Robert Bosch Engineering and Business Solutions Limited, Bangalore V. DCIT, Bangalore

ITA 412/BANG/2011

• Counselvise Citation: 41221114 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 12-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M TIRUMALA KUMAR I
• Assessee Lawyers: PERCY PARDIWALA SR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.412/BANG/2011 ASSESSMENT YEAR : 2007-08 ROBERT BOSCH ENGINEERING & BUSINESS SOLUTIONS LTD., (FORMERLY ROBERT BOSCH INDIA LTD.), HOSUR ROAD, KORAMANGALA, BANGALORE. PAN : AAACR 7108R VS. THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PERCY PARDIWALA, SR. COUNSEL RESPONDENT BY : SHRI M. TIRUMALA KUMAR, CIT(DR)-I DATE OF HEARING : 07.01.2014 DATE OF PRONOUNCEMENT : 22.01.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D ATED 22.03.2011 OF CIT(APPEALS), LTU, BANGALORE. ITA NO.412 /BANG/2011 PAGE 2 OF 11 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINE SS OF DEVELOPMENT OF SOFTWARE, DEALING IN AUTOMOBILE COMP ONENTS, DEVELOPMENT OF MECHANICAL AND ELECTRONIC DESIGNS, TRANSLATIONS, DOCUMENTATION ETC. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS ENTITLED TO DE DUCTION U/S. 10A IN RESPECT OF ITS PROFITS DERIVED FROM THE BUSINESS OF MANUFACTURE AND EXPORT OF COMPUTER SOFTWARE. THE ASSESSEE CLAIMED A SUM O F RS.102,24,99,897 AS DEDUCTION U/S. 10A OF THE ACT. IN THE AUDIT REP ORT IN FORM 56F FILED BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S. 10A OF THE ACT, THE ASSESSEE EXCLUDED COMMUNICATION CHARGES, EXPENDITURE INCURRE D IN FOREIGN CURRENCY FROM EXPORT TURNOVER AND ALSO FROM THE TOTAL TURNOV ER. 3. THE AO REFERRED TO CLAUSE (IV) OF EXPLANATION 2 OF SECTION 10A OF THE ACT WHICH DEFINES EXPORT TURNOVER, WHICH READS AS U NDER:- 'EXPORT TURNOVER' MEANS THE CONSIDERATION IN RESP ECT OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTE R SOFTWARE RECEIVED IN, OR BROUGHT INTO, INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB-SECTION (3) , BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATION CHARGES OR INSUR ANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THI NGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRE D IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSID E INDIA; SECTION-10A(4) OF THE ACT PRESCRIBES THAT THE PROFI TS DERIVED FROM THE BUSINESS OF MANUFACTURE AND SALE OF COMPUTER SOFTWA RE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS, THE SAME PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. ITA NO.412 /BANG/2011 PAGE 3 OF 11 4. ACCORDING TO THE AO, COMMUNICATION CHARGES AND EXPENSES INCURRED IN FOREIGN CURRENCY, AS PER THE ABOVE EXPL ANATION, HAD TO BE EXCLUDED FROM THE EXPORT TURNOVER. HE ALSO REFERRE D TO THE DECISION OF THE ITAT CHENNAI BENCH IN THE CASE OF CALIFORNIA SOFTWARE CO. LTD. V. ACIT, 118 TTJ 844 , WHEREIN IT WAS HELD THAT WHAT IS EXCLUDED FROM TH E EXPORT TURNOVER NEED NOT BE REDUCED FROM THE TOTAL TURNOVER. FOLLOWING THE AFORESAID DECISION, THE AO REFUSED TO EXCLUDE COMMU NICATION CHARGES AND EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTA L TURNOVER AND COMPUTED DEDUCTION U/S. 10A OF THE ACT BY REDUCING THE COMMU NICATION CHARGES AND EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE EXPO RT TURNOVER ALONE. CONSEQUENTLY, DEDUCTION U/S. 10A WAS ALLOWED BY THE AO AT A SUM OF RS.81,62,37,207. 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE P REFERRED APPEAL BEFORE THE CIT(APPEALS). THE ASSESSEE RAISED SPECI FIC GROUND OF APPEAL BEFORE THE CIT(A) REGARDING EXCLUSION OF EXPENDITUR E INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER. ACCORDING TO TH E ASSESSEE, THE EXPENDITURE INCURRED IN FOREIGN CURRENCY IN THE FIR ST PLACE OUGHT TO BE EXCLUDED FROM THE EXPORT TURNOVER ALSO. GROUNDS NO .2 & 3 RAISED BY THE ASSESSEE BEFORE THE CIT(A) IN THIS REGARD READ AS F OLLOWS:- 2. THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE E XCLUDED EXPENDITURE IN FOREIGN CURRENCY IN A SUM OF RS. 92, 43,87,701 FROM THE EXPORT TURNOVER RELATING TO EXPORT OF COMP UTER SOFTWARE. ITA NO.412 /BANG/2011 PAGE 4 OF 11 3. THAT THE ASSESSING OFFICER OUGHT TO HAVE HELD T HAT THE EXCLUSION OF EXPENDITURE IN FOREIGN CURRENCY FROM T HE EXPORT TURNOVER CONTEMPLATED IN CLAUSE (IV) OF EXPLANATION TO SEC 10A IS APPLICABLE ONLY TO EXPORT TURNOVER FROM PROVIDIN G TECHNICAL SERVICES OUTSIDE INDIA AND DOES NOT APPLY TO EXPORT OF COMPUTER SOFTWARE. 6. ALTERNATIVELY, THE ASSESSEE SUBMITTED THAT WHATE VER IS EXCLUDED FROM THE EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM TH E TOTAL TURNOVER AND IN THIS REGARD, RAISED A SPECIFIC GROUND BEING GROUND NO.5, WHICH READS AS FOLLOWS:- 5. WITHOUT PREJUDICE TO GROUND 2 & 3, THE LEARNED AO ERRED IN NOT REDUCING FROM THE TOTAL TURNOVER TELECOMMUNI CATION CHARGES OF RS. 7,76,45,192/- AND EXPENDITURE INCURR ED IN FOREIGN CURRENCY OF RS.92,43,87,701/- WHILE COMPUTING DEDUC TION U/S. 10A OF THE ACT. 7. IN RESPECT OF GROUNDS 2 & 3, THE ASSESSEE SUBMIT TED BEFORE THE CIT(A), SINCE IN THE FORMULA PRESCRIBED IN SECTION 10A(4). EXPORT TURNOVER OF THE STP UNDERTAKING REPRESENTS THE NUMERATOR AND TH E TOTAL TURNOVER REPRESENTS THE DENOMINATOR AND FURTHER BECAUSE, THE WORD EXPORT TURNOVER IS DEFINED BUT TOTAL TURNOVER IS NOT DEFINED, APPLY ING THE WELL-KNOWN PRINCIPLES OF CONSTRUCTION THAT MEANING OF WORDS AN D EXPRESSIONS USED IN THE ACT MUST TAKE THEIR COLOUR FROM THE CONTEXT IN WHICH THEY APPEAR, THE AO OUGHT TO HAVE ACCEPTED THE ASSESSEES STAND THAT THE ADJUSTMENTS CARRIED TO ARRIVE AT THE EXPORT TURNOVER NEEDS TO B E APPLIED TO TOTAL TURNOVER ALSO. THE ASSESSEE CONTENDED THAT THE EXCLUSION CL AUSE IN THE PROVISIONS OF CLAUSE (IV) OF EXPLANATION TO SEC 10A REFERS TO TWO ITEMS. THE FIRST ITEM ITA NO.412 /BANG/2011 PAGE 5 OF 11 IS FREIGHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFT WARE OUTSIDE INDIA. THIS EXCLUSION CAN ONLY BE WITH REFERENCE TO A CASE WHER E THE DEDUCTION U/S.10A(1) IS CLAIMED BY AN ASSESSEE ENGAGED IN THE BUSINESS OF EXPORT OF COMPUTER SOFTWARE. THE SECOND ITEM OF EXCLUSION IS EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHN ICAL SERVICES OUTSIDE INDIA. THIS EXCLUSION CAN BE ONLY WITH REFERENCE T O A CASE WHERE EXPENDITURE IN FOREIGN EXCHANGE IS INCURRED IN PROV IDING TECHNICAL SERVICES OUTSIDE INDIA. THE ASSESSEE SUBMITTED THAT IT WAS I N THE BUSINESS OF EXPORT OF COMPUTER SOFTWARE, THE ADJUSTMENT CONTEMPLATED T HEREIN DOES NOT APPLY. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWIN G DECISIONS WHEREIN IT WAS HELD THAT SUCH EXCLUSION WAS NOT REQUIRED TO BE MADE WHEN EXPENDITURE WAS INCURRED IN CONNECTION WITH DEVELOP MENT OF SOFTWARE:- - HONBLE ITAT, BANGALORE BENCHS DECISION IN THE CAS E OF M/S INFOSYS LTD. VS JCIT/DCIT (ITA NOS. 50,793 TO 795,7 42 TO 734 DT. 31.03.2005). - HONBLE ITAT, HYDERABAD BENCHS DECISION IN THE CAS E OF M/S PATNI TELECOM PVT. LTD. VS ITO (2009) 308 ITR (A.T. ) 414. 8. IT WAS SUBMITTED THAT IN THE AFORESAID ORDERS TH E JURISDICTIONAL ITAT AS WELL AS THE HYDERABAD BENCH OF THE TRIBUNAL HELD THAT EXCLUSION OF EXPENSES INCURRED IN FOREIGN EXCHANGE FROM THE EXPO RT TURNOVER WAS NOT REQUIRED TO BE MADE WHEN THE ASSESSEE DID NOT RENDE R ANY INDEPENDENT TECHNICAL SERVICES BUT INSTEAD INCURRED THE SAME FO R THE DEVELOPMENT OF ITA NO.412 /BANG/2011 PAGE 6 OF 11 SOFTWARE. A COPY OF THE SOFTWARE PROJECTS AGREEMENT (SPA) ENTERED INTO BETWEEN ROBERT BOSCH GMBH GERMANY AND THE ASSESSEE WAS FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS. POINTI NG OUT TO THE AFORESAID AGREEMENTS IT WAS SUBMITTED THAT THE OBJECT OF THE SPA WAS PERFORMANCE OF SOFTWARE DEVELOPMENT WORK TO BE UNDERTAKEN BY THE A SSESSEE. ATTENTION WAS ALSO DRAWN TO ANNEXURE A TO FORM NO. 56F PRODUC ED BY THE ASSESSEE WHICH INDICATED THAT THE NATURE OF BUSINESS OF THE UNDERTAKING WAS DEVELOPMENT OF SOFTWARE. 9. THE CIT(APPEALS) DID NOT CONSIDER THE ABOVE SUB MISSIONS MADE BY THE ASSESSEE. ON GROUND NO.5, THE CIT(A) RENDERED DECISION BY FOLLOWING THE SPECIAL BENCH DECISION OF ITAT CHENNAI IN THE C ASE OF ITO V. SAK SOFT LTD. 121 TTJ (SB) 865 AS FOLLOWS:- DECLINING TO GO INTO THE MERITS OF THE ISSUED RAIS ED IN GROUND 3, I AM HOWEVER OF THE VIEW THAT THE APPELLANT SUCCEEDS IN THE ALTERNATIVE SUBMISSION MADE IN GROUND 5. RESPECTFU LLY FOLLOWING THE DECISIONS OF THE JURISDICTIONAL TRIBUNAL (SUPRA) AN D THE DECISION OF THE SPECIAL BENCH (SUPRA), I, ACCORDINGLY, DIRECT THE A O TO EXCLUDE THE EXPENDITURE INCURRED ON TELECOMMUNICATION EXPENSES AND EXPENDITURE INCURRED IN FOREIGN CURRENCY FROM THE T OTAL TURNOVER AS WELL. 10. THUS, THE TELECOMMUNICATION EXPENSES AND EXPEND ITURE INCURRED IN FOREIGN CURRENCY WERE EXCLUDED FROM THE EXPORT TURN OVER AS WELL AS TOTAL TURNOVER. EVEN AFTER SUCH RELIEF, THE ASSESSEE DID NOT GET THE DEDUCTION U/S. 10A, AS WAS CLAIMED BY IT IN THE RETURN OF INC OME. THE ASSESSEE HAS THEREFORE FILED THE PRESENT APPEAL RAISING THE FOLL OWING EFFECTIVE GROUND:- ITA NO.412 /BANG/2011 PAGE 7 OF 11 1. THE LEARNED CIT(A) LTU ERRED IN CONCLUDING [IN PENULTIMATE PARA ON PAGE 10 OF HER ORDER], TO DECL INE TO GO INTO THE MERITS OF THE ISSUE IN GROUND 3, ALTHOUGH THE CIT(A) IN FACT WENT INTO THE ISSUE ON MERITS, BOTH ON FACTS AND IN LAW [IN PARA 6.1.1 ON PAGES 9 AND 10] AND CONSEQUENTLY OUGHT TO HAVE RENDERED HER DECISION ON MERITS ON GROUNDS 2 & 3. 11. IT CAN BE SEEN FROM THE AFORESAID GROUND THAT T HE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) WHEREBY SHE R EFUSED TO GO INTO THE QUESTION AS TO WHETHER EXPENDITURE INCURRED IN FORE IGN CURRENCY IN A SUM OF RS.92,43,87,701 HAS TO BE EXCLUDED FROM THE EXPORT TURNOVER WHILE COMPUTING DEDUCTION U/S. 10A OF THE ACT. 12. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSES SEE WAS THAT THE RATIO LAID DOWN BY THE HONBLE ITAT BANGALORE BENCH IN TH E CASE OF M/S. INFOSYS LTD. (SUPRA) AND THE HYDERABAD BENCH OF THE ITAT IN THE CASE OF PATNI TELECOM PVT. LTD. (SUPRA) ARE SQUARELY APPLICABLE TO THE ASSESSEES CASE. 13. IN THE CASE OF PATNI TELECOM PVT. LTD. (SUPRA) , THE FACTS WERE THAT THE ASSESSEE IN THAT CASE WAS ENGAGED IN THE B USINESS OF DEVELOPMENT AND EXPORT OF COMPUTER SOFTWARE. THE A SSESSEE CLAIMED DEDUCTION U/S. 10A OF THE ACT. WHILE ARRIVING AT T HE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 10A OF THE ACT, THE AO EXCLUDED THE EXPENSES INCURRED IN FOREIGN EXCHANGE. THE AO TREATED THIS EXPENDITURE AS EXPENDITURE INCURRED IN FOREIGN EXCH ANGE IN PROVIDING ITA NO.412 /BANG/2011 PAGE 8 OF 11 TECHNICAL SERVICES OUTSIDE INDIA. THE CORRECTNESS OF THE ACTION OF THE AO WAS CONSIDERED BY THE TRIBUNAL. THE TRIBUNAL ANALY SED THE TERMS OF THE AGREEMENT BY WHICH THE ASSESSEE AGREED TO RENDER ON -SITE AND OFF-SHORE SERVICES RELATED TO SOFTWARE DEVELOPMENT. 'ONSITE' SERVICES WERE RENDERED AT CUSTOMERS PLACE BY THE ASSESSEES EMPLOYEE SENT THERE. THE OFFSITE SERVICES ARE RENDERED AT THE ASSESSEES PLACE LOCAL LY. THE ACTIVITIES OF THE ASSESSEE COMPANY AMOUNTED TO SALE OF GOODS IN THE F ORM OF COMPUTER SOFTWARE. THE ASSESSEE RECEIVED CONSIDERATION IN CO NVERTIBLE FOREIGN EXCHANGE FOR BOTH TYPES OF SERVICES. THE TRAVEL AND ALLOWANCE EXPENSES OF RS. 1,16,61,307 WERE TREATED BY THE AO AS EXPENDITU RE INCURRED IN FOREIGN EXCHANGE FOR PROVIDING TECHNICAL SERVICES OUTSIDE I NDIA AND SAME WAS REDUCED FROM CONVERTIBLE FOREIGN EXCHANGE RECEIVED BY THE ASSESSEE. THE TRIBUNAL HELD THAT THE EXPENDITURE WAS NOT IN CONNE CTION WITH PROVIDING TECHNICAL SERVICES AND THAT THE ASSESSEE DID NOT RE NDER ANY INDEPENDENT TECHNICAL SERVICES. IT DEVELOPED SOFTWARE ON CONTRA CT BASIS AS PER THE AGREEMENT AND HANDED OVER THE SAME TO THE CUSTOMER. THE EXPENDITURE INCURRED WAS FOR DEVELOPMENT OF SOFTWARE. THE TRIBU NAL HELD THAT THERE HAS TO BE A DISTINCTION DRAWN BETWEEN CONSIDERATION REC EIVED AGAINST EXPENDITURES INCURRED FOR THE PURPOSE OF GOODS SOLD OR MANUFACTURED OR PRODUCED AND CONSIDERATION RECEIVED AGAINST INDEPEN DENT SERVICES RENDERED. UPTO THE POINT OF SALE OF GOODS EXPENDITU RES INCURRED ARE RELATED TO GOODS. SUCH EXPENSES INCURRED CANNOT BE SAID TO BE EXPENDITURE FOR TECHNICAL SERVICES. IF THE TECHNICAL SERVICES ARE R ENDERED INDEPENDENTLY ITA NO.412 /BANG/2011 PAGE 9 OF 11 WHICH ARE BEING AGREED TO BE SEPARATELY CHARGED IN ADDITION TO THE PRICE OF THE GOODS, IN SUCH CIRCUMSTANCES EXPENDITURE INCURR ED COULD BE IN THE NATURE OF EXPENDITURE FOR THE PURPOSE OF TECHNICAL SERVICES. 14. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT THE ASSESSEE IN THE PRESENT CASE WAS ONLY EXPORTING COMPUTER SOF TWARE AND WAS NOT ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL SERV ICES OUTSIDE INDIA. IT WAS SUBMITTED THAT THE EXPENSES INCURRED IN FOREIGN CURRENCY WAS NOT FOR RENDERING TECHNICAL SERVICES OUTSIDE INDIA AND THER EFORE THE SAME SHOULD NOT BE EXCLUDED FROM THE EXPORT TURNOVER. ACCORDIN G TO HIM, IN THE LIGHT OF THE ADMITTED FACTUAL POSITION THAT THE ASSESSEE WAS NOT ENGAGED IN THE BUSINESS OF PROVIDING TECHNICAL SERVICES OUTSIDE IN DIA AND WAS ENGAGED IN THE BUSINESS OF EXPORT OF COMPUTER SOFTWARE, THE IS SUE CAN BE DECIDED BY THE TRIBUNAL WITHOUT REMANDING THE ISSUE TO THE CIT (APPEALS) FOR CONSIDERATION AS THE FACTUAL POSITION IS NOT IN DIS PUTE. 15. THE LD. DR, HOWEVER, SUBMITTED THAT THE ISSUE S HOULD BE DIRECTED TO BE EXAMINED BY THE CIT(A). 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT I S CLEAR FROM THE DECISION OF THE HYDERABAD BENCH OF THE ITAT THAT TO EXCLUDE EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOV ER, THE ASSESSEE SHOULD HAVE OBTAINED THE BENEFIT OF SECTION 10A ON INCOME FROM RENDERING TECHNICAL SERVICES OUTSIDE INDIA. THE ADMITTED FAC TUAL POSITION IN THE PRESENT CASE IS THAT THE ASSESSEE IS IN THE BUSINES S OF EXPORTING COMPUTER ITA NO.412 /BANG/2011 PAGE 10 OF 11 SOFTWARE AND THEREFORE THE EXPENSES INCURRED IN FOR EIGN EXCHANGE CANNOT BE SAID TO BE ONE INCURRED BY THE ASSESSEE IN CONNE CTION WITH PROVIDING TECHNICAL SERVICES OUTSIDE INDIA. THE ASSESSEE DOE S NOT CLAIM EXCLUSION OF TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA. THE CLAIM FOR EXCLUSION FR OM THE EXPORT TURNOVER IS MADE BY THE ASSESSEE ONLY IN RESPECT OF EXPENSES IN CURRED IN FOREIGN CURRENCY IN PROVIDING TECHNICAL SERVICES OUTSIDE IN DIA. WE HOWEVER DO NOT HAVE THE BREAK-UP OF THE ITEM OF EXPENDITURE INCURR ED IN FOREIGN CURRENCY OUTSIDE INDIA. A COPY OF THE AGREEMENT BETWEEN THE ASSESSEE AND ROBERT BOSCH, GERMANY TITLED SOFTWARE PROJECT AGREEMENT (S PA) HAS BEEN FILED BEFORE US. WE DO NOT KNOW AS TO WHETHER THE ENTIRE EXPORT TURNOVER IS IN RELATION TO THIS CLIENT ALONE OR THERE WERE OTHER C LIENTS FOR WHOM THE ASSESSEE RENDERED COMPUTER SOFTWARE DEVELOPMENT SER VICES. A PERUSAL OF THE SPA FILED BEFORE US SHOWS THAT THE ASSESSEE AGR EED TO CARRY OUT SOFTWARE DEVELOPMENT WORK FOR ROBERT BOSCH GERMANY AT GERMANY ALSO. THE TERMS OF THE AGREEMENT FOR RENDERING SERVICES O N-SITE AT CLAUSES-5.2 TO 5.2.6 OF THE AGREEMENT DOES NOT INVOLVE RENDERING O F ANY TECHNICAL SERVICES. THE QUESTION AS TO WHETHER THE ENTIRE EX PENDITURE INCURRED IN FOREIGN EXCHANGE OUTSIDE INDIA RELATES TO PROVIDING TECHNICAL SERVICES OUTSIDE INDIA CANNOT BE DECIDED IN THE ABSENCE OF T HE REQUIRED INFORMATION AS STATED ABOVE. IF THE CLAIM OF THE ASSESSEE THAT THE ENTIRE EXPENDITURE INCURRED IN FOREIGN EXCHANGE OUTSIDE INDIA DOES NOT RELATE TO PROVIDING TECHNICAL SERVICES OUTSIDE INDIA, THEN THE SAME CAN NOT BE EXCLUDED FROM ITA NO.412 /BANG/2011 PAGE 11 OF 11 THE EXPORT TURNOVER. SINCE THE FACTUAL VERIFICATIO N IS REQUIRED FOR ADJUDICATING THE AFORESAID ISSUE, WE DEEM IT APPROP RIATE TO SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE ISSUE TO HIM WIT H A DIRECTION TO DECIDE THE ISSUE WITH REGARD TO GR.NO.2 AND 3 RAISED BY TH E ASSESSEE BEFORE HIM. WE ACCORDINGLY ALLOW THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. 17. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY, 2014 . SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 22 ND JANUARY, 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.