DCIT8(2), MUMBAI V. LIONBRIDGE TECHNOLOGIES P.LTD, MUMBAI

ITA 4999/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2764 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Assessee Lawyers: J D MISTRY
• Keywords: Rule of consistency
• Section: 143(3); 115JB; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI , , BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.4999/MUM/2012 ASSESSMENT YEAR 2003-04 THE DCIT 8(2), ROOM NO.209, 2 ND FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (APPELLANT ) VS. M/S. LIONBRIDGE TECHNOLOGIES PVT. LTD. SPECTRA BUILDING PARK, 5 TH & 6 TH FLOOR, HIRANANDANI BUSINESS PARK, HIGH STREET, POWAI, MUMBAI -76. (RESPONDENT) APPELLANT BY : SHRI R.A . DHYANI RESPONDENT BY : SHRI J.D.M ISTRY DATE OF HEARING 29/10/2015 DATE OF PRONOUNCEMENT 29/10/2015 ORDER PER BEENA PILLAI, J.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE, AGAINST THE ORDER PASSED BY LD. CIT(A)-17, MUMBAI VIDE ORDER DATED 08/05/201 2, FOR ASSESSMENT YEAR 2003-04. THE REVENUE HAS RAISED THE FOLLOWING GRO UND OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW. THE LD.CIT(A) ERRED IN QUASHING THE 147 PROCEEDINGS WIT HOUT APPRECIATING THAT THE ASSESSE HAD COMPUTED THE EXPORT TURNOVER FOR TH E PURPOSE OF DEDUCTION U/S 10A IN COMPLETE CONTRAVENTION OF THE PROVISIONS OF THE SAID SECTION, RESULTING IN ESCAPEMENT OF INCOME. ITA NO.4999/MUM/2012 ASSESSMENT YEAR 2003-04 2 2. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN QUASHING THE PROCEEDINGS U/S. 14 7 OF THE ACT. WITHOUT APPRECIATING THAT THE ASSESSEE HAD WRONGLY CLAIMED AND HAD BEEN ALLOWED EXCEESIVE DEDUCTION U/S. 10A OF THE ACT IN THE ORIG INAL ASSESSMENT ON ACCOUNT OF FAILURE TO EXCLUDE THE PRESCRIBED EXPENSES FROM THE EXPORT TURNOVER IN TERMS OF EXPLANATION2(IV) OF SECTION 1OA OF THE ACT 3. 3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN QUASHING THE PROCEEDINGS U/S 147 OF THE ACT BY REFERRING TO THE VIEW TAKEN IN A.Y 2004-05 WITHOUT APPRECIATING THAT THE PRINCIPLE OF ESTOPPELS DOES NOT APPLY TO INCOME TAX PROCEEDINGS 4. 4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. THE LD CIT(A) ERRED IN HOLDING THAT THE EXPENSES REQUIRED TO BE EXCLUDED FROM THE EXPORT TURNOVER IN TERMS OF EXPLANATION 2(IV) OF SE CTION 10A ARE ALSO REQUIRED TO HE EXCLUDED FROM THE TOTAL TURNOVER IN TERMS OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GEM PLUS JEWELLERY INDIA LTD 330 ITR 175. WITHOUT APPRECIATING THAT THE DEPA RTMENT HAS FILED AN SLP IN RESPECT OF THE SAID DECISION. 5 THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED 2. THE BRIEF FACTS OF THE CASE AS RECORDED BY THE L D.AO ARE AS UNDER. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPM ENT AND EXPORT OF COMPUTER SOFTWARE SOLUTIONS AND, PROVIDING OTHER RELATED SER VICES. IT HAD FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04 ON 5/12/2003, DE CLARING TOTAL INCOME AT RS.1,54,98,981/- UNDER THE NORMAL PROVISIONS, AND BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T) AT RS.1,71,47,273/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT W AS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 30/3/2006, DETERMINING THE TOT AL INCOME AT RS.7,68,56,600/-. THE ASSESSING OFFICER THEN REOPENED THE ASSESSEES CASE ON 31.03.2003, ON THE GROUND THAT, THE COMPUTATION OF DEDUCTION UNDER SEC TION 10A SUBMITTED BY THE ASSESSEE IN WHICH THE EXPORT TURNOVER HAS BEEN COM PUTED AT RS.45,85,23,836/- ITA NO.4999/MUM/2012 ASSESSMENT YEAR 2003-04 3 INCLUDED REIMBURSEMENT OF THE EXPENSES INCURRED IN FOREIGN CURRENCY AMOUNTING TO RS.1,20,92,957/- AND SOME OTHER EXPENSES INCLUDING COMMUNICATION EXPENSES, FOREIGN TRAVEL EXPENSES. THE ASSESSING OFFICER HEL D THAT INCLUSION OF AFORESAID EXPENSES TOWARDS REIMBURSEMENT, COMMUNICATION, FORE IGN TRAVEL EXPENSES IN THE EXPORT TURNOVER, HAS RESULTED IN EXCESS ALLOWANCE O F DEDUCTION UNDER SECTION 10A OF THE ACT. THE ASSESSING OFFICER, ACCORDINGLY, CO MPUTED THE 10A DISALLOWANCE AT RS.11,48,89,447/-. 3. SIMULTANEOUSLY, CIT-8 IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, PASSED ORDER U/S.263 VIDE ORDER DATE D 17.1.2008, AND REDUCED THE DEDUCTION U/S.10A. ON FURTHER APPEAL BEFORE THE TRI BUNAL IN ITA NO. 7261/MUM/2008, THE TRIBUNAL SET ASIDE THE MATTER TO THE LD.AO WITH CERTAIN DIRECTIONS AS REGARDS TO THE COMPUTATION OF EXPORT TURNOVER AND TOTAL TURNOVER. ACCORDINGLY THE LD. AO WHILE GIVING EFFECT TO THE O RDER OF THE TRIBUNAL, ALLOWED THE DEDUCTION U/S.10A, VIDE ORDER DATED 05.05.2010, AS COMPUTED BY THE ASSESSEE IN ITS RETURN, BY DELETING THE EXCLUSION OF EXPENSE S FROM THE EXPORT TURNOVER. 4. AGAINST THE LD.AOS ORDER PASSED U/S.147, R.W.SE .148 OF THE ACT THE ASSESSEE WENT INTO APPEAL BEFORE THE LD. CIT(A). THE LD. CIT (A) HELD AS UNDER: MOREOVER, I FIND THAT A SIMILAR ISSUE CAME UP IN T HE ASSESSMENT FOR THE YEAR 2004-05. IN THAT YEAR THE ADMIN CIT HAD PASSED AN ORDER UNDER S ECTION 263 ASKING THE ASSESSING OFFICER TO REDUCE THE FIGURE OF EXPORT TURNOVER BY ALLOWING THE DEDUCTION REDUCING TO EXPENSES INCURRED IN FOREIGN EXCHANGE. THE ASSESSEE CHALLENGED THE ORDER BEFORE THE ITAT, WHICH DIRECTED THAT THE ASSESSING OFFICER SHO ULD EXAMINE THE FIGURE OF EXPORT EARNER AND ARRIVE AT THE SAME IN ACCORDANCE WITH TH E DEFINITION OF EXPORT TURNOVER AS PER SECTION 10A. IT FURTHER DIRECTED THAT THE PARITY S HOULD BE MAINTAINED BETWEEN EXPORT TURNOVER IN TOTAL TURNOVER IN KEEPING WITH THE DECI SION OF THE SPECIAL BENCH IN SAK SOFT LIMITED. THE ABOVE ORDER OF THE ITAT WAS GIVEN EFF ECT TO BY THE ASSESSING OFFICER VIDE ITS ORDER DATED MAY 5, 2010. AS PER DISORDER THE DEDUC TION AS PER SECTION 10A HAS BEEN WORKED OUT AT RS. 22,70,85,863/-, WHICH IS THE SAM E FIGURE WHICH WAS RETURNED BY THE ASSESSEE. IN OTHER WORDS, THE ASSESSING OFFICER AC CEPTED THE A RETURN COMPETITION WITH REGARD TO SECTION 10A. NOW, THE APPELLANT HAS ARGU ED , THAT KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY, EVEN FOR ASSESSMENT YEAR 2003-04, N O ADJUSTMENT ON THIS GROUND LIES WITH REGARD TO THE COMPUTATION UNDER SECTION 10A. I AM IN AGREEMENT WITH THE APPELLANT THAT THE PRINCIPLE OF CONSISTENCY, WHICH HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF GOPAL PUROHIT, DICTATES THAT, FACTS REM AINING THE SAME, ADJUSTMENT OF ITA NO.4999/MUM/2012 ASSESSMENT YEAR 2003-04 4 DEDUCTION UNDER SECTION 10A ON THE SAME GROUNDS ARE NOT POSSIBLE FOR ASSESSMENT YEAR 2003-04. HENCE, EVEN ON THIS GROUND THE NOTICE U/S .148 IS NOT SUSTAINABLE. 5. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 6. WE HAVE PERUSED THE ORDERS PASSED BY THE AUTHORI TIES BELOW AND THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE PRE SENT ASSESSMENT YEAR CITED BY THE LD. REPRESENTATIVE FOR THE ASSESSEE . THE PRESENT APPEAL FILED BY THE ASSESSEE IS ON 03.0 8.2012, ON IDENTICAL GROUND, WHICH HAS BEEN ALREADY DEALT WITH BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 7261/MUM/2008. IT IS OBSERVED BY US THAT THE LD .AO, GAVE EFFECT TO THE ORDER OF THE ITAT DATED 8/12/2009 VIDE HIS ORDER DATED 05 /05/2010 AND RECOMPUTED THE DEDUCTION UNDER SECTION 10A OF THE ACT. WE ARE THEREFORE NOT INCLINED TO ENTERTAIN THE APPE AL FILED BY THE REVENUE AS IT BECOMES INFRUCTUOUS. THE REVENUES APPEAL IS THEREFORE DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/10/2015 29/10/2015 SD/- SD/- ( , /RAJENDRA ) ( / BEENA PILLAI) /ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; #$ DATED 29/10/2015 ITA NO.4999/MUM/2012 ASSESSMENT YEAR 2003-04 5 !' #$ / COPY OF THE ORDER FORWARDED TO : 1. %&'( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. +, ( %& ) / THE CIT(A)- 4. +, / CIT 5. -. ),$/0 , %&1 %/0 , / DR, ITAT, MUMBAI 6. 2 / GUARD FILE. / BY ORDER, *-&, ), //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . $ . ./ VM , SR. PS