DCIT, Bangalore V. Sasken Network Engineering Ltd., Bangalore

ITA 530/BANG/2013

• Counselvise Citation: 53021114 RSA 2013
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 19-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BIJOY KUMAR PANDA
• Assessee Lawyers: PADAMCHAND KHINCHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO.530/BANG/2013 ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BANGALORE. VS. M/S. SASKEN NETWORK ENGINEERING LTD., 139/25, DOMLUR RING ROAD, DOMLUR, BANGALORE 560 071. PAN: AAICS 4405Q APPELLANT RESPONDENT APPELLANT BY : SHRI BIJOY KUMAR PANDA, ADDL.CIT(DR) RESPONDENT BY : SHRI PADAM CHAND KHINCHA, C.A. DATE OF HEARING : 06.01.2014 DATE OF PRONOUNCEMENT : 06.01.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 29.01.2013 OF THE CIT(APPEALS)-III, BANGALORE RELATING TO ASSE SSMENT YEAR 2009-10. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF INSTALLATION AND COMMISSIONING SERVICES. THE ASSESSEE ESTABLISH ED UNITS UNDER THE SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI) SCHEME. THE ASSESSEE WAS ITA NO.530/BANG/2013 PAGE 2 OF 5 ENTITLED TO CLAIM DEDUCTION U/S. 10A OF THE ACT IN RESPECT OF THE UNITS SO ESTABLISHED. WHILE COMPUTING THE EXPORT TURNOVER FO R THE PURPOSE OF ALLOWING DEDUCTION U/S. 10A OF THE ACT, THE AO EXCL UDED THE FOLLOWING AMOUNTS FROM THE EXPORT TURNOVER, BUT DID NOT EXCLU DE THE SAME FROM THE TOTAL TURNOVER. NATURE OF EXPENSES RS. TELECOMMUNICATION EXPENSES 15,32,972 TRAVEL & OTHER EXPENSES 46,47,990 3. THE ASSESSEE SUBMITTED THAT EXPLANATION 2 TO SEC TION 10A DEFINES EXPORT TURNOVER TO MEAN CONSIDERATION IN RESPECT OF EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDA NCE WITH SUB-SECTION (3), BUT DOES NOT INCLUDE FREIGHT, TELECOMMUNICATIO N CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES, IF ANY, INCURRED IN FOREIGN EXCH ANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA. THE ASSESSEE SUB MITTED THAT NONE OF THE AFORESAID ITEMS OF EXPENDITURE SET OUT ABOVE FELL W ITHIN THE EXCLUSIVE CLAUSE OF THE DEFINITION OF EXPORT TURNOVER. ALTERNATIV ELY, IT WAS SUBMITTED THAT IF THE AFORESAID AMOUNTS ARE EXCLUDED FROM THE EXPORT TURNOVER, THE SAME SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER AS LAID DOWN IN THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF TATA ELXSI LTD. 349 ITR 98 (KARN.). ITA NO.530/BANG/2013 PAGE 3 OF 5 4. THE AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE, AS ACCORDING TO HIM, THE REVENUE HAS NOT ACCEPTED THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT AND A SPECIAL LEAVE PETITION AGAINST THE SAID DECISION HAS BEEN FILED BEFORE THE HONBLE SUPREME COURT. THE AO ACC ORDINGLY EXCLUDED THE AFORESAID ITEMS FROM THE EXPORT TURNOVER WHILE COMP UTING DEDUCTION U/S.10A OF THE ACT. 5. THE CIT(APPEALS), ON THE AFORESAID ISSUES, FOLLO WING THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF TATA ELXSI LTD., 349 ITR 98 (KARN.) DIRECTED THE AO TO EXCLUDE THE AFORE SAID AMOUNTS FROM THE TOTAL TURNOVER ALSO. THE CIT(A) DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE THAT THE AFORESAID AMOUNTS CANNOT BE EXCLU DED FROM THE EXPORT TURNOVER. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) IN EXCLUDIN G THE AFORESAID ITEMS BOTH FROM THE EXPORT TURNOVER AND TOTAL TURNOVER, T HE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING EFFECTIVE GROUND:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW IN DIRECTING THE AO TO EXCLUDE THE REIMBURSEMENT OF TELECOMMUNICATION EXPENSES OF RS.1 5,32,972 AND OTHER EXPENSES TOTALING TO RS.46,47,900 INCURRE D IN FOREIGN CURRENCY BOTH FROM THE EXPORT TURNOVER AS WELL AS F ROM TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTIO N U/S. 10A WITHOUT APPRECIATING THE FACT THAT THE STATUTE ALLO WS EXCLUSION OF SUCH OF EXPENDITURE ONLY FROM EXPORT TURNOVER BY WA Y OF SPECIFIC DEFINITION OF EXPORT TURNOVER AS ENVISAGED BY SUB-C LAUSE (4) OF ITA NO.530/BANG/2013 PAGE 4 OF 5 EXPLANATION 2 BELOW SUB-SECTION (8) OF SECTION 10A AND THE TOTAL TURNOVER HAS NOT BEEN DEFINED IN THIS SECTION. 7. THE ISSUE RAISED BY THE REVENUE IS NO LONGER RES INTEGRA AND HAS NOW BEEN DECIDED BY THE HONBLE HIGH COURT OF KARNA TAKA IN THE CASE OF IN THE CASE OF TATA ELXSI LTD. IN 349 ITR 98 (KARN.) WHEREIN IT HAS BEEN HELD THAT WHATEVER IS EXCLUDED FROM EXPORT TURNOVER SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER. THE FACT THAT TH E REVENUE HAS NOT ACCEPTED THE DECISION OF THE HONBLE KARNATAKA HIGH COURT AND HAS FILED AN SLP BEFORE THE HONBLE SUPREME COURT CANNOT BE THE BASIS NOT TO FOLLOW THE DECISION OF THE HONBLE KARNATAKA HIGH COURT. IN VIEW OF THE AFORESAID DECISION OF THE HONBLE HIGH COURT OF KARNATAKA, WE ARE OF THE VIEW THAT THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL DO NOT REQUIRE ANY ADJUDICATION. CONSEQUENTLY THE GROUND RAISED BY THE REVENUE IN IT S APPEAL IS DISMISSED. 8. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 06 TH DAY OF JANUARY, 2014 . SD/- SD/- ( N. BARATHVAJA SANKAR ) ( N.V. VASU DEVAN ) VICE PRESIDENT JUDIC IAL MEMBER BANGALORE, DATED, THE 06 TH JANUARY, 2014. /D S/ ITA NO.530/BANG/2013 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.