DCIT, CHENNAI V. M/s. Alcatel Lucent India Ltd., CHENNAI

ITA 524/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4970 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: K VENKATACHALAM; V P MANIKANDAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE U.B.S.BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER .. ITA NO.523/MDS./2011 ASSESSMEN T YEAR:2005-06 ITA NO.524/MDS./2011 ASSESSMEN T YEAR:2006-07 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE 1(1), CHENNAI 600034. VS. M/S.ALCATEL LUCENT INDIA LTD., (FORMERLY KNOWN AS M/S.ALCATEL DEVELOPMENT INDIA PVT LTD.,) 94-95,THIRUVIKA INDUSTRIAL ESTATE,GUINDY, CHENNAI 600 032. PAN AAACA 9352 S (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.VENKATACHALAM & SHRI V.P.MANIKANDAN DEPARTMENT BY : SHRI P.B.SEKARAN O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS OF THE REVENUE DIRECTED AGA INST THE ORDERS DT.22.12.10 & 20.12.10 OF CIT(A)-III, CHENN AI FOR THE RESPECTIVE ASSESSMENT YEARS. GROUNDS TAKEN BY THE REVENUE IN BOTH THE YEARS ARE SIMILAR. 2. ITS GRIEVANCE IS THAT THE COMMISSIONER OF INCOM E TAX(A) DIRECTED THE ASSESSING OFFICER TO REDUCE ALL THE EX PENSES, WHICH WERE EXCLUDED FROM EXPORT TURNOVER FROM THE T OTAL PAGE OF 5 ITA. 523 & 524/MDS/11 2 TURNOVER ALSO WHILE COMPUTING DEDUCTION U/S.10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). AS PER THE REV ENUE THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF ITO VS.M/S.SAK SOFT LTD., IN 121 TTJ 865 RELIED ON BY THE COMMISSIONER OF INCOME TAX(A) WAS NOT ACCEPTABLE AN D IT HAD PREFERRED AN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT. 3. ASSESSING OFFICER WHILE COMPUTING THE INCOME O F THE ASSESSEE , ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF COMPUTER SOFTWARE, HAD EXCLUDED CERT AIN TELECOMMUNICATION EXPENSES AND CERTAIN FOREIGN CURR ENCY TRAVEL EXPENSES FROM THE EXPORT TURNOVER WHILE WORK ING OUT ELIGIBLE DEDUCTION U/S.10A OF THE ACT. THOUGH SUCH AMOUNTS WERE EXCLUDED FROM THE EXPORT TURNOVER, THE ASSESS ING OFFICER DID NOT EXCLUDE IT FROM THE TOTAL TURNOVER WHILE AP PLYING THE RATIO FOR WORKING OUT THE DEDUCTION U/S.10A OF THE ACT. ASSESSEE MOVED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A), BOTH AGAINST EXCLUSION OF THE ABOVE AMOUNTS FROM THE EXPORT TOTAL TURNOVER AND ALSO AGAINST NON -EXCLUSION OF SAME FROM THE TOTAL TURNOVER WHILE WORKING OUT D EDUCTION U/S.10A OF THE ACT. COMMISSIONER OF INCOME TAX(A) CONFIRMED THE ORDERS OF THE ASSESSING OFFICER INSOFAR AS THE EXCLUSION OF THESE AMOUNTS FROM EXPORT TURNOVER WAS CONCERNED. NEVERTHELESS, THE COMMISSIONER OF INCOME TAX(A) REL YING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N M/S.SAK SOFT LTD.(SUPRA) HELD THAT THE AMOUNTS WHICH WERE R EDUCED FROM THE EXPORT TURNOVER, HAD ALSO TO BE EXCLUDED F ROM THE TOTAL TURNOVER, WHILE WORKING OUT THE DEDUCTION U/S.10A O F THE ACT. PAGE OF 5 ITA. 523 & 524/MDS/11 3 4. NOW BEFORE US, LD. DR STRONGLY ASSAILING THE OR DERS OF THE COMMISSIONER OF INCOME TAX(A) SUBMITTED THAT EX CLUSION OF THE FOREIGN CURRENCY EXPENSES FROM TOTAL TURNOVE R WAS NOT WARRANTED AND THE COMMISSIONER OF INCOME TAX(A) ERR ED IN RELYING ON THE DECISION OF THE SPECIAL BENCH OF THI S TRIBUNAL IN THE CASE OF M/S.SAK SOFT LTD. 5. PER CONTRA LD.AR SUBMITTED THAT RECENTLY HON BLE BOMBAY HIGH COURT HAD ALSO IN THE CASE OF COMMISSIO NER OF INCOME TAX VS. GEM PLUS JEWELLERY INDIA LTD.[2010] 233 CTR 248 HELD THAT EXPORT TURNOVER IN THE NUMERATOR MUST HAVE THE SAME MEANING AS THE EXPORT TURNOVER WHICH FORMS A CONSTITUENT ELEMENT OF THE TOTAL TURNOVER IN THE DE NOMINATOR. THEREFORE ACCORDING TO HIM, THE APPEAL OF THE REVEN UE HAD NO MERITS. 6. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES B ELOW AND HEARD THE RIVAL CONTENTIONS. THE SPECIAL BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.SAK SOFT LTD., HAS CLEARLY HELD THAT TOTAL TURNOVER FOR THE PURPOSE OF APPLYING THE FORMULA P RESCRIBED, FOR COMPUTING DEDUCTION SHOULD BE CONSTRUED IN THE SAME MANNER IN WHICH EXPORT TURNOVER HAS BEEN DEFINED. I N OTHER WORDS WHATEVER WAS EXCLUDED FROM THE EXPORT TURNOVE R WAS ALSO REQUIRED TO BE EXCLUDED FROM TOTAL TURNOVER WH ILE APPLYING THE FORMULA PRESCRIBED IN SEC.10A OF THE ACT. THIS VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT ALSO IN THE CASE OF GEM PLUS JEWELLERY INDIA LTD.(SUPRA). WE ARE, T HEREFORE, OF PAGE OF 5 ITA. 523 & 524/MDS/11 4 THE OPINION THAT COMMISSIONER OF INCOME TAX(A) WAS JUSTIFIED IN DIRECTING SUCH EXCLUSION. NO INTERFERENCE IS REQ UIRED. 7. APPEALS OF THE REVENUE IN BOTH THE YEARS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JUNE, 2011. SD/- S D/- ( U.B.S.BEDI ) ( ABRAHAM P. GEORGE ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 2 ND JUNE, 2011. KSS COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE OF 5 ITA. 523 & 524/MDS/11 5 DATE INITIALS 1. DRAFT DICTATED ON 02.06.11 2. DRAFT PLACED BEFORE AUTHORITY 02.06.11 3. DRAFT PLACED BEFORE THE 03.06.11 SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER