ITO 10(3)(4), MUMBAI V. PRAXIS INTERACTIVE SERVICES P.LTD, MUMBAI

ITA 4637/MUM/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6328 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Keywords: Depreciation
• Section: 10AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI AMARJIT SINGH, JM ITA NO. 4637 /MUM/201 5 ( ASSESSMENT YEAR : 2011 - 12 ) INCOME TAX OFFICER - 10(3)(4) R.NO.554, 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD, MUMBAI 400 020 VS. M/S. PRAXIS INTERACTIVE SERVICES PVT. LTD., 607/608, MULTI STORIED BUILDING, SEEPZ, ANDHERI (E), MUMBAI - 400096 PAN/GIR NO. AAECP5196M (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI ABI RAMA KARTIKEYAN ASSESSEE BY NONE DATE OF H EARING 31 / 07 /2019 DATE OF PRONOUNCEMENT 02/08 /2019 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 4637/MUM/2015 FOR A.Y. 2011 - 12 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 17, MUMBAI IN A PPEAL NO. CIT(A) - 17 /IT - 15 /14 - 15 DATED 15/05/2015 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 04/02/2014 BY THE LD. INCOME TAX OFFICER - 8(2)(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). ITA NO. 4637/MUM/2015 M/S. PRAXIS INTERACTIVE SERVICES PVT LTD. 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. SINCE THE ISSUE INVOLVED IN REVENUES APPEAL IS ALREADY COVERED, WE PROCEED TO DISPOSE OFF THE APPEAL AFTER HEARING THE LD DR AND BASED ON MATERIALS AVAILABLE ON RECORD. 3. THE FIRST I SSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DIRECTING THE LD AO TO EXCLUDE RS 1.38 CRORES COMPRISING OF FOREIGN TRAVEL EXPENSES, PROFESSIONAL CONSULTANCY SERVICES, US OFFICE SUPPORT SERVICES AND OTHER EXPENSES FROM THE T OTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10AA OF THE ACT. 4. WE HAVE HEARD THE LD DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD INCURRED THE FOLLOWING EXPENSES IN FOREIGN CURRENCY: - TRAVELLING EXPE NSES - RS 24,24,389/ - PROFESSIONAL CONSULTANCY SERVICES - RS 9,38,261/ - US OFFICE SUPPORT SERVICES - RS 1,04,62,522/ - OTHER EXPENSES - RS 19,581/ - ----------------------- TOTAL - RS 1,38,44,752/ - THE LD AO REDUCED THE AFORESAID EXPENDITURE INCURRED IN FOREIGN CURRENCY FOR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA FROM THE EXPORT TURNOVER WHILE COMPUTING THE DEDUCTION U/S 10AA OF THE ACT AND ACCORDINGLY DETERMINED THE DEDUCTION U/S 10AA OF THE ACT AT RS 9,24,48,725/ - . THERE IS NO DISPUTE THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 10AA OF THE ACT IN THE INSTANT CASE. THE LD CITA HELD THAT ITEMS THAT WERE EXCLUDED FROM EXPORT TURNOVER SHOULD ALSO BE CORRESPONDINGLY REDUCED FROM TOTAL TURNOVER ALSO AND HENCE IT WOUL D NOT ALTER THE CLAIM OF DEDUCTION U/S 10AA OF THE ACT FOR THE ASSESSEE. WE FIND THAT THE HONBLE SUPREME COURT IN THE CASE OF CIT VS HCL TECHNOLOGIES LTD IN CIVIL APPEAL NO. 8489 - 8490 OF 2013 REPORTED IN 404 ITA NO. 4637/MUM/2015 M/S. PRAXIS INTERACTIVE SERVICES PVT LTD. 3 ITR 719 (SC) HAD HELD THAT ITEMS THAT WERE EX CLUDED FROM EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM TOTAL TURNOVER. IN VIEW OF THIS DECISION, WE FIND NO INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 5. THE NEXT GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DIRECTING THE LD AO TO ALLOW THE CARRY FORWARD OF LOSSES WITHOUT SETTING IT OFF AGAINST THE INCOME ELIGIBLE FOR DEDUCTION U/S 10AA OF THE ACT. 6. WE HAVE HEARD THE LD DR. WE FIND T HAT THE LD CITA HAD PLACED RELIANCE ON THE ORDER PASSED BY HIS PREDECESSOR FOR ASST YEAR 2010 - 11 IN ASSESSEES OWN CASE IN APPEAL NO. CIT(A) - 17/IT - 157/13 - 14 DATED 9.5.2014 WHEREIN BY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BLACK & VEATCH CONSULTING P LTD REPORTED IN 348 ITR 72 (BOM) WHEREIN IT WAS HELD THAT SECTION 10A IS A DEDUCTION PROVISION AND NOT AN EXEMPTION PROVISION ; THAT SECTION 10A BENEFIT HAS TO BE GIVEN EFFECT TO AT THE STAGE OF COMPUTING THE PROFITS AND GAINS OF BUSINESS ; THAT IT IS ANTERIOR TO THE APPLICATION OF THE PROVISIONS OF SECTION 72 OF THE ACT WHICH DEALS WITH THE CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. IN OTHER WORDS, IT WAS HELD THAT THE DEDUCTION U/S 10A OF THE ACT IS TO B E ALLOWED WITHOUT SETTING OFF OF CARRY FORWARD UNABSORBED LOSSES AND THE DEPRECIATION FROM THE EARLIER ASSESSMENT YEAR OR CURRENT ASSESSMENT YEAR EITHER IN THE CASE OF NON - STPI UNIT OR IN THE CASE OF VERY SAME UNDERTAKING. FOLLOWING THE SAID DECISION, T HE LD CITA FOR THE YEAR UNDER CONSIDERATION DIRECTED THE LD AO TO ALLOW THE CARRIED FORWARD OF LOSSES WITHOUT SETTING IT OFF AGAINST THE INCOME EXIGIBLE FOR DEDUCTION U/S 10A OF THE ACT. WE FIND THAT SIMILAR VIEWS WERE ENDORSED BY THE HONBLE SUPREME COU RT IN THE CASE OF PCIT VS RANGSONS ELECTRONICS PVT LTD ITA NO. 4637/MUM/2015 M/S. PRAXIS INTERACTIVE SERVICES PVT LTD. 4 REPORTED IN 398 ITR 619 (SC) AND IN THE CASE OF CIT VS YOKOGAWA INDIA LTD 391 ITR 274 (SC). HENCE RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CITA IN THIS REGARD. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 7. THE GROUND NOS. 3 & 4 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02 / 08 /201 9 SD/ - ( AMARJIT SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 02 / 08 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//