DCIT, New Delhi V. M/s. Alcatel Lucent Tech. India (P) Ltd., New Delhi

ITA 476/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3153 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-02-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 02-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Business income
• Section: 143(3)

Judgement Text

ITA NO. 476/DEL/2010 ASSESSMENT YEAR 2001-02 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL M EMBER ITA NO. 476/DEL/2010 ASSESSMENT YEAR: 2001-02 DY.COMMISSIONER OF INCOME TAX, CIRCLE 1(1), C.R. BUILDING, NEW DELHI. VS M/S ALACATEL LUCENT TECH INDIA P. LTD., 202-206, TOLSTOY HOUSE, TOLSTOY MARG, NEW DELHI-1 APPELLANT BY SHRI S.K. JAIN, DR RESPONDENT BY SHRI MANONEET DALAL, ADV. SHRI YISHU GOEL, ADV. ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF LD. CIT, DELHI-VII, NEW DELHI DATED 11.11. 2009 AND PERTAINS TO ASSESSMENT YEAR 2001-02. 2. FOLLOWING GROUNDS HAVE BEEN PREFERRED BY THE REV ENUE:- 1) ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTIN G THE AO TO ALLOW DEDUCTION U/S 1OA OF THE ACT TO THE TUNE O F DATE OF HEARING 08.02.2017 DATE OF PRONOUNCEMENT 1 1 . 0 5 . 2 0 1 7 ITA NO. 476/DEL/2010 ASSESSMENT YEAR 2001-02 2 RS.54,58,97,581/-AS AGAINST RS.47,20,08,243/- ALLOW ED BY THE AO IGNORING THAT (A) THE SERVICES CHARGES GENERATED IN INDIA DO NOT CONSTITUTE EXPORT TURNOVER (B) INTEREST INCOME EARNED DOES NOT CONSTITUTE BUS INESS INCOME OF THE UNDERTAKING 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. AT THE OUTSET, LD. AR SUBMITTED THAT AS FAR AS G ROUND NO.1 (B) REGARDING INTEREST INCOME IS CONCERNED, THE LD. CIT (A) IN PAGE 4, PARA 7(A) OF THE IMPUGNED ORDER HAS DECIDED THIS IS SUE AGAINST THE ASSESSEE AND, THEREFORE, THE DEPARTMENT CANNOT RAIS E THIS GROUND BEFORE THE ITAT. 3.1 ON GROUND NO. 1(A) REGARDING THE SERVICE CHARGE S, IT WAS SUBMITTED THAT THE SAME IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE ITAT IN ASSESSEES OWN CASE IN ITA NOS . 2297, 2298, 2244, 2245/DEL/2008 FOR ASSESSMENT YEAR 2003-04 AND 2004-05. 4. LD. DR AGREED TO THE CONTENTIONS OF THE LD. AR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIAL ON RECORD AND WE FIND THAT THE SUBMISSIONS OF THE LD. AR ITA NO. 476/DEL/2010 ASSESSMENT YEAR 2001-02 3 ARE CORRECT AS FAR AS GROUND NOL. 1(B) OF THE DEPAR TMENTS APPEAL IS CONCERNED. LD. CIT (A) IN PARA 7(A) PAGE 4 OF THE IMPUGNED ORDER HAS HELD THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/ S 10A OF THE ACT ON THE INCOME FROM EXPORT OF SOFTWARE AS WELL A S INCOME FROM IT ENABLED SERVICES AND ALSO ON INTEREST INCOME EARNED FROM FIXED DEPOSITS AND MARGIN MONEY KEPT AS RESERVES. HOWEVE R, IN THE PROCEEDINGS U/S 143(3) OF THE ACT, THE ASSESSING OF FICER EXCLUDED INTEREST INCOME FROM THE BUSINESS INCOME FOR THE PU RPOSES OF COMPUTING DEDUCTION U/S 10A OF THE ACT. ON APPEAL, THE LD. CIT (A) CONFIRMED THE SAID DISALLOWANCE. ON FURTHER APPEAL , THE TRIBUNAL TOO CONFIRMED THE SAID DISALLOWANCE. PARA 7(A) READ S AS UNDER- (A) THE APPELLANT, BEING A COMPANY ENGAGED IN THE BUSIN ESS OF SOFTWARE DEVELOPMENT AND RENDERING SERVICES IN THE FIELD OF TELECOMMUNICATION, HAD CLAIMED DEDUCTION UNDER SECT ION 10A OF THE ACT, ON INCOME FROM THE AFORESAID SALE A ND SERVICES. IN ITS RETURN FOR ASSESSMENT YEAR 2001-02 , THE APPELLANT CLAIMED DEDUCTION UNDER SECTION 10A OF T HE ACT ON THE INCOME FROM EXPORT OF SOFTWARE AS WELL AS INCOM E FROM IT ENABLED SERVICES AND ALSO ON INTEREST INCOME EARNED FROM FIXED DEPOSITS AND MARGIN MONEY KEPT AS RESERVES. HOWEVER, IN THE PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER EXCLUDED INTEREST INCOME FROM THE ITA NO. 476/DEL/2010 ASSESSMENT YEAR 2001-02 4 BUSINESS INCOME FOR THE PURPOSES OF COMPUTING DEDUC TION UNDER SECTION 10A OF THE ACT. ON APPEAL THE LEARNE D CIT (APPEALS) CONFIRMED THE SAID DISALLOWANCE. ON FURTH ER APPEAL, THE HON'BLE TRIBUNAL TOO, CONFIRMED THE SAI D DISALLOWANCE. 5.1 THUS, IT IS APPARENT THAT THIS ISSUE HAS BEEN H ELD AGAINST THE ASSESSEE AND, THEREFORE, THIS GROUND OF THE DEPARTM ENT IS INFRUCTUOUS AND IS DISMISSED AS SUCH. 5.2 AS FAR AS GROUND NO. 1(A) OF THE APPEAL IS CONC ERNED, IT IS SEEN THAT THE SAME IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT DELHI I BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2003-04, 2004-05. THE RELEVANT PA RAGRAPH IS PARA 17.5 ON PAGE 20 OF THE SAID ORDER AND THE SAME READS AS UNDER:- 17.5 HAVING HEARD BOTH THE PARTIES, WE FIND THAT IT IS NOT DISPUTED THAT PR. SUPPLY CHAIN, CT HEAD AND SMG WERE INCIDENTAL SERVICES TO IT ENABLED SERVICES AN D, THEREFORE IN VIEW OF NOTIFICATION NO. 890(E) DATED 26-9- 2000, THESE SERVICES BEING PART OF BACK OFFICE OPER ATION AND SUPPORT SERVICES ARE ELIGIBLE TO BE CONSIDERED AS PART OF EXPORT TURNOVER. IN THE RESULT, THIS GROUND IS A LLOWED. ITA NO. 476/DEL/2010 ASSESSMENT YEAR 2001-02 5 5.3 IN THE LIGHT OF THE AFORESAID FINDING OF THE IT AT IN FAVOUR OF THE ASSESSEE, WE DISMISS GROUND NO. 1(A) OF THE DEPARTM ENTS APPEAL. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2017. SD/- SD/- (S.V. MEHROTRA) (SUDHANSHU SRIVASTAVA ) VICE PRESIDNET JUDICIAL MEMBER DT. 11TH MAY 2017 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR