Global Logic India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6082/DEL/2010

• Counselvise Citation: 608220114 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 25-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 31-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Section: 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C: NEW DELHIA BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T. A. NO.6082/DEL/2010 ASSESSMENT YEAR : 2005-06 GLOBAL LOGIC INDIA PVT. LTD., DY. COMMISSIONER OF INCOME-TAX, 207, GUPTA ARCADE, LSC, VS. CIRCLE 12(1), NEW DELH I. PLOT NO.5, MAYUR VIHAR PHASE-I, EXTN., DELHI-110091. PAN/GIR NO.AABCI2526F. (APPELLANT) (RESPONDEN T) APPELLANT BY : S/SHRI NEERAJ JAIN & ABHISHEK AGG ARWAL, AR. RESPONDENT BY : SHRI R.I.S. GILL, CIT-DR. O R D E R PER K.D. RANJAN, ACCOUNTAT MEMBER: THIS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 200 5-06 ARISES OUT OF THE ORDER OF THE ASSESSING OFFICER UNDER SEC. 143(3 ) READ WITH SEC. 144C OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. IN THIS CASE DELHI BENCH `C OF ITAT VIDE ORDER DATED 25 TH MARCH, 2011 IN ITA NO.6082/DEL/2010 FOR ASSESSMENT YEAR 20 05-06 HAS DISPOSED OF THE APPEAL. THE ASSESSEE FILED MISCELLANEOUS AP PLICATION DATED 18.06.2011 IN MA NO.182/DEL/2011 STATING THAT GROUN DS NO.8, 8.1 & 8.2 HAVE NOT BEEN DISPOSED OF. ITAT DELHI BENCH `FRIDA Y, NEW DELHI IN MA 2 NO.182/DEL/2011 RECALLED ORDER FOR DISPOSAL OF GROU ND NO.8, 8.1 & 8.2 RAISED IN ABOVE CAPTIONED APPEAL VIDE ORDER DATED 6 TH JANUARY, 2012. 3. THE APPEAL CAME UP FOR HEARING FINALLY ON 25 TH APRIL, 2012. SHRI NEERAJ JAIN, CA SUBMITTED THAT FOR THE PURPOSE OF D EDUCTION U/S 10A COMMUNICATION EXPENSES TO THE EXTENT OF RS.24,06,28 7/- AND INSURANCE EXPENSES TO THE EXTENT OF RS.3,32,329/- ARE TO BE R EDUCED FROM EXPORT TURNOVER FOR COMPUTATION IN TERMS OF CLAUSE (IV) O F EXPLANATION 2 TO SECTION 10A OF THE ACT. IT WAS FURTHER SUBMITTED THAT WHEN AN AMOUNT IS EXCLUDED FROM EXPORT TURNOVER, THE SAME IS TO BE REDUCED FRO M THE TOTAL TURNOVER. IN OTHER WORDS, THE AMOUNT WHICH IS REDUCED FROM EXPOR T TURNOVER IN THE NUMERATOR THEN THE SAME IS TO BE EXCLUDED FROM THE TOTAL TURNOVER IN THE DENOMINATOR. THE LEARNED AR PLACED RELIANCE ON VAR IOUS DECISIONS INCLUDING THE DECISION OF DELHI HIGH COURT IN THE C ASE OF HCL TECHNOLOGIES VS. ACIT IN ITA NOS.1320 & 1446/DEL/2008. ON THE O THER HAND, THE LEARNED CIT-DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. DRP IN THEIR ORDER HAVE STATE D THAT THE AO HAD ALLOWED THE CLAIM OF EXEMPTION U/S 10A OF THE ACT AT RS.2,7 3,74,225/- BY TAKING THE EXPORT TURNOVER OF RS.2,53,47,375/- BY REDUCING THE SAME BY THE EXPENDITURE OF RS.27,38,616/- BEING THE COMMUNICATION EXPENSES AND INSURANCE 3 EXPENSES ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE. WHILE DOING SO THE AO HAS RELIED ON THE EXPLANATION 2(IV) OF SEC. 10A OF THE I.T. ACT WHICH SPECIFICALLY STATES THAT EXPORT TURNOVER SHALL NOT INCLUDE FREIG HT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY O F ARTICLE OR THING OR COMPUTER SOFTWARE OUTSIDE INDIA. THE ASSESSEE HAD OBJECTED THIS ADJUSTMENT OF LOWERING DOWN OF THE CLAIM OF EXEMPTION MADE U/S 10A OF THE ACT BY SUBMITTING THAT IT HAD ESTIMATED THAT 5% OF INTERNE T CHARGES WERE ATTRIBUTABLE TO THE TRANSFER OF SOFTWARE AND NOT THE 20% OF ENTI RE COMMUNICATION EXPENSES AS HAD BEEN TAKEN BY THE AO. IT HAS ALSO BEEN STATED THAT THE AO HAD WRONGLY HELD THAT THE ENTIRE INSURANCE CHARGES INCLUDING INSURANCE OF BUSINESS PREMISES WERE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA. DRP IN VIEW OF THESE FACTS DIRECTED THE AO TO VERIF Y THE FACTS AND THEN REDUCE THE EXPORT TURNOVER BY THE EXPENSES INCURRED BY THE ASSESSEE WHICH WERE ACTUALLY ATTRIBUTABLE TO TRANSFER OF SOFTWARE AND THEN ONLY COMPUTE THE CLAIM OF EXEMPTION U/S 10A OF THE ACT. 5. THE ASSESSEE BEFORE US HAS STATED THAT THE AMOUN T WHICH IS TO BE REDUCED FROM THE EXPORT TURNOVER SHOULD ALSO BE RED UCED FROM THE TOTAL TURNOVER RELYING ON VARIOUS DECISIONS. ITAT SPECIA L BENCH IN THE CASE OF ITO VS. SAK SOFT LTD., 313 ITR (AT) 353 (CHENNAI)(S B) HAS HELD THAT EXPENSES ON FREIGHT, TELECOMMUNICATION CHARGES, OR INSURANCE ATTRIBUTABLE TO 4 THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES INCURRED IN FOREIGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA, WHICH ARE REQUIRED TO BE EXCLUDED FR OM THE EXPORT TURNOVER AS DEFINED IN EXPLANATION 2(III) BELOW SECTION 10B OF THE INCOME-TAX ACT, 1961, SHOULD ALSO BE EXCLUDED FROM THE FIGURE OF TOTAL TU RNOVER WHILE APPLYING THE FORMULA PRESCRIBED BY SUB-SECTION (4) OF SECTION 10 B OF THE ACT. SINCE THE ISSUE IS COVERED BY THE DECISION OF SPECIAL BENCH I N THE CASE OF SAK SOFT LTD. (SUPRA), WHICH HAD BEEN FOLLOWED BY THE VARIOUS BEN CHES IN LARGE NUMBER OF CASES, WE ARE OF THE CONSIDERED VIEW THAT THE AMOUN T ATTRIBUTABLE TO EXPORT WHICH IS TO BE REDUCED FROM EXPORT TURNOVER, SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER WHILE WORKING OUT THE DEDUCTION U/S 10A OF THE ACT. THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTE DEDUCTIO N U/S 10A AFTER REDUCING THE EXPORT TURNOVER AND TOTAL TURNOVER BY THE AMOUN T ATTRIBUTABLE TO EXPORT OF GOODS OR ARTICLES OR COMPUTER SOFTWARE AND DETERMIN E DEDUCTION U/S 10A OF THE ACT ACCORDINGLY. THE AO IS DIRECTED ACCORDINGL Y. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE TERMS MENTIONED AS ABOVE. 7. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2012. SD/- SD/- (RAJPAL YADAV) (K.D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH JUNE, 2012. 5 ITA NO.6082/DEL/2010 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.