Income Tax Officer, Ward-16(2), New Delhi V. M/s Teleatlas India (P) Limited,

ITA 3840/DEL/2010

• Counselvise Citation: 384022514 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. : 3840/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD 16(2), NEW DELHI. VS. M/S TELEATLAS INDIA (P) LTD., NOIDA, U.P. PAN: AAAC14487J (APPELLANT) (RESPONDENT+ APPELLANT BY : SHRI R. LAXMAN RESPONDENT BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING : 26-09-2013 DATE OF PRONOUNCEMENT : 04 -10-2013 O R D E R PER B. RAMAKOTAIAH, A.M.: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT(A)-XIX, NEW DELHI, DATED 15/06/201 0 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS RAISED THE FOLLOWING SOLITARY GR OUND IN ITS APPEAL: THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW BY ADM ITTING ADDITIONAL EVIDENCE IN SUPPORT OF THE ASSESSEES CO NTENTION THAT NO FEES WERE CHARGED FOR TECHNICAL SERVICES OUTSIDE INDIA IN VIOLATION OF THE PROVISION OF RULE 46A AND DECIDING THEREBY THAT THE EXPORT TURNOVER SHOULD NOT BE REDUCED BY AN AMO UNT OF RS. 71,58,960/- AS DECIDED BY THE AO. 3. BRIEFLY STATED FACTS ARE, THE ASSESSEE COMPANY M /S TELE ATLAS INDIA PVT. LTD., GOT MERGED WITH M/S INFOTECH ENTER PRISES LTD. VIDE THE HONBLE AP HIGH COURT ORDER DATED 27/01/2006, WITH EFFECT FROM ITA NO. 3840/DEL/2010 M/S TELEATLAS INDIA (P) LTD. 2 01/10/2005. THE ASSESSEE COMPANY WAS IN OPERATION F OR THE PERIOD FROM 01/04/2005 TO 30/09/2005 AND FILED RETURN OF I NCOME ACCORDINGLY FOR AY 2006-07 CLAIMING DEDUCTION U/S 10A OF THE AC T. IN THE COURSE OF ASSESSMENT, THE AO NOTICED THAT AN AMOUNT OF RS. 71 ,58,960/- WAS PAID BY THE ASSESSEE TOWARDS SOFT LINK EXPENSES INC URRED OUTSIDE INDIA AND, HENCE, INVOKING THE EXPLANATION 2 TO S ECTION 10A EXCLUDED THE SAID AMOUNT FROM THE EXPORT TURNOVER W HILE WORKING OUT THE DEDUCTION U/S 10A. 4. ON APPEAL, BEFORE THE CIT(A) IT WAS CONTENDED TH AT THE AMOUNT OF RS. 71,58,960/- INCURRED OUTSIDE INDIA IS NOT AT TRIBUTABLE TO DELIVERY OF ARTICLES OR THINGS OUTSIDE INDIA, THEREFORE, CLA USE (IV) OF EXPLANATION 2 TO SECTION 10A DOES NOT APPLY TO THES E TELECOMMUNICATION EXPENSES, THOUGH, THE SAME WERE I NCURRED OUTSIDE INDIA. ALTERNATIVELY, IT WAS SUBMITTED THAT IF THE AMOUNT IS CONSIDERED AS COMMUNICATION EXPENSES, THE SAME IS TO BE EXCLUD ED FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER. FOR THIS PROPOSITION, ASSESSEE RELIED ON THE DECISION IN THE CASE OF PATNI TELECOM (P) LTD. VS. ITO, 22 SOT 26 AND ALSO THE DE CISION IN THE CASE OF DCIT VS. SOFT SOL SOLUTIONS INDIA LTD. 22 S OT 271. FURTHER THE ASSESSEE ALSO RELIED ON THE SPECIAL BENCH DECIS ION OF THE ITAT, CHENNAI IN CASE OF SAK SOFT LTD., 121 TTJ 865 WHERE IN IT WAS HELD THAT TELECOMMUNICATION CHARGES SHOULD BE EXCLUDED B OTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. 5. THE LEARNED CIT(A) AFTER EXAMINING THE INVOICES HELD THAT THE EXPENDITURE WAS NOT INCURRED FOR PROVIDING SERVICES OUTSIDE INDIA AND NOTHING HAS BEEN CHARGED FROM THE CLIENTS, THEREFOR E, THE EXPORT TURNOVER CANNOT BE REDUCED BY THE SAID AMOUNT AS WA S DONE BY THE AO. ITA NO. 3840/DEL/2010 M/S TELEATLAS INDIA (P) LTD. 3 6. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE US CONTESTING THE ISSUE NOT ON MERITS BUT ONLY ON THE ISSUE OF AD MISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS, PERUSIN G THE MATERIAL ON RECORD AS WELL AS THE ORDERS OF THE REVENUE AUTHORI TIES, WE DO NOT FIND ANY REASON OR MERIT IN THE GROUND RAISED BY THE REV ENUE FOR THE REASON THAT THERE IS NO ADDITIONAL EVIDENCE ADMITTE D BY THE LEARNED CIT(A) AS THE DETAILS FURNISHED BEFORE THE AO WERE ONLY FURNISHED BEFORE THE CIT(A) TO ESTABLISH THAT COMMUNICATION C HARGES INCURRED OUTSIDE INDIA DO NOT PERTAIN OR ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE IND IA. EVEN OTHERWISE ON MERIT, THE ACTION OF THE AO CANNOT BE UPHELD AS THE SAME AMOUNT REQUIRES TO BE EXCLUDED FROM THE TOTAL TURNOVER ALS O. AS SEEN FROM COMPUTATION OF INCOME DONE BY THE AO IN THE ASSESSM ENT ORDER, THE ASSESSEES TOTAL TURNOVER AS PER THE P&L A/C WAS RS . 17,22,73,310/- AND THE ASSESSEES EXPORT TURNOVER WAS ALSO THE SAM E AMOUNT I.E. RS. 17,22,73,310/-. WHAT THE AO DONE WAS THAT HE EX CLUDED RS. 71,58,960/- FROM ONLY EXPORT TURNOVER THEREBY EFFEC TING THE COMPUTATION OF BUSINESS PROFITS AND CORRESPONDINGLY DIS-ALLOWED THE NET DEDUCTION TO THE EXTENT OF RS. 11,86,016/-. IF THE ALTERNATE CONTENTION OF THE ASSESSEE IS TO BE CONSIDERED, SIN CE EXPORT TURNOVER AND TOTAL TURNOVER BEING THE SAME, EVEN AFTER EXCLU DING THE SAID TELECOMMUNICATION EXPENSES, THE PROFITS WILL REMAIN SAME. THEREFORE, THE REVENUE HAS NOT RAISED ANY ISSUE ON MERITS BUT ONLY IT WAS CONTESTED IN THE APPEAL ON THE VIOLATION OF PROVISI ONS UNDER RULE 46A BY THE CIT(A). WE DO NOT FIND ANY EVIDENCE ON RECOR D THAT THE CIT(A) HAS VIOLATED RULE 46A. EVEN OTHERWISE, THE POWERS O F THE CIT(A) ARE CO-TERMINUS WITH THAT OF THE AO, THEREFORE, HE IS WITHIN HIS RIGHTS TO EXAMINE THE ISSUE AFRESH. WE DO NOT FIND ANY MERIT IN THE GROUND RAISED BY THE REVENUE AND ACCORDINGLY, THE SAME IS DISMISSED. ITA NO. 3840/DEL/2010 M/S TELEATLAS INDIA (P) LTD. 4 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 04-10-2013. SD/- SD/- (SAKTIJIT DEY) (B. RAMAKOT AIAH) JUDICIAL MEMBER ACCOUNTANT MEMB ER HYDERABAD, DATED: 4 TH OCTOBER, 2013. KV COPY TO:- 1) ITO, WARD 16(2), ROOM NO. 224, C.R. BUILDING, NEW DELHI. 2) M/S TELEATLAS INDIA (P) LTD., B-11, SECTOR 63, NOIDA, UP 201301. 3) CIT(A)-XIX, NEW DELHI 4) CIT-VI, NEW DELHI 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T ., HYDERABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER