Deputy Commissioner of Income Tax Circle-6(1)(2), Bangalore V. M/s Swiss Re-shared Services Pvt Ltd , Bangalore

ITA 515/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7505 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: KEERTHI NARAYAN
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.515/ BANG/2017 (ASST. YEAR 2009-10) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 6(1)(2), BENGALURU. . APPELLANT VS. M/S SWISS RE-SHARED SERVICES PVT. LTD., NO.21, VASWANI CENTROPOLIS, 2 ND TO 6 TH FLOOR, LANGFORD ROAD, LANGFORD TOWN, BENGALURU. . RESPONDENT PAN AAECS8786L. APPELLANT BY : SHRI SMT. PADMAMEENAKSHI, JCIT RESPONDENT BY : SHRI KEERTHI NARAYAN, C.A DATE OF HEARING : 10-10-2017 DATE OF PRONOUNCEMENT : 11-10-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-6, BANGALORE DATED 27.12.2016 FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- ITA NO.515/B/17 2 2.1 THE ASSESSEE, A COMPANY ENGAGED IN THE BUSINE SS OF PROVIDING IT ENABLED SERVICES (ITES), FILED ITS RETURN OF INC OME FOR ASSESSMENT YEAR 2009-10 ON 24.09.2009 DECLARING TOTAL INCOME O F RS. 1,31,31,730/- AFTER, INTER ALIA, CLAIMING DEDUCTIO N U/S. 10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) TO THE TU NE OF RS.9,67,75,378/-. THE CASE WAS TAKEN UP FOR SCRUTI NY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VID E ORDER DATED 18.02.2013 WHEREIN THE ASSESSEES INCOME WAS DETERM INED AT RS.2,00,41,086/- IN VIEW OF, INTER ALIA, THE ASSES SING OFFICER (AO) DISALLOWING THE ASSESSEES EXCESS CLAIM FOR DEDUCTI ON U/S. 10A OF THE ACT TO THE EXTENT OF RS.69,09,356/-. ON APPEAL, TH E CIT(A)-6, BANGALORE PARTLY ALLOWED THE ASSESSEES APPEAL VIDE ORDER DATED 27.12.2016. IN DOING SO, THE LD. CIT(A) ALLOWED TH E ASSESSEES CLAIM FOR DEDUCTION U/S. 10A OF THE ACT FOLLOWING THE DEC ISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V T ATA ELXSI LTD. (349 ITR 98) (KAR). 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-6, BANGALO RE DATED 27.12.2016 FOR ASSESSMENT YEAR 2009-10, REVENUE HAS FILED THIS APPEAL, RAISING THE FOLLOWING GROUNDS:- 1.THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.515/B/17 3 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE CIT(A) ERRED IN CITING THE RATIO LAID DOWN BY THE H ON'BLE HIGH COURT IN THE CASE OF CIT VS TATA ELXSI LTD. RE PORTED IN 349 ITR 98 AND DIRECTING THE AO TO REDUCE EXPENS ES INCURRED IN FOREIGN CURRENCY, BOTH FROM EXPORT TURN OVER AS WELL AS FROM TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10A, WITHOUT APPRECIAT ING THE FACT THAT THE STATUTE ALLOWS EXCLUSION OF SUCH EXPENDITURE ONLY FROM EXPORT TURNOVER BY WAY OF A SPECIFIC DEFINITION FOR EXPORT TURNOVER IN THE ACT. ON THE OTHER HAND, THERE IS NO SPECIFIC PROVISION IN SECTI ON 10A WARRANTING EXCLUSION OF THE ABOVE EXPENSES FROM THE TOTAL TURNOVER ALSO. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE O RDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GRO UNDS MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER B E RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. THE LD. DR WAS HEARD IN SUPPORT OF THE GROUNDS RA ISED. ITA NO.515/B/17 4 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENT CITED. AS REGARDS THE ISSUE OF REDUC TION OF THE ITEMS OF EXPENDITURE INCURRED IN FOREIGN CURRENCY SUCH AS TELECOMMUNICATION CHARGES, PROFESSIONAL AND CONSULT ATION FEES, TRAVELLING AND CONVEYANCE EXPENSES ETC.; WHICH ARE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA AND IN RENDERING OF TECHNICAL SERVICES OUTSIDE INDIA, THE JURISDICTIONAL HIGH COU RT OF KARNATAKA IN THE CASE OF CIT V TATA ELXSI LTD (349 ITR 98) (KAR) HAS HELD THAT WHEN CERTAIN EXPENSES ARE EXCLUDED FROM THE EXPORT TURNOVER FOR THE PURPOSES OF COMPUTING DEDUCTION ADMISSIBLE UNDER TH E ACT; LIKE U/S. 10A OF THE ACT, SUCH EXPENSES ARE ALSO TO BE EXCLUD ED FROM TOTAL TURNOVER, AS EXPORT TURNOVER IS A PART OF TOTAL TUR NOVER. THE DECISION IN THE CASE OF TATA ELXSI LTD (SUPRA) HAS ALSO BEEN FO LLOWED BY THE HONBLE COURT IN ITS ORDER IN THE CASE OF DCIT V MO TOR INDUSTRIES CO. LTD., (ITA NO. 776/2006, 744/2007 AND 1155/2006 DAT ED 13.06.2014), HOLDING THAT IF ANY EXPENDITURE IS SOUGHT TO BE REM OVED FROM EXPORT TURNOVER, THEN IT SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER FOR THE PURPOSES OF COMPUTING THE ELIGIBLE DEDUCTION U/S. 1 0A OF THE ACT. IN THIS LEGAL AND FACTUAL MATRIX OF THE CASE, AS DISCU SSED ABOVE, WE FIND NO REASON TO INTERFERE WITH OR DEVIATE FROM THE FIN DING RENDERED BY THE LD. CIT(A) ON THIS ISSUE, AND THEREFORE UPHOLD THE SAME. CONSEQUENTLY, THE GROUNDS S.NOS. 1 TO 4 RAISED BY R EVENUE ARE DISMISSED. ITA NO.515/B/17 5 4. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER, 2017 . SD/- SD/- (N.V VASUDEVAN) (JASO N P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEM BER BANGALORE DATED : 11/10/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVAT E SECRETARY, ITAT, BANGALORE