ITO 2(1)(3), MUMBAI V. E-CLERX SERVICES P. LTD, MUMBAI

ITA 6451/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59773 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 260A

Judgement Text

1 E-CLERX SERVICES P LTD IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI E EE E BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI R R R R K PANDA, K PANDA, K PANDA, K PANDA, AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO ITA NO ITA NO ITA NOS SS S. . . . 6451/MUM/2010 (ASSESSMENT YEAR 2005 6451/MUM/2010 (ASSESSMENT YEAR 2005 6451/MUM/2010 (ASSESSMENT YEAR 2005 6451/MUM/2010 (ASSESSMENT YEAR 2005- -- -06) 06) 06) 06) & && & ITA NO. 6452/MUM/2010 (ASSESSMENT YEAR 2007 ITA NO. 6452/MUM/2010 (ASSESSMENT YEAR 2007 ITA NO. 6452/MUM/2010 (ASSESSMENT YEAR 2007 ITA NO. 6452/MUM/2010 (ASSESSMENT YEAR 2007- -- -08) 08) 08) 08) THE INCOME TAX OFFICER WARD 2(1)(3), MUMBAI VS E-CLERX SERVICES P LTD BANK ST IST FLOOR, FORT \MUMBAI 400 003 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACE 7932L AAACE 7932L AAACE 7932L AAACE 7932L ASSESSEE BY SH HITEN VASANT REVENUE BY SH D S SUNDER SINGH DT.OF HEARING 10 TH JAN N2012 DT OF PRONOUNCEMENT 20 JAN 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST TWO SEPARATE ORDERS BOTH DATED 22.6.2010 OF THE CIT(A) FOR THE ASSESSME NT YEAR 2005-06 & 2007-08 RESPECTIVELY. 2 THE COMMON GROUNDS RAISED BY THE ASSESSEE IN THES E APPEALS ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1 THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FAC TS OF THE CASE. 2. ON THE FACTS CIRCUMSTANCES OF THE CASE AND IN JA W THE CIT (A) HAS ERRED IN HOLDING THAT INSURANCE CHARGES, INTERNET CHARGES AND TELECOMMUNICATION/ TELEPHONE CHARGES SHALL BE REDUC ED FROM TOTAL TURNOVER WHILE WORKING OUT THE AMOUNT ELIGIBLE FOR EXEMPTION U/S 10 A 2 E-CLERX SERVICES P LTD WITHOUT APPRECIATING THAT NO PROVISION FOR DEDUCTIO N OF SUCH EXPENSES FROM TOTAL TURNOVER IS PROVIDED U/S 10A OF THE IT A CT. 3. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN JAW THE CIT(A) FAILED TO APPRECIATE THAT UNDER THE PROVISION OF SE C 10A OF THE IT ACT, IT IS THE EXPORT TURNOVER ONLY AND NOT THE TOTAL TURNOVER OF THE BUSINESS WHICH IS TO BE REDUCED BY THE EXPENSES INCURRED ON ACCOUN T OF INSURANCE CHARGES, INTERNET CHARGES AND TELECOMMUNICATION/TEL EPHONE CHARGES. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THA T OF THE ASSESSING OFFICER RESTORED. 3 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED B Y THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO. 5797/MUM/2009 VIDE ORDER DATED 22 ND OCT 2010 IN PARA NOS 4 & 5 AS UNDER: 4. THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION IN THE FOLLOWING WORDS: 4. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE E UTHANIZED REPRESENTATIVE AND I FIND FORCE IN THE ARGUMENT OF THE AUTHORIZED REPRESENTATIVE THAT THE TOTAL TURNOVER OF THE APPE LLANT IS TO BE EXCLUDED BY THE EXPENSES OF INSURANCE, INTEREST, PROFESSIONA L FEES AND TELEPHONE EXPENSES AS DECIDED IN THE CASE OF CIT VS. SUDARSHA N CHEMICAL INDUSTRIES LTD., 245ITR 769 AND CONFIRMED BY THE SUPREME COURT IN THE CASE OF LAKSHMI MACHINE WORKS, 290 ITR 667(SC). EVEN THE SP ECIAL BENCH OF ITAT., CHENNAI IN THE CASE OF SAK SOFT LTD . REPORTED IN ITA NO.691 OF 1953/MAD/2007 DATED 6 TH , MARCH, 2009 HAS HELD THAT IF CERTAIN EXPENSES ARE EXCLUDED FROM EXPORT TURNOVER THEN THE SAME SHO ULD ALSO B EXCLUDED FROM TOTAL TURNOVER. HENCE, THE ASSESSING OFFICER I S DIRECTED TO EXCLUDE THE EXPENSES MENTIONED ABOVE FOR COMPUTATION OF EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF DEDUCTION U/S. 10A. THI S GROUND OF APPEAL IS ALLOWED. HENCE THE PRESENT APPEAL. 3 E-CLERX SERVICES P LTD 5. WE HAVE CONSIDERED THE FACTS AND THE RIVAL CONTE NTIONS. THE LEARNED CIT DR, WHILE AGREEING THAT THE ISSUE NOW STANDS COVER ED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE SPECIAL BENCH, CHENNAI IN THE CASE OF SAK SOFT LTD., REPORTED IN (2009) 20 DTR 514, SUBMITTED THAT THE DEPARTMENT HAS NOT ACCEPTED THE SAID ORDER AND HAS FILED AN AP PEAL UNDER SECTION 260A BEFORE THE HIGH COURT. THE SPECIAL BENCH DECIS ION HAS BEEN FOLLOWED BY THE CIT(A), WHICH IS TO THE EFFECT THAT FOR PURP OSES OF SECTION LOB, WHICH IS SUBSTANTIALLY SIMILAR TO SECTION 1OA, WHATEVER I TEMS ARE EXCLUDED FROM THE EXPORT TURNOVER BECAUSE OF THE DEFINITION IN EX PLANATION 2(IV) HAVE ALSO TO BE EXCLUDED FROM THE TOTAL TURNOVER, WHICH EXPRESSION HAS NOT BEEN DEFINED IN THE SECTION. THE SPECIAL BENCH HAS CONSIDERED THE RELEVANT STATUTORY PROVISIONS AND THE AUTHORITIES A ND HAS COME TO THIS CONCLUSION. RESPECTFULLY FOLLOWING THE ORDER OF THE SPECIAL INCH, WE UPHOLD THE DECISION OF THE CIT(A) DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE FOUR ITEMS OF EXPENSES FROM THE COMPUTATION OF BOTH THE EXPORT TURNOVER AND THE TOTAL TURNOVER /FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 10A. 3.1 WE FURTHER NOTE THAT THE APPEAL FILED BY THE RE VENUE AGAINST THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006-07 HAS BE EN DISMISSED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER 26 TH JULY 2011 IN ITA NO.466 OF 2011 AS UNDER: THE LD COUNSEL FOR THE PARTIES STATE THAT THE QUES TIONS RAISED IN THIS APPEAL ARE COVERED AGAINST THE REVENUE BY THE DECIS ION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS GEM PLUS JEWE LLERY INDIA LTD REPORTED IN (210) 233 CTR P.248. ACCORDINGLY, THE A PPEAL IS DISMISSED. 4 ACCORDINGLY, FOLLOWING THE EARLIER ORDER OF THE T RIBUNAL, WHICH HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT, WE DECIDE THIS ISSUE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 5 IN THE RESULT, THE APPEALS FILED BY THE REVENUE A RE DISMISSED. ORDER PRONOUNCED ON THE 20 TH DAY OF JAN 2012. SD/ SD/- ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 20 TH , JAN 2012 RAJ* RAJ* RAJ* RAJ* 4 E-CLERX SERVICES P LTD COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI