Goldstone Technologies Ltd, Sec'bad, Hyderabad V. The DCIT Circle - 2(2), Hyderabad

ITA 476/HYD/2011

• Counselvise Citation: 47622514 RSA 2011
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 23-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATHPATI
• Assessee Lawyers: P MURALI MOHAN RAO
• Section: 148; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.476/HYD./2011 ASSESSMENT YEAR 2004-05 M/S GOLD STONE TECHNOLOGIES LIMITED, SECUNDERABAD (PAN AAACG 7478 F) VS THE DCIT, CIRCLE 2 (2), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI P. MURALI MOHAN RAO RESPONDENT BY : SHRI SATHPATI ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) VI I, HYDERABAD DATED 28-2-2011 AND PERTAINS TO THE ASSESSMENT YEAR 2004-05. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 10A OF THE INCOME TAX ACT. IN THIS CA SE, THE ASSESSMENT WAS REOPENED AND A NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON 6.5.2008 FOR THE PURPOSE TO VERIFY WHETHER EXPENDITURE OF RS.34,21,86,354/- WAS INCURRED ON EXPORT TURNOVER (FOREIGN EXCHANGE) OR NOT. THE ASSESSING OFFICER A FTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HAS REJECTED THE CLAIM OF THE ASSESSEE U/S 10A OF THE A CT AND THEREBY DENIED THE EXEMPTION OF RS.3,88,28,315/-. ACCORDING TO THE ASSESSING OFFIC ER, ITA NO.476 OF 2011 M/S GOLD STONE TECHNOLOGIES LTD., SECUNDERABAD 2 THE EXPORT TURNOVER OF THE ASSESSEE HAS TO BE TREAT ED AS NIL BECAUSE THE EXPENDITURE INCURRED IN FOREIGN EXCHANGE IS REDUCED FROM THE EXPORT TURNOVER AND TH E RESULTED FIGURE IS NEGATIVE. THUS, THE ASSESSING OFFICER DENIED SECTION 10A OF THE ACT AND THE SAME WAS CONFIRMED BY THE CIT(A). AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEES COUNSEL HAS RELIED ON THE ORDER OF THE SPECIAL BEN CH, CHENNAI OF THE TRIBUNAL VIDE ITS ORDER DATED 2.11.2010 IN THE CASE OF M/S ZYLOG SYSTEMS LTD. IN ITA NO.1138/MDS./2007 FOR THE ASSESSMENT YEAR 2003-04. WE HAVE ALSO GONE THROUGH THE ORDER OF TH E TRIBUNAL WHEREIN HELD IN PARA 24 AS UNDER: TO SUM UP, IN THIS CASE WHATEVER THE EXPENDITURE HAS BEEN INCURRED ON FOREIGN SOIL IN A SUM OF RS.3,33,46,592 WERE INCURRED IN CONNECTION WITH DEVELOPMENT OF SOFTWARE BY THE EMPLOYEES OF THE ASSESSEE COMPANY AT FOREIGN BRANCH AND NOTHING HAS BEEN INCURRED ON MANAGERIAL OR TECHNICAL SERVICES RENDERED TO ANY OUTSIDER IN FOREIGN SOIL. IN VIEW OF THIS DISCUSSION, WE ARE INCLINED TO ALLOW THE GROUND OF THE ASSESSEE THAT RS.3,33,46,592/- SHOULD NOT BE EXCLUDED FROM THE EXPORT TURNOVER FOR COMPUTING DEDUCTION U/S 10B OF THE IT ACT. WE ANSWER THE QUESTION REFERRED TO US IN FAVOUR OF THE ASSESSEE. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED. 4. IN VIEW OF THE ABOVE FINDINGS OF THE TRIBUNAL, THE ASSESSING OFFICER IS NOT JUSTIFIED IN DENYING T HE EXEMPTION U/S 10A OF THE ACT. THE ASSESSING OFFICE R ITA NO.476 OF 2011 M/S GOLD STONE TECHNOLOGIES LTD., SECUNDERABAD 3 HAS UTTERLY MISTAKEN THE QUANTUM OF EXEMPTION U/S 10A AND HE WRONGLY CONSIDERED EXPORT TURNOVER AND TOTAL TURNOVER OF THE BUSINESS WHICH IS EVIDENT FRO M PAGE 2 OF THE ORDER OF THE ASSESSING OFFICER. THE CIT(A) HAS ALSO NOT APPLIED HIS MIND IN PROPER PERSPECTIVE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DEDUCTION U/S 10A IN ACCORDANCE WITH THE ORDER OF THE SPECIAL BENCH (CHENNAI) AFTER CONSIDERING THE CERTIFICATE FILED B Y THE ASSESSEE U/S 10A OF THE IT ACT 1961. 5. THE GROUND RELATING TO REOPENING OF THE ASSESSMENT IS NOT ARGUED BEFORE US. ACCORDINGLY, T HIS GROUND IS DISMISSED AS NOT PRESSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 28 .7.20 11 SD/ - G.C. GUPTA SD/ - CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT M EMBER DATED THE 28 TH JULY, 2011 COPY FORWARDED TO: 1. M/S P. MURALI & CO., C AS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. M/S GOLDSTONE TECHNOLOGIES P LTD., 9-1-83 & 84, AC, SHARMA COMPLEX, SD ROAD, S BAD. 2. THE DCIT, CIRCLE 2(2), HYDERABAD 3. THE CIT(A) VII, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/