ITO, Bangalore V. M/s Richmond Hotels Pvt. Ltd., Bangalore

ITA 47/BANG/2015

• Counselvise Citation: 4721114 RSA 2015
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y RAJENDRA
• Assessee Lawyers: ANUKUR PAI DHUNGAL
• Section: 263

Judgement Text

ITA NOS.641 & 642(B)/13 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER IT(TP)A NO.641 & 642(BANG.)/2013 (ASSESSMENT YEARS : 2005-06 & 2008-09) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12(2), NRUPATHUNGA ROAD, BANGALORE APPELLANT VS M/S QUALITY ENGG. & SOFTWARE TECH.PVT.LTD. NO.55, QUEST TOWERS, WHITEFIELD MAIN ROAD, BANGALORE 560 048. DATE OF HEARING : 01-09-2015 DATE OF PRONOUNCEMENT : 04-09-2015 APPELLANT BY : SHRI Y. RAJENDRA, CIT RESPONDENT BY : SHRI ANUKUR PAI DHUNGAL O R D E R PER SHRI S. RIFAUR RAHMAN, AM; THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE ORDERS OF THE LEARNED CIT (A)-III, BANGALORE, DATED 4.2.2013 AND 28.02.2013 FOR THE AYS 2005-06 AND 2008-09 RESPECTIVELY. THE RELEVANT ASSESSMENT YEARS ARE 2005-06 AND 2008-09. 2. THE REVENUE, IN ITS GROUNDS OF APPEAL FOR BOTH THE ASST. YEARS UNDER CONSIDERATION, HAD RAISED AN IDENTICAL ISSUE, NAMELY, THAT THE CIT (A) ERRED IN LAW IN DIRECTING THE AO TO EXCLUDE THE REIMBURSEMENT OF ITA NOS.641 & 642(B)/13 EXPENSES INCURRED IN FOREIGN CURRENCY BOTH FROM THE EXPORT TURNOVER AS WELL AS FROM TOTAL TURNOVER FOR THE PURPOSE OF C OMPUTATION OF DEDUCTION U/S 10A OF THE ACT. 3. AS THE ISSUE RAISED IN THESE APPEALS IS SIMILAR FOR BOTH THE ASSESSMENT YEARS, THEY WERE HEARD TOGETHER AND DISP OSED OF BY THIS COMMON ORDER. 4. BRIEFLY STATED, THE ASSESSEE WAS ENGAGED IN PROVIDING ENGINEERING SOLUTIONS FOR ADVANCED TECHNOLOGY PRODUCTS IN AEROS PACE, POWER GENERATION, OIL AND GAS AND INDUSTRIAL PRODUCTS DOMAIN THROUGH COMPUTER AIDED ENGINEERING ANALYSIS AND SOFTWARE SERVICES WHICH WE RE IN THE NATURE OF IT ENABLED SERVICES. FOR THE AY 2005-06 , GIVING EFFECT TO THE ORDER OF THE CIT- III, BANGALORE U/S 263 OF THE ACT DATED 30.8.2010, THE AO HAD, IN HIS ORDER DATED 31.12.2010, REDUCED THE EXPENDITURE OF RS.41. 78 LAKHS INCURRED TOWARDS COMMUNICATION EXPENSES AND RS.6.94 CRORES T OWARDS TRAVELLING, BOARDING AND CONVEYANCE EXPENSES IN FOREIGN CURRENC Y IN CONNECTION WITH PROVIDING TECHNICAL SERVICES OUTSIDE INDIA FROM THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10A OF THE ACT. LIKEWISE, FOR THE AY 2008-09 , THE AO HAD ALSO REDUCED THE COMMUNICATION, TRAVEL LING AND CONVEYANCE EXPENSES ETC ., FROM THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING 10A DEDUCTION. 5. AGGRIEVED, THE ASSESSEE HAD APPROACHED , ALONG WITH OTHER ISSUES, THE CIT (A) FOR BOTH THE ASSESSMENT YEARS FOR RELIE F. AFTER DUE CONSIDERATION ITA NOS.641 & 642(B)/13 OF THE SUBMISSION OF THE ASSESSEE AND ALSO QUOTING AND EXTRACTING THE RULING OF THE HONBLE KARANATAKA HIGH COURT IN THE CASE OF TATA ELXSI LIMITED [349 ITR 98 (KAR)] WHEREIN THE HONBLE COUR T HAD CONFIRMED THE FINDINGS OF THIS TRIBUNAL IN ITA NO.70/2009 DATED 3 0.08.2011, THE CIT (A) DIRECTED THE AO TO REDUCE THE EXPENDITURE INCURRED ON FOREIGN CURRENCY FROM BOTH EXPORT TURNOVER AND TOTAL TURNOV ER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 10A OF TH E ACT. [REFER: PARA 6.3. ON PAGE 20 OF CIT(A)S ORDER FOR THE AY 2008-0 9]. 6. AGGRIEVED WITH THE FINDINGS OF THE CIT ( A), THE REVENUE HAS COME UP BEFORE US WITH THE PRESENT APPEALS. DURING THE COU RSE OF HEARING, THE LEARNED DR SUBMITTED THAT THE LEARNED CIT (A) HAD E RRED IN LAW IN DIRECTING THE AO TO EXCLUDE THE REIMBURSEMENT OF EXPENSES INC URRED IN FOREIGN CURRENCY BOTH FROM THE EXPORT TURNOVER AS WELL AS F ROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10A OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE STATUTE ALLOWS EXCLU SION OF SUCH EXPENDITURE ONLY FROM EXPORT TURNOVER BY WAY OF SPECIFIC DEFINI TION OF EXPORT TURNOVER AS ENVISAGED BY SUB-CLAUSE (4) OF EXPLANATION 2 BELOW SUB-SECTION (8) OF S. 10A OF THE ACT AND THAT THE TOTAL TURNOVER HAS NOT BEEN DEFINED IN THIS SECTION. IT WAS, THEREFORE, ARGUED THAT THE STAND OF THE LEA RNED CIT (A) FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION REQUIRE TO BE REVERSED. ITA NOS.641 & 642(B)/13 7. ON THE OTHER HAND, THE LEARNED AR SUPPORTED THE FINDINGS OF THE CIT (A) AND URGED THAT THE APPEALS OF THE REVENUE D ESERVE TO BE QUASHED. 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISS IONS OF BOTH THE PARTIES AND ALSO PERUSED THE CASE RECORDS. AT THIS JUNCTUR E, IT IS APPROPRIATE TO REFER FINDINGS OF THE EARLIER COORDINATED BENCH OF THIS TRIBUNAL, IN AN IDENTICAL ISSUE, IN THE CASE OF TATA ELXSI LIMITED IN ITA NO.70/2009 DATED 30.08.2011 WHICH HAS BEEN UPHELD BY THE HONBLE JUR ISDICTIONAL HIGH COURT [349 ITR 98 (KAR)] AFTER ANALYZING THE ISSUE. RESPECTFULLY FOLLOWING THE RULING OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LIMITED [SUPRA] ON A SIMILAR ISSUE, WE ARE OF THE V IEW THAT THERE IS NO ANY INFIRMITY IN THE FINDINGS OF THE CIT (A) FOR BOTH T HE ASSESSMENT YEARS UNDER CONSIDERATION NECESSITATING OUR INTERFERENCE. IN S UBSTANCE, THE APPEALS OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMI SSED. 9. IN THE RESULT, THE REVENUES APPEALS FOR THE AYS 2005-06 AND 2008- 09 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 4 TH SEPTEMBER, 2015. SD/- SD/- (N.V.VASUDEVAN) (S. RIFAUR AHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: BANGALORE DATED: 04-09-2015 AM* ITA NOS.641 & 642(B)/13 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF (BLORE) BY ORDER AR, ITAT, BANGALORE