DCIT, Cir-1(1), Hyderabad V. M/s. ADP Pvt. Ltd., Hyderabad

ITA 316/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59098 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: SHRI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, A.M. & SMT. ASHA VIJAYARAGHAVAN, J.M. ITA NO.316/HYD/2011 ASSESSMENT YEAR 2005-06 THE DCIT, CIRCLE 1(1), HYDERABAD VS M/S ADP PVT. LTD., HYDERABAD (PAN AAACW 2655 C) APPELLANT RESPONDENT APPELLANT BY : SHRI T. DIWAKAR PRASAD RESPONDENT BY : SHRI PANKAJ JAIN DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 6.1.2012 ORDER PER ASHA VIJAYARAGHAVAN, JM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER PASSED BY THE CIT(A) III, HYDERABAD DATED 12.1.201 1 AND IT PERTAINS TO THE ASSESSMENT YEAR 2005-06. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF COMPUTER SOFTWARE DEVELOPMENT AND R ELATED SOURCES. FOR THE ASSESSMENT YEAR 2005-06, IT HAS FILED RETURN OF INC OME SHOWING LOSS OF RS.1,38,41,745/- AFTER CLAIMING DEDUCTION UNDER SEC TION 10A FOR R.66993665/-. AFTER PROCESSING UNDER SECTION 143(1 ) OF THE ACT, THE SAME WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT DURING THE PREVIOU S YEAR, THE ASSESSEE HAS CLAIMED EXPENSES OF RS.22924711/- TOWARDS SATELLITE DATA LINK FACILITY. ITA NO.316/H/2011 ADP PVT. LTD., HYDERABAD 2 3. THE ASSESSING OFFICER HELD THAT SUCH EXPENSES TOWARDS COMMUNICATION CHARGES BEING CONTRIBUTED TO SOFTWARE OUTSIDE INDIA, THE SAME HAS TO BE EXCLUDED FROM EXPORT TURNOVER CONSID ERED BY THE ASSESSEE FOR COMPUTING ELIGIBLE EXPORT TURNOVER FOR COMPUTAT ION OF DEDUCTION UNDER SECTION10A. 4. AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) HELD AS UNDER:- AS PER THE SUBMISSION OF THE APPELLANT, THE AO HAV ING DEDUCTED SUCH COMMUNICATION CHARGES FROM THE EXPORT TURNOVER, HE OUGHT TO HAVE DEDUCTED THE SAME FROM THE TOTAL TURNOVER FOR COMPU TATION OF DEDUCTION U/S.10A OF THE ACT. IN THIS REGARD, THE APPELLANT FURTHER REFERRED TO THE DECISION OF THE HONBLE JURISDICTIONAL ITAT IN THE CASE OF DE BLOCK INDIA SOFTWARE P LTD VIDE ORDER DATED 31.01.2007, IN ITA NO 983 & 984/H/2006, IN PATNI TELECOM (P) LTD VS ITO (2008) 22 SOT 26 AND THE COMBINED ORDER DATED 03.10.2008 IN ITA NO 479/HYD/0 7 AND ITA NO 142/HYD/08 FOR THE ASSESSMENT YEARS 2003-04 AND 200 4-05 IN THEIR OWN CASE. IN VIEW OF THE ABOVE ORDERS OF THE HONBL E ITAT IN THE CASE OF D.E.BLOCK INDIA (SUPRA) PATNI TELECOM (P) LTD (SUPR A) AND THE SAID ORDER IN THE APPELLANTS OWN CASE FOR THE AY 2003-04 AND 2004-05. 5. THE CIT(A) ALLOWED THE GROUND RAISED BY THE AS SESSEE. 6. AGGRIEVED THE DEPARTMENT IS ON APPEAL BEFORE U S BY RAISING THE FOLLOWING GROUNDS:- 2. THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSES SING OFFICER TO EXCLUDE COMMUNICATION CHARGES OF RS.2,29,24,711/- FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.10A. 3. THE LEARNED CIT(A) OUGHT TO HAVE NOTICED THAT ON THE ISSUE OF EXCLUSION OF COMMUNICATION CHARGES FROM TOTAL TURNO VER, THE CASE LAWS- ITA NO.316/H/2011 ADP PVT. LTD., HYDERABAD 3 ON WHICH HE RELIED UPON HAVE NOT BECOME FINAL AND T HE MATTER IS IN APPEAL BEFORE THE HIGH COURT 7. WE HEARD BOTH THE PARTIES. RESPECTFULLY FOLLO WING THE DECISION OF THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ADP PVT LTD FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO. 106/HYD/2009, WH EREIN THE DECISION OF THE SPECIAL BENCH (CHENNAI) TRIBUNAL IN THE CASE OF ITO VS. SAK SOFT LTD. (3 SOT 55) HAS BEEN FOLLOWED WHEREIN IT HAS BEEN HELD THAT IF DATA LINK CHARGES ARE REDUCED FROM EXPORT TURNOVER, THEN THE SAME SHO ULD ALSO BE REDUCED FROM THE TOTAL TURNOVER. THEREFORE, WE DISMISS THE ABOVE DEPARTMENTAL APPEAL. 8. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT 6.1.2012 SD/- SD/- (CHANDRA POOJARI) ( (ASHA VIJAYA RAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 6 TH JANUARY, 2012 COPY FORWARDED TO: 1. THE DCIT, CIRCLE 1(1), HYDERABAD 2. M/S ADP PVT. LTD., 6-3-1091/C/1, RAJBHAVAN ROAD, HY DERABAD 3. THE CIT(A)- III, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/