DCIT, CHENNAI V. ISoft R & D Limited, CHENNAI

ITA 661/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8756 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.661/MDS/2016 ( / ASSESSMENT YEAR: 2007-08) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -2(2)., R.NO.512, 5 TH FLOOR, CHENNAI-600 034. VS M/S.ISOFT R & D LTD., 19 (OLD NO.8) HAFIZ COURT KODAMBAKKAM HIGH ROAD, NUNGAMBAKKAM, CHENNAI-600 034. PAN: AAACI7884D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. R.CLEMENT RAMESH KUMAR, ADDL.CIT /RESPONDENT BY : MR. RAGHUNATHAN PARTHASARATHY, MANAGER /DATE OF HEARING : 24 TH MAY,2016 /DATE OF PRONOUNCEMENT : 20 TH JULY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 6, CHENNAI DATED 13.01.2016 IN ITA NO.442/CIT(A)-6 /2013- 14 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOWS:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE EXPENSES INCURRED IN FOREIGN CURRENCY ATTRIBUTABLE TO LEASED LINE TELECOMMUNICATION CHARGES SHOULD BE EXCLUDED 2 ITA NO.661/MDS/2016 BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF PROVIDING IT ENA BLED SERVICES AND BPO SERVICES FILED ITS RETURN OF INCO ME FOR THE ASSESSMENT YEAR 2007-08 ON 26.10.2007 ADMITTING TO TAL INCOME OF ` 34,62,025/-. SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY; AND THE ASSESSMENT WAS COMPLETED BY T HE LEARNED ASSESSING OFFICER UNDER SECTION 143(3) OF T HE ACT ON 20.12.2010 AFTER MAKING CERTAIN ADDITIONS/DISALLOWA NCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LE ARNED ASSESSING OFFICER NOTICED THAT THE ASSESSEE WHILE W ORKING OUT THE DEDUCTION UNDER SECTION 10A OF THE ACT HAS EXCLUDED THE EXPENDITURE INCURRED IN FOREIGN CURRENCY AMOUNT ING TO ` 2,90,68,159/- TOWARDS COMMUNICATION AND LEASED L INE CHARGES AND INSURANCE CHARGES ATTRIBUTABLE TO DELIV ERY OF COMPUTER SOFTWARE SERVICES OUTSIDE INDIA FROM BOTH EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER. HOWEVE R, THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT AS PER THE AMENDED PROVISIONS OF SECTION 10A OF THE ACT, EXPEN SES 3 ITA NO.661/MDS/2016 INCURRED IN FOREIGN CURRENCY IN RELATION TO COMMUNI CATION CHARGES SHOULD BE EXCLUDED ONLY FROM EXPORT TURNOVE R AND NOT FROM TOTAL TURNOVER AND ACCORDINGLY HE RECOMPUT ED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 10A OF THE ACT. 4. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE DECISION OF THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CIT VS. GEM PLUS JEWELLERY IN DIA LTD. REPORTED IN 330 ITR 175 AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. SAK SOFT LTD., REPORTED IN 313 ITR (AT) 353(CHENNAI) HELD THAT EXPENSES IN FOR EIGN EXCHANGE AND TELECOMMUNICATION CHARGES SHOULD BE RE DUCED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER, AGAIN ST WHICH THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, WE FIND THAT THIS ISSUE IS COVERE D BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT AND THE S PECIAL BENCH OF THE TRIBUNAL CITED SUPRA AGAINST THE REVEN UE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ONLY FOLLOWED THE AFORESAID DECISIONS AND GIVEN RELIEF T O THE 4 ITA NO.661/MDS/2016 ASSESSEE. IN THIS SITUATION, WE DO NOT FIND IT NECE SSARY TO INTERFERE WITH HIS ORDERS. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DEVOID OF MERIT. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20 TH JULY, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 20 TH JULY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF