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

ITA 5023/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9954 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: JIGAR MEHTA
• Section: 142(1); 10AA; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 5023 / MUM/20 1 5 ( / ASSESSMENT YEAR : 20 12 - 13 ) INCOME TAX OFFICER - 10(3)(4), ROOM NO. 555 , 5 TH FLOOR, AYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 / VS. M/S PRAXIS INTERACTIVE SERVICES PVT.LTD, 607/608, MULTI STORIES BLDG, SEEPZ, ANDHERI (E), MUMBAI - 400096 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AAECP5196M / APPELLANT BY: SHRI RAJAT MITTAL / RESPONDENT BY SHRI JIGAR MEHTA / DATE OF HEARING : 5. 7. 201 7 / DATE OF PRONOUNCEMENT : 13. . 7. 201 7 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 1 7 , MUMBAI D A T ED 2 8 . 07 .2015 PERTAINING TO A .Y. 20 12 - 13 . 2. IN THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C A SE AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE AO TO EXCLUDE RS.2.08 CRORES COMPRISING OF FOREIGN TRAVEL EXPENSES, US SUPPORT OFFICE EXPENSES, TRAVELLING EXPENSES ETC FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10AA OF THE ACT, AS THESE ARE SPENT IN FOREIGN CURRENCY FOR PROVIDING TECHNICAL SERVICES OUTSIDE INDIA ITA NO . 5023 / M/1 5 2 3. THE ISSUE RAISED BY THE RE VENUE IS AGAINST THE DIRECTION OF LD.CIT(A) TO THE AO TO EXCLUDE RS.2.08 CRORES ON ACCOUNT OF FOREIGN TRAVEL EXPENSES, US SUPPORT OFFICE EXPENSES ETC FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10AA OF THE INCOME TAX ACT, 196 1. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 29.10.2012 DECLARING NIL INCOME UNDER THE NORMAL PROVISIONS OF ACT AND RS.11,98,35,828/ - UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT AND THEREAFTER RECTIFICATION APPLICATION WAS ALSO MOVED. THEREAFTER , THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE YEAR, THE ASSESSEE CLAIMED DEDUCTION U/S 10AA OF THE ACT AMOUNTING TO RS.11,90 ,62,930/ - BY CLAIMING EXEMPTION ON THE ENTIRE EXPORT TURNOVER WHICH WAS ON 30,48,50,399/ - AS PER THE FORM 56F . T HE AO UPON GOING THROUGH T HE SAME FOUND THAT THE ASSESSEE INCURRED FOLLOWING FOREIGN EXPENSES: S.NO. NATURE OF EXPENSES AMOUNT IN RS. 1 US SUP PORT OFFICE EXPENSES 1,76,28,223/ - 2 BUSINESS ENTERTAINMENT FOREIGN 1,89,977 3 FOREIGN TRAVEL EXPENSES - HOTEL AND BOARDING 2,22,244 4 FOREIGN TRAVEL EXPENSES - MISC. 1,63,012 5 FOREIGN TRAVEL EXP - TAXI/SHUTTLE 3,43,703 6 FOREIGN TRAVEL EX -- TELEPHONE 14 ,484 7 TRAVELLING EXPENSES - PER DIEM 22,91,718 TOTAL 2,08,56,360/ - ACCORDING TO THE AO, THE TURNOVER FOR THE PURPOSES OF CALCULATION OF EXEMPTION U/S 10AA OF THE ACT HAS TO BE REDUCED BY FOREIGN EXCHANGE EXP ITA NO . 5023 / M/1 5 3 FOR PROVIDING TECHNICAL SERVICES OUTSIDE IN DIA. THE AO FURTHER NOTICE D THAT IN THE EARLIER YEAR ALSO THE SAID EXPENSES WERE REDUCED FROM THE EXPORT TURNOVER AND NOT FROM THE TOTAL TURNOVER OF THE UNDERTAKING. ACCORDINGLY, THE AO CALCULATED THE EXEMPTION AT RS.10,41,38,083/ - AS UNDER : EXPORT T URNOVER: RS.30,48,50,339/ - . LESS RS. 2,08,56,360/ - EXPORT TURNOVER RS.28,39,93,979/ - EXEMPTION U/S 10AA = BUSINESS PROFI T X EXPORT TURNOVER TOTAL TURNOVER = 11,17,85,926 X 28,39,93,979 30,48,50,339 EXEMPTION U/S 10AA = 10,41,38,083/ - 5. IN THE APPELLATE PROCEEDING, THE LD.CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE SIMILAR ISSUE HAS BEEN DECIDED BY HIS PREDECESSOR IN THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 1 2 IN FAVOUR OF THE ASSESSEE AND SINCE THE FACTS OF BOTH THE CASES ARE SAME, THE LD. CIT(A) DIRECTED THE AO TO EXCLUDE THE AFORESAID EXPENSES INCLUDING US SUPPORT OFFICE EXPENSES, BUSINESS ENTERTAINMENT FOREIGN AND FOREIGN TRAVEL EX TELEPHONE ETC. FROM THE TOTAL TURNOVER FOR THE PURPOSE OF CALCULATION OF EXEMPTION U/S 10AA OF THE ACT. 6 . AT THE OUTSET, THE LD.AR SUBMITTED THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE FOLLOWING DECISIONS: A) ITO V/S M/S PRAXIS INTERACTIVE TECHNOLOGIES PVT LTD IN ITA NO.3953/MUM/2010 (AY - 2006 - 07) DATED 16.9.2011; B) ITO V/S M/S PRAXIS INTERACTIVE TECHNOLOGIES PVT LTD IN ITA NO.8015/MUM/2010 (AY - 2007 - 08) DATED 7.9.2012; C) CIT V/S GEM PLUS JEWELLERY INDIA LTD ((2011) 330 ITR 175(BOM) . ITA NO . 5023 / M/1 5 4 THE LD.AR, THEREFORE PRAYED T HAT THE APPEAL OF THE REVENUE BE DISMISSED. 7 . THE LD. DR FAIRLY AGREED WITH THE CONTENTIONS OF THE LD.AR. 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE IMPUGNED ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE AS MENTIONED ABOVE AND THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GEM PLUS JEWELLERY INDIA LTD (SUPRA) . THE OPERATIVE PART OF THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IS REPRODUCED BELOW ( ITA NO.8015/MUM/2010 (AY - 2007 - 08) DATED 7.9.2012 ): 4. AT THE TIME OF HEARING BEFORE US, THE LD. REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE IS SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07 RENDERED VIDE ITS ORDER DATED 16.09.2011 I N ITA NO.3953/MA/2010, WHEREIN SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT AT CHENNAI IN THE CASE OF ITO VS. SAK SOFT LTD . (SUPRA). AS THE IS SUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACT RELEVANT THERE TO ARE SIMILAR TO THE ASSESSMENT YEAR 2006 - 07, WE RESPECTIVELY FOLLOW THE ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006 - 07 PASSED IN THE ASSESSEE'S OWN CASE AND UPHOLD THE IMPUGNED ORDER OF THE CIT(A) DIRECTING THE ASSESSING OFFICER NOT TO EXCLUDE THE EXPENDITURE IN QUESTION INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 10A. WE, THER EFORE, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE TRIBUNAL AND HONBLE HIGH COURT UPHOLD THE ORDER OF LD.CIT(A) BY DISMISS ING THE APPEAL OF THE REVENUE. ITA NO . 5023 / M/1 5 5 9 . IN THE RES U LT THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN TH E OPEN COURT ON 13TH JUL Y , 2017 . 13 JUL Y , 2017 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMB ER ACCOUNTANT MEMBER MUMBAI: 13 . 7.2017 . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDEN T. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI