Symantec Software and Services India Private Ltd, , Chennai V. DCIT, Corporate Circle 6(2), Chennai

ITA 33/CHNY/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3979 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR M SRINIVASA RAO
• Section: 10AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.33/CHNY/2018 ( )( / ASSESSMENT YEAR : 2013-14 M/S SYMANTEC SOFTWARE AND SERVICES INDIA PVT. LTD., 1/124, SHIVAJI GARDENS, DLF INFO CITY BLOCK NO.1C, 5 TH FLOOR, MONLIGHT STOP, NANDAMBAKKAM POST, RAMAPURAM, MOUNT-POONAMALEE ROAD, CHENNAI - 600 089. PAN : AAKCS 5422 K V. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(2), CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI NIKHIL MUTHA -.+, / 0 / RESPONDENT BY : DR. M. SRINIVASA RAO, CIT 1 / 2% / DATE OF HEARING : 24.09.2018 3') / 2% / DATE OF PRONOUNCEMENT : 05.10.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE ASSESSING OFFICER, DATED 30.10.2017, SUBSEQUENT TO THE DIRECTION OF THE DISPUTE RESOLUTION PANEL DATED 14. 09.2017 AND PERTAINING TO ASSESSMENT YEAR 2013-14. 2 I.T.A. NO.33/CHNY/18 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS COMP UTATION OF DEDUCTION UNDER SECTION 10AA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. WHEN THE APPEAL WAS TAKEN UP FOR HEARING, THE LD . REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT HE I S NOT PRESSING THIS ISSUE. IN VIEW OF THE ABOVE, THE FIRST GROUND OF APPEAL, WHICH RELATES TO DEDUCTION UNDER SECTION 10AA OF THE ACT, IS DISMISSED AS NOT PRESSED. 4. THE NEXT ISSUE ARISES FOR CONSIDERATION IS REDUC TION OF INSURANCE AND TELECOMMUNICATION EXPENDITURE INCURRE D BY THE ASSESSEE IN FOREIGN CURRENCY FROM THE TOTAL TURNOVE R ALSO. 5. SHRI NIKHIL MUTHA, THE LD. REPRESENTATIVE FOR TH E ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER REDUCED THE EX PENDITURE INCURRED BY THE ASSESSEE TOWARDS INSURANCE AND TELE COMMUNICATION FROM THE EXPORT TURNOVER. HOWEVER, THE SAME WAS NO T REDUCED FROM TOTAL TURNOVER. PLACING RELIANCE ON THE JUDGMENT O F APEX COURT IN CIT V. M/S HCL TECHNOLOGIES LTD. IN CA NO.8489-8490 OF 2013 DATED 24.04.2018, THE LD. REPRESENTATIVE SUBMITTED THAT THE APEX COURT FOUND THAT THE EXPENDITURE INCURRED BY THE AS SESSEE ALSO 3 I.T.A. NO.33/CHNY/18 NEEDS TO BE REDUCED FROM THE TOTAL TURNOVER. REFER RING TO CIRCULAR ISSUED BY THE CBDT IN CIRCULAR NO.4/2018 DATED 14 TH AUGUST, 2018, THE LD. REPRESENTATIVE SUBMITTED THAT THE CBDT INST RUCTED ITS OFFICERS THAT TELECOMMUNICATION CHARGES AND INSURAN CE EXPENSES ARE TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TO TAL TURNOVER. IN VIEW OF THIS CIRCULAR, ACCORDING TO THE LD. REPRESE NTATIVE, THE DRP IS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER NO T TO EXCLUDE THE EXPENDITURE INCURRED BY THE ASSESSEE IN FOREIGN CUR RENCY FROM THE TOTAL TURNOVER. 6. WE HEARD DR. M. SRINIVASA RAO, THE LD. DEPARTMEN TAL REPRESENTATIVE ALSO. THE DENOMINATOR AND NUMERATOR SHALL BE OF SAME FACTOR FOR THE PURPOSE OF DEDUCTION UNDER SECT ION 10AA OF THE ACT. THE EXPENDITURE INCURRED BY THE ASSESSEE IN F OREIGN CURRENCY TOWARDS INSURANCE AND TELECOMMUNICATION CHARGES WAS EXCLUDED BY THE ASSESSING OFFICER FROM THE EXPORT TURNOVER. TH EREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SUCH AN EXPENDITURE SHALL ALSO BE EXCLUDED FROM THE TOTAL TURNOVER. MOREOVER , THE CBDT IN CIRCULAR NO.4/2018 DATED 14 TH AUGUST, 2018 INSTRUCTED ITS OFFICERS TO EXCLUDE THE EXPENDITURE INCURRED BY THE ASSESSEE BO TH FROM EXPORT TURNOVER AND TOTAL TURNOVER. THE CBDT FURTHER INST RUCTED ITS OFFICERS 4 I.T.A. NO.33/CHNY/18 NOT TO FILE APPEAL BEFORE THIS TRIBUNAL AND ALSO IN STRUCTED TO WITHDRAW THE APPEALS ALREADY FILED. IN VIEW OF THE ABOVE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER H AS TO EXCLUDE THE EXPENDITURE INCURRED BY THE ASSESSEE IN FOREIGN CUR RENCY FROM TOTAL TURNOVER ALSO. IN VIEW OF THE ABOVE, ORDERS OF ALL THE LOWER AUTHORITIES ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO EXCLUDE THE EXPENDITURE INCURRED BY THE ASSESSEE NO T ONLY FROM EXPORT TURNOVER BUT ALSO FROM TOTAL TURNOVER. 7. THE NEXT ISSUE ARISES FOR CONSIDERATION IS EXPEN DITURE SAID TO BE INCURRED BY THE ASSESSEE IN RESPECT OF EMPLOYEE SEVERANCE PAYMENTS UNDER SECTION 40(A)(IA) OF THE ACT. 8. SHRI NIKHIL MUTHA, THE LD. REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE PROVISION IN R ESPECT OF CERTAIN EMPLOYEES WHO ARE TERMINATED FROM SERVICE. THE PAYMENT WAS MADE IN THE SUBSEQUENT YEAR. REFERRING TO SECT ION 192 OF THE ACT, THE LD. REPRESENTATIVE SUBMITTED THAT THE PAYM ENT OF COMPENSATION FOR EMPLOYEES WHOSE SERVICES WERE TERM INATED, IS NOTHING BUT SALARY. THEREFORE, ACCORDING TO THE LD . D.R., THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX, HENCE, THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. 5 I.T.A. NO.33/CHNY/18 9. WE HEARD DR. M. SRINIVASA RAO, THE LD. DEPARTMEN TAL REPRESENTATIVE ALSO. THE ASSESSEE, IN FACT, HAS NO T INCURRED ANY EXPENDITURE AND THE ASSESSEE ADMITTEDLY MADE A PROV ISION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ONLY ACT UAL EXPENDITURE INCURRED BY THE ASSESSEE HAS TO BE ALLOWED. MERE P ROVISION MADE IN THE ACCOUNTS TO MEET THE EXPENDITURE IN FUTURE C ANNOT BE ALLOWED AS EXPENDITURE WHILE COMPUTING THE TAXABLE INCOME. IT IS OPEN TO THE ASSESSEE TO CLAIM THE ACTUAL AMOUNT SPENT. THE REFORE, THIS ASSESSMENT YEAR IS CONCERNED, IT CANNOT BE DISALLOW ED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 5 TH OCTOBER, 2018 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 5 TH OCTOBER, 2018. KRI. 6 I.T.A. NO.33/CHNY/18 / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. ITO (OSD), DRP-2, BENGALURU 4. PRINCIPAL CIT-6, CHENNAI 5. CIT(TP), CHENNAI 5. 79 -2 /DR 6. ( : /GF.