Deputy Commissioner of Income-tax, Circle - 11, Pune V. Capgemini Technology Services India Limited , (Formerly known as I Gate Solution Ltd), Pune

ITA 612/PUN/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9006 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 05-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GARG
• Keywords: Set aside

Judgement Text

आयकर अपीलीय अधधकरण “बी ” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI R.S.SYAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 612/PUN/2018 धनधाारण वषा / Assessment Year : 2005-06 The Deputy Commissioner of Income Tax, Circle-11, Pune. .......अपीलाथी / Appellant बनाम / V/s. Capgemini Technology Services India Limited ( formerly known as I Gate Global Solution Limited) Plot No.14, Tajiv Gandhi Infotek Park, Hinjewadi, Phase-III, MIDC SEZ, Pune-411 057 PAN : AABCM4573E ......प्रत्यथी / Respondent Assessee by : Shri C.H. Naniwadekar Revenue by : Shri Sandeep Garg सुनवाई की तारीख / Date of Hearing : 08.11.2021 घोषणा की तारीख / Date of Pronouncement : 09.11.2021 आदेश / ORDER PER CHANDRA MOHAN GARG JM: This appeal filed by the Revenue is directed against the order of the Ld. CIT(Appeals)-3, Bangaluru dated 12.01.2018 for the assessment year 2005- 06 as per the following grounds of appeal: “1. The order of the Ld. Commissioner of Income Tax (Appeals) is contrary to the law and on facts and in the circumstances of the case. 2. The Ld. CIT(A) erred on the facts and circumstances of the case in directing the AO to reduce the telecommunication expenses of 2 ITA No. 612/PUN/2018 A.Y.2005-06 Rs.7,63,45,379/- from the total turnover also even though the decision on the issue is pending with the Apex Court in the case of Tata Elxsi Ltd. 3. The Ld. CIT(A) erred on facts and circumstances of the case in directing the AO to reduce the expenses incurred in foreign currency in relation to the provision for technical services of Rs.92,08,86,067/- from export turnover as well as total turnover for computing the deduction u/s.10A and u/s.10AA of the Act even though the decision on the issue is pending with the Apex Court in the case of Tata Elxsi Ltd. 4. The Ld. CIT(A) erred on facts and circumstances of the case in directing the AO to reduce the amounts recovered from customers towards hardware and software amounting to Rs.4,74,297/-, Rs.3,34,000/- and Rs.17,87,203/- from total turnover of STPI units while computing deduction u/s.10A even though the decision on the issue is pending with the Apex Court in the case of Tata Elxsi Ltd. 5. For these and such other grounds as may be urged at the time of hearing, the order of the Ld. CIT(A) may be vacated and that of the AO restored. 6. The appellant craves to add, amend, alter or delete any of the above ground of appeal during the course of appellate proceedings before the Hon’ble Tribunal.” 2. Ground Nos. 1, 5 and 6 are general in nature and hence, no adjudication is required. Ground Nos. 2 & 3 3. The Ld. CIT DR vehemently supported the assessment order and submitted that the Ld. CIT(Appeals) in assessee’s own case for the assessment years 2002-03 and 2003-04 has held that 80% of link charges are attributable towards delivery of computer software outside India. It is also observed by the Ld. CIT(Appeals) that during the said assessment years, the assessee has incurred expenditure on link charges of Rs.9,54,31,724/- and following the same, the Assessing Officer was rightly directed that 80% of total link charges has to be reduced from export turnover for each STPI. 3.1 The Ld. CIT DR further contended that the Ld. CIT(Appeals) was not correct in directing the Assessing Officer to reduce the telecommunication 3 ITA No. 612/PUN/2018 A.Y.2005-06 expenses from the total turnover also even though the decision on the issue is pending with the Hon’ble Apext Court in the case of Tata Elxsi Ltd. The Ld. CIT DR also submitted that in the facts and circumstances of the case, the Ld. CIT(Appeals) also erred in directing the Assessing Officer to reduce the said expenses incurred in foreign currency in relation to the provision for technical services from export turnover as well as total turnover for computing the deduction u/s.10A and u/s.10AA of the Act even though the decision on the issue is pending with the Hon’ble Apext Court in the case of Tata Elxsi Ltd. 4. Replying to the above, the Authorized Representative (AR) supported the findings recorded by the Ld. CIT(Appeals) and drew attention towards relevant paragraphs of the First Appellate Order and submitted that the Hon’ble Supreme Court in the case of CIT Vs. Yokogawa India Ltd. (2017) 77 taxmann.com 41 (SC) has observed that though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. 4.1 The Ld. AR further submitted that this issue has been decided by the Tribunal against the Appellant/Revenue in its own case I Gate Global Solutions Ltd. (2008) 24 SOT 3 ( Bang.) and therefore, the Ld. CIT(Appeals) has rightly granted relief to the assessee. 5. On being asked, the Ld. CIT DR candidly submitted that the Tribunal has decided this issue in favour of the assessee and this proposition is also followed by the Ld. CIT(Appeals) while granting relief to the assessee. 4 ITA No. 612/PUN/2018 A.Y.2005-06 6. On careful consideration of the above submissions, we are of the considered view that the Ld. CIT(Appeals) has rightly followed the order of the Tribunal and directed the Assessing Officer to reduce the impugned telecommunication expenses incurred by the assessee and in foreign currency in relation to the provision for technical services from export turnover as well as total turnover for computing the deduction u/s.10A and u/s.10AA of the Act. We are unable to see any ambiguity, perversity or invalidity in the findings of the Ld. CIT(Appeals) and accordingly, the same is upheld. Thus, Ground Nos. 2 & 3 raised in appeal by the Revenue are dismissed. Ground No.4 7. The Ld. CIT DR supported the action of the Assessing Officer and submitted that the Assessing Officer has rightly observed that recovery from customers towards hardware and software amounting to Rs.22,62,000/- and Rs.3,34,000/- were erroneously included in export turnover while computing deduction u/s.10A of the Act and the same has to be reduced from export turnover. The Ld. CIT DR also submitted that the Ld. CIT(Appeals) granted relief to the assessee without justifying the reason and basis and he has erred on facts and circumstances of the case in directing the Assessing Officer to reduce the amounts recovered from customers towards hardware and software from total turnover of STPI units while computing deduction u/s.10A of the Act even though the decision on the issue is pending with the Hon’ble Apext Court in the case of Tata Elxsi Ltd. Therefore, the findings recorded by the Assessing Officer may be restored and set aside the findings of the Ld. CIT(Appeals). 8. Replying to the above, the Ld. AR drew attention to Para 6 of the Ld. CIT(Appeals)’s order and submitted that this issue is covered by the decision 5 ITA No. 612/PUN/2018 A.Y.2005-06 of the Hon’ble Bombay High Court in the case of CIT Vs. Tata Elxsi Ltd. (2012) 349 ITR 98 which is in existence and binding on all the Lower Authorities including the Tribunal. Therefore, the Ld. CIT(Appeals) has rightly followed the same despite the fact that SLP of the Department is pending before the Hon’ble Supreme Court for adjudication. 9. On careful consideration of the above submissions, we are of the considered view that the judgment rendered by the Hon’ble Jurisdictional High Court of Bombay, on the same issue in favour of the assessee, in the case of CIT Vs. Tata Elxsi Ltd. (supra.) is holding the field till the same is set aside or amended or modified by the Hon’ble Supreme Court and thus, at this juncture it has binding effect on all the Lower Authorities including the Tribunal. Therefore, we are compelled to hold the Ld. CIT(Appeals) has rightly granted relief to the assessee and we are unable to see any valid reason to interfere with the findings recorded by the Ld. First Appellate Authority and thus, the same is hereby upheld. Accordingly, Ground No.4 raised in appeal by the Revenue is dismissed. 10. In the result, appeal of the Revenue is dismissed. Order pronounced on 09 th day of November, 2021. Sd/- Sd/- R.S.SYAL CHANDRA MOHAN GARG VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; ददनांक / Dated : 09 th November, 2021. SB 6 ITA No. 612/PUN/2018 A.Y.2005-06 आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT(Appeals)-13, Pune. 4. The Pr. CIT-5, Pune. 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गार्ा फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // धनजी सधचव / Private Secretary आयकर अपीलीय अधधकरण, पुणे / ITAT, Pune. 7 ITA No. 612/PUN/2018 A.Y.2005-06 Date 1 Draft dictated on 08.11.2021 Sr.PS/PS 2 Draft placed before author 09.11.2021 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order