Appeal details
Counselvise Citation
38621114 RSA 2011
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-05-2012
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2006-2007
Appeal Filed On
07-04-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.386/BANG/2011 ASSESSMENT YEAR : 2006-07 M/S. GOODRICH AEROSPACE SERVICES PRIVATE LTD., SY.NOS. 14/1 & 15/1, MARUTHI INDUSTRIAL ESTATE, PHASE 2, HOODY VILLAGE, WHITEFIELD ROAD, K.R. PURAM HOBLI, BANGALORE 560 048. PAN : AAACB 8857H VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI K.R. GIRISH, C.A. RESPONDENT BY : SHRI SARAVANAN, B., JT. CIT(DR) DATE OF HEARING : 15.05.2012 DATE OF PRONOUNCEMENT : 25.05.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 30.12.2010 OF THE CIT(APPEALS)-I, BANGALORE. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L:- ITA NO.386/BANG/11 PAGE 2 OF 6 1. THE ORDER PASSED BY THE ACIT UNDER SECTION 14 3(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) AND THE LEARNED CO MMISSIONER OF INCOME-TAX (APPEALS)-I, [THE CIT(A)] UNDER SEC TION 250 OF THE ACT, ARE BAD IN LAW AND ON FACTS. 2. THE CIT(A) ERRED IN CONCLUDING THAT OUTWARD FRE IGHT CHARGES SHOULD BE EXCLUDED FROM THE EXPORT TURNOVER , EVEN IF THE SAME WAS NOT SEPARATELY INCLUDED IN THE EXPORT TURN OVER. 2.1 THE CIT(A) ERRED IN DISREGARDING THE DECISION OF THE HYDERABAD BENCH OF THE INCOME-TAX APPELLATE TRIBUNA L (ITAT) IN THE CASE OF PATNI TELECOM (P) LTD. V ACIT [2008] 22 SOT 26 (HYD) AND THAT OF THE MUMBAI BENCH OF THE ITAT IN T HE CASE OF M/S WILLIS PROCESSING SERVICES (INDIA) PRIVATE LIMI TED V ASSISTANT COMMISSIONER OF INCOME-TAX 2010-TIOL-576- ITAT- MUM RELIED UPON BY THE APPELLANT IN SUPPORT ITS CON TENTION THAT FREIGHT EXPENSES OUGHT NOT BE REDUCED FROM THE EXPO RT TURNOVER, SINCE IT WAS NOT INCLUDED IN THE FIRST PLACE. THE CIT(A) AGAIN ERRED IN RELYING ON HIS OWN ORDER IN THE CASE OF AXA TECHNOLOGY SERVICES (INDIA) (P) LTD VIDE ITA NO . 155/DC- 11(1)/A -1/08-09 DATED 20 DECEMBER 2010 [COPY OF TH E ORDER NOT MADE AVAILABLE TO THE APPELLANT] WHEREIN, IT HAD BE EN CONCLUDED THAT FREIGHT CHARGES SHOULD BE PRESUMED TO BE INCLU DED IN THE EXPORT TURNOVER, EVEN IF THEY HAD NOT BEEN SEPARATE LY RECOVERED BY THE EXPORTER. 3. WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A) ERRE D IN HOLDING THAT A CORRESPONDING ADJUSTMENT OF OUTWARD FREIGHT CHARGES NEED NOT BE MADE TO THE TOTAL TURNOVER. 3.1 THE CIT(A) GROSSLY ERRED IN NOT FOLLOWING THE JURISDICTIONAL DECISION OF THE BANGALORE BENCH OF T HE ITAT IN THE APPELLANTS OWN CASE FOR AY 2004-05 AND AY 2005-06 WHICH WERE ISSUED IN FAVOUR OF THE APPELLANT ON THE VERY SAME LEGAL ISSUE. 3.2 THE CIT(A) ALSO ERRED IN DISREGARDING THE DECI SION OF THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF IN COME-TAX- 8 V M/S GEM PLUS JEWELLERY LIMITED (2010 233 CTR 24 8 (BOM) AND SPECIAL BENCH OF THE CHENNAI ITAT IN THE CASE O F ITO V. SAKSOFT LTD (2009 313 ITR 353 (ITAT-CHENNAI-SB) AND VARIOUS OTHER JURISDICTIONAL DECISIONS RENDERED BY THE BANG ALORE BENCH OF THE ITAT WHERE-IN IT WAS, INTER ALIA, HELD THAT ANY ADJUSTMENT MADE TO EXPORT TURNOVER OUGHT TO BE MADE EVEN FRO M TOTAL TURNOVER FOR SECTION L0B PURPOSES. ITA NO.386/BANG/11 PAGE 3 OF 6 3.3 THE CIT(A) AGAIN ERRED IN RELYING ON HIS OWN O RDER IN THE CASE OF M/S BIOPLUS LIFE SCIENCES PVT LTD IN ITA NO S. 127 & 139/DC-11(2)/A-I/08-09 & 09-10 DATED 4 OCTOBER 2010 [COPY NOT MADE AVAILABLE TO THE APPELLANT] TO SUPPORT HIS VIEW THAT NO ADJUSTMENT OF FREIGHT CHARGES IS WARRANTED FROM TOT AL TURNOVER. 4. THE CIT(A) ERRED IN CONCLUDING THAT, IN ABSENCE OF DEFINITION OF TOTAL TURNOVER IN SECTION L0B OF THE ACT, THE SAME CANNOT BE CONSTRUED FROM DEFINITION OF TOTAL TURNOV ER AS PROVIDED IN SECTION 8OHHC/8OHHE OF THE ACT AND SUCH DEFINITI ON OF TOTAL TURNOVER IS RESTRICTED TO THOSE SECTIONS ONLY BY RE LYING ON HIS ORDER IN THE CASE OF M/S. HEALTH ASSYST PVT LTD, VI DE, IN ITA NO. 53/W-11(2)/A-I/08-09 DATED 26AUGUST 2010. THE CIT(A) ERRED IN NOT TAKING COGNIZANCE OF THE DE CISION OF THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V DREDGING CORPORATION OF INDIA [1988] 174 ITR 682 AND INCOME- TAX APPELLATE TRIBUNAL IN NEYVELI LIGNITE CORPORATION LIMITED V. ACIT [2004] 93 TTJ 685 , WHEREIN IT HAS BEEN HELD THAT UNLESS THE CONTEXT OTHERWISE REQUIRES, THE DEFINITION OF AN EX PRESSION CONTAINED IN THE ACT SHOULD PREVAIL THROUGHOUT THE ACT. 5. THE CIT(A) ERRED IN NOT DELETING INTEREST UNDE R SECTION 234B OF THE ACT LEVIED BY THE ACIT. THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER, BY D ELETION, SUBSTITUTION OR OTHERWISE, THE ABOVE GROUNDS OF APP EAL, AT ANY TIME BEFORE OR DURING THE HEARING OF THE APPEAL. THE APPELLANT SUBMITS THAT THE ABOVE GROUNDS ARE IN DEPENDENT, AND WITHOUT PREJUDICE TO ONE ANOTHER. 3. GROUND NO.1 IS GENERAL IN NATURE, SO DO NOT REQU IRE ANY COMMENTS ON OUR PART. 4. VIDE GROUND NOS. 2 TO 4, THE GRIEVANCE OF THE AS SESSEE RELATES TO THE DEDUCTION U/S. 10B OF THE INCOME-TAX ACT, 1961 [HER EINAFTER REFERRED TO AS THE ACT IN SHORT]. 5. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THA T THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE AND EXPORT OF EVACUATION SLIDES, GENERAL ITA NO.386/BANG/11 PAGE 4 OF 6 AVIATION LIFE RAFTS AND AIRCRAFT SEATING SYSTEMS. THE ASSESSEE FILED RETURN OF INCOME ON 30.11.2006 DECLARING NIL INCOME AFTER CLA IMING DEDUCTION U/S. 10B OF THE ACT OF Q 6,88,66,986 WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INCURRED EXPENSES OF Q 29,93,044 TOWARDS COMMUNICATION, Q 1,31,17,980 FOR FREIGHT EXPENSES AND Q 47,90,983 FOR FOREIGN TRAVEL. THE AO WAS OF THE VIEW THAT OUT OF THE ABOVE EXPENSES, ONLY THE EXPENSES TOWARDS OUTWARD FREIGHT AMOUNTING TO Q 1,31,17,980 WERE ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR TH INGS OR COMPUTER SOFTWARE OUTSIDE. THE AO EXCLUDED THOSE EXPENSES FROM THE E XPORT TURNOVER BUT NOT FROM THE TOTAL TURNOVER WHILE WORKING OUT THE DEDUC TION U/S. 10B OF THE ACT. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A ), WHO CONFIRMED THE ACTION OF THE AO. NOW THE ASSESSEE IS IN APPEAL. 7. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COU RT DATED 24.12.2011 IN ASSESSEES OWN CASE IN ITA NO.19/2009, COPY OF THE SAID JUDGMENT WAS FURNISHED. 8. THE LD. DR IN HIS RIVAL SUBMISSIONS ALTHOUGH SUP PORTED THE ORDER OF THE AUTHORITIES BELOW, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. 9. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PA RTIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS BEEN DECIDED IN FAVOUR OF THE ASS ESSEE IN ASSESSEES OWN ITA NO.386/BANG/11 PAGE 5 OF 6 CASE BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 24.10.2011 IN ITA NO.19 OF 2009, WHEREIN BY FOLLOWI NG ITS EARLIER JUDGMENT DATED 30.08.2011 IN THE CASE OF CIT V. M/S. TATA ELXSI LTD. IN ITA NO.70/2009 & ORS., THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARAS 1 & 2 OF THE AFORESAID REFERRED TO ORDER DATED 24.10.2011 IN ASSESSEES OWN CASE, WHICH READ AS UNDER:- THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE TRIBUNAL. THE QUESTION THAT ARISES F OR CONSIDERATION IN THIS APPEAL IS WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT WHEN COMPUTING THE RELIEF UNDER SECTION 10-A OF THE INCOME-TAX ACT, 1961 THE AMOUNT OF COMMUNICATION EXPENSES/FREI GHT, INSURANCE, TELECOMMUNICATION EXPENSES AND EXPENSES INCURRED IN FOREIGN CURRENCY SHOULD BE EXCLUDED FROM THE TOTAL TURNOVER FOR THE SAME ARE REDUCED FROM EXPORT TURNOVER. 2. THIS QUESTION HAD COME UP FOR CONSIDERATION BEFO RE THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. TATA ELXSI LTD., IN ITA NO.70/2009 AND OTHER CONNEC TED CASES DISPOSED OFF ON 30 TH AUGUST, 2011. AFTER REFERRING TO VARIOUS JUDGMENTS AND REFERRING TO VARIOUS EXPENSES IT WAS HELD THAT WHILE COMPUTING THE CONSIDERATION RECEIVED FRO M SUCH EXPORT TURNOVER, THE EXPENSES INCURRED TOWARDS FREIGHT, TELECOMMUNICATION CHARGES, OR INSURANCE ATTRIBUTABL E TO THE DELIVERY OF THE ARTICLES OR THINGS OF COMPUTER SOFT WARE OUTSIDE INDIA, OR EXPENSES IF ANY INCURRED IN FOREIGN EXCHA NGE IN PROVIDING THE TECHNICAL SERVICE OUTSIDE INDIA SHOUL D NOT BE INCLUDED. THE JUDGMENT PASSED BY THE TRIBUNAL IS I N CONSONANCE WITH THE LAW DECLARED BY THIS COURT. THEREFORE, WE DO NOT SEE ANY MERIT IN THIS APPEAL. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVO UR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. FROM THE ABOVE, IT IS CLEAR THAT THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT DATED 24.10. 2011 OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORESAID REFERRED TO ASSESSEES OWN CASE IN ITA NO.386/BANG/11 PAGE 6 OF 6 ITA NO. 19 OF 2009. WE THEREFORE SET ASIDE THE IMP UGNED ORDER OF THE LD. CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. 11. AS REGARDS TO GROUND NO.5 RELATING TO CHARGING OF INTEREST U/S. 234B OF THE ACT, IT WAS THE COMMON CONTENTION OF BOTH TH E PARTIES THAT IT IS CONSEQUENTIAL IN NATURE. WE ORDER ACCORDINGLY. 12. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF MAY, 2012. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH MAY , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.
