRECTIONS OF CIT(A) IN FI RST ROUND. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF NOVEMBER, 2016. SD/- SD/- (A. K. GARODIA) (SUNIL KUMAR YADA V) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE. DATED: 11 TH NOVEMBER, 2016. /NS/ COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.