DCIT 8(3), MUMBAI V. SYNTEL LTD, MUMBAI

ITA 5850/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3473 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 13-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: DINESH VYAS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 5850/MUM/2013 (ASSESSMENT YEAR:2009-10) THE DY. COMMISSIONER OF INCOME TAX 8(3), ROOM NO.217, AAYAKAR BHAVAN, M. K. MARG, MUMBAI 400 020 APPELLANT VS. M/S. SYNTEL LTD. UNIT NO.112, SDF-IV, SEEPZ, ANDHERI (E), MUMBAI 400096 RESPONDENT PAN: AAACS8305D /BY APPELLANT : SHRI MANJUNATHA SWAMY, CIT D.R. /BY RESPONDENT : SHRI DINESH VYAS, A.R. /DATE OF HEARING : 18.08.2016 /DATE OF PRONOUNCEMENT : 26.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-18, MUMBAI, DA TED 04.07.2013 FOR A.Y. 2009-10 ON FOLLOWING GROUNDS: ITA NO.5850/MUM/13 A.Y. 09-10 [DCIT VS. M/S. SYNTEL LTD.) PAGE 2 (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING INTERE ST INCOME OF RS.14,26,60,079/- AS PROFITS ELIGIBLE FOR DEDUCTION U/S. 10A/10B WITHOUT APPRECIATING THAT TH E SAID INCOME WAS NOT DERIVED FROM EXPORT OF COMPUTER SOFTWARE AND HENCE WAS NOT ELIGIBLE FOR DEDUCTION U/S.10A/10B OF THE ACT.' (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) ERRED IN NOT APPRECIATING THE RA TIO OF THE JUDGEMENT OF THE HON'BLE APEX COURT IN THE CASE OF LIBERTY INDIA LTD. VS. CIT (317 ITR 218) WHEREIN IT IS HELD THAT THAT CERTAIN INCOME MAY CONSTITUTE PROFIT FROM BUSINESS U/S 28, YET THE SAME CANNOT BE CONSTRUED AS PROFITS DERIVED FROM AN INDUSTRIAL UNDERTAKING AND HENCE WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S.10A/10B OF THE ACT, WHICH RATIO HAS BEEN FOLLOWED BY THE HON'BLE ITAT, 'E' BENCH, MUMBA I IN THE CASE OF TRICORN INDIA LTD. VS. ACIT (36 SOT 302)( A.Y. 200607) AND IN THE SUBSEQUENT A.Y. 2007-08 IN THE SAME CASE BY ITAT, 'K' BENCH, MUMBAI [ITA NO.8058/MUM/ 2011 (ORDER DATED 03.05.2013)].' (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE IN TEREST INCOME FROM EEFC ACCOUNTS AS PROFITS ELIGIBLE FOR DEDUCTIONS U/S. 10A/10B OF THE ACT RELYING UPON THE BOMBAY HIGH COURT'S JUDGEMENTS IN THE CASES OF PUNI T COMMERCIAL LTD. (245 ITR 550) AND NAGPUR ENGINEERING (245 ITR 806) WITHOUT APPRECIATING THAT IN A SUBSEQUENT JUDGEMENT DELIVERED IN THE CASE OF CIT VS. SHAH ORIGINALS (327 ITR 19 [2010], IT WAS CATEGORICALLY HELD BY THE BOMBAY HIGH COURT THAT TH E INTEREST ACCRUED TO THE ASSESSEE ON THE DEPOSITS HE LD IN THE EEFC ACCOUNT FALLS FOR CLASSIFICATION AS INCOM E FROM OTHER SOURCES' AND CAN NOT BE TREAT AS BUSINES S INCOME.' 2. THE ONLY ISSUE IN APPEAL IS REGARDING ALLOWABILI TY OF INTEREST INCOME OF RS.14,26,60,079/- AS PROFITS ELI GIBLE FOR DEDUCTION U/S.10A/10B OF THE ACT. ITAT MUMBAI E BENCH IN ITA NO.5850/MUM/13 A.Y. 09-10 [DCIT VS. M/S. SYNTEL LTD.) PAGE 3 CASE OF STATE STREET SYNTEL SERVICES PRIVATE LIMITE D VS. DCIT IN ITA NO.6912/MUM/2014 BY FOLLOWING ASSESSEES OWN CA SE FOR A.Y.2009-10 ON SIMILAR ISSUE HELD AS UNDER: 7. NO MATERIAL DIFFERENCE IN FACT FOR THE IMPUGNED ASSESSMENT YEAR HAS BEEN BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH RENDERED IN ASSESSEE'S OWN CASE REFERRED TO ABOVE, WE ALLOW ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 10A. HOWEVER, IT IS OBSERVED THAT THE ASSESSING OFFICER HAD DISALLOWED CLAIM OF DEDUCTION UNDER SECTION 10A FOR AN AMOUNT OF RS.1,17,23,282, BEING THE INTEREST INCOME, WHEREAS, AS PER THE GROUND OF APPEAL RAISED BEFORE US AND THE ORDER OF THE LEARNED COMMISSIONER (APPEALS), THE INTEREST INCOME REFERRED TO THEREIN IS RS.1,70,23,282. THE ASSESSING OFFICER IS DIRECTED TO ALLOW ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 10A AFTER VERIFYING THE EXACT AMOUNT OF INTEREST INCOME.' THERE BEING NO MATERIAL DIFFERENCE IN FACTS BROUGHT TO OUR NOTICE BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, RESPECTFULLY FOLLOWING THE CONSISTE NT VIEW OF THE TRIBUNAL IN ASSESSEE'S OWN CASE, WE ALL OW ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 10A IN RESPECT OF INTEREST INCOME OF RS.4,46,09,912. GROUN D RAISED BY THE ASSESSEE IS ALLOWED. 2.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWI NG SAME REASONING, WE ALLOW THE ASSESSEES CLAIM OF DEDUCTI ON U/S.10A OF THE ACT IN RESPECT OF INTEREST INCOME AS RAISED BY ASSESSEE. 2.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, ITA NO.5850/MUM/13 A.Y. 09-10 [DCIT VS. M/S. SYNTEL LTD.) PAGE 4 WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF CIT(A) WHO HAS ALLOWED THE ASSESSEES CLAIM BY ALLOWING INTEREST I NCOME OF RS.14,26,60,079/- AS ELIGIBLE PROFIT FOR DEDUCTION U/S.10A/10B OF THE ACT. 3. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 26/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&