24/7 customer Private Ltd, Bangalore V. Deputy commissioner of Income tax, Bangalore

ITA 689/BANG/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6268 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-02-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 31-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: SUMIT LOVANIWALA
• Keywords: Transfer pricing; International transaction; Competent authority; Set aside
• Section: 43B; 10; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A 689/BANG/2016 ASSESSMENT YEAR : 2011 12 M/S. 24/7 CUSTOMER PVT. LTD., PRESTIGE TECH PLATINA 2, SURVEY NOS. 32/1, 32/2, 34/1, 34/2, 34/3, 34/4, KADUBEESANAHALLI VILLAGE, VARTHUR HOBLI, OUTER RING ROAD BETWEEN SARJAPUR AND MARATHAHALLI, BANGALORE 560 087. PAN NO : AAACZ1014A VS. DEPUTY COMMISSIONER OF INCOME TAX, WARD 2 (1) (1), ROOM NO. 217, 2 ND FLOOR, BMTC BUILDING, KORAMANGALA, BANGALORE 560 047. APPELLANT RESPONDENT & IT(TP)A 591/BANG/2016 ASSESSMENT YEAR : 2011 12 DEPUTY COMMISSIONER OF INCOME TAX, WARD 2 (1) (1), ROOM NO. 217, 2 ND FLOOR, BMTC BUILDING, KORAMANGALA, BANGALORE 560 047. VS. M/S. 24/7 CUSTOMER PVT. LTD., PRESTIGE TECH PLATINA 2, SURVEY NOS. 32/1, 32/2, 34/1, 34/2, 34/3, 34/4, KADUBEESANAHALLI VILLAGE, VARTHUR HOBLI, OUTER RING ROAD BETWEEN SARJAPUR AND MARATHAHALLI, BANGALORE 560 087. PAN NO : AAACZ1014A APPELLANT RESPONDENT APPELLANT BY : SHRI. SUMIT LOVANIWALA, RESPONDENT BY : MR. MUZAFFAR HUSSAIN, CIT - DR DATE OF HEARING : 04 - 02 - 2020 DATE OF PRONOUNCEMENT : 07 - 02 - 2020 PAGE 2 OF 5 IT(TP)A 689/BANG/2016 & IT(TP)A 591/BANG/2016 A. Y : 2011 12 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE FINAL ASSESSMENT ORDER DATED 28/01/2016 PASSED BY LD. DCIT CIRCLE 2 (1) (1), BANGALORE. 2. AT THE OUTSET, LD. AR HAS LETTER DATED 04/11/2019 BY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBDT, PURSUANT TO WHICH ASSESSEE WISHES TO WITHDRAW ASSESSEES APPEAL FILED FOR YEAR UNDER CONSIDERATION. THE SAID LETTER IS REGARDING MUTUAL AGREEMENT PROCEDURE REACHED BETWEEN UNITED STATES COMPETENT AUTHORITY AND INDIAN COMPETENT AUTHORITY, WITH REGARD TO TRANSFER PRICING ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTIONS, RELATED TO ITES SEGMENT FOR YEAR UNDER CONSIDERATION. 2.1. LD. CIT DR DO NOT OBJECT FOR THE SAME. 3. CONSIDERING THE SUBMISSIONS MADE BY ASSESSEE IN ITS LETTER DATED 04/11/2019 BY MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, CBDT FILED BEFORE THIS TRIBUNAL ON, WE ALLOW WITHDRAWAL OF PRESENT APPEAL. ACCORDINGLY, GROUNDS RAISED BY ASSESSEE ON TRANSFER PRICING ISSUE IN PRESENT APPEAL STANDS DISMISSED AS WITHDRAWN. AND GROUND NO. 3 RAISED BY REVENUE IN THEIR APPEAL STANDS DISMISSED. 4. THERE IS CORPORATE TAX GROUND NO.12 RAISED BY ASSESSEE REGARDING DISALLOWANCE OF 10A DEDUCTION OF RS.3,43,54,527/-, BEING SOFTWARE EXPENSED PERTAINING TO HYDERABAD UNIT. 5. IT HAS BEEN SUBMITTED THAT, DISALLOWANCE IS REGARDING EXCLUSION OF TELECOMMUNICATION CHARGES PERTAINING TO DELIVERY OF COMPUTER PAGE 3 OF 5 IT(TP)A 689/BANG/2016 & IT(TP)A 591/BANG/2016 A. Y : 2011 12 SOFTWARE OUTSIDE INDIA FROM EXPORT TURNOVER AND ALSO EXPENDITURE INCURRED IN FOREIGN CURRENCY ON TRAVEL. 6. BOTH SIDES SUBMITTED THAT THERE ARE CORPORATE GROUNDS RAISED IN APPEAL FILED BY REVENUE. IT HAS BEEN SUBMITTED THAT GROUND NO.1 IN REVENUE APPEAL PERTAINS TO SAME ISSUE. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 6.1. GROUND NO.1 IN REVENUE APPEAL AND GROUND NO. 12 OF ASSESSEE APPEAL PERTAINS TO SAME ISSUE. 7. BOTH SIDES ALSO SUBMITTED THAT THIS ISSUE STANDS SETTLED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS TATA ELXSI LTD REPORTED IN 349 ITR 98, WHEREIN HONBLE HIGH COURT HELD THAT; TOTAL TURNOVER CONSISTS OF EXPORT TURNOVER AND THE TURNOVER FROM LOCAL SALES. EXPORT TURNOVER CONSTITUTED NUMERATOR OF THE FORMULA PROVIDED UNDER SECTION 10 A OF THE ACT, AND ALSO FORMS A CONSTITUTE ELEMENT IN DENOMINATOR, IN AS MUCH AS THE EXPORT TURNOVER IS PART OF THE TOTAL TURNOVER. ACCORDINGLY, IF AN AMOUNT IS REDUCED FROM THE EXPORT TURNOVER, THE SAME HAS TO BE REDUCED FROM THE ELEMENT OF EXPORT TURNOVER PRESENT IN THE TOTAL TURNOVER. IN THIS CONTEXT, HONBLE KARNATAKA HIGH COURT PLACED RELIANCE ON DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS GEM PLUS JEWELLERY INDIA LTD. , REPORTED IN (2011) 330 ITR 175. 8. RESPECTFULLY FOLLOWING THE ABOVE, WE DIRECT LD. AO TO RECOMPUTE DEDUCTION UNDER SECTION 10 A IN ACCORDANCE WITH RATIO LAID DOWN BY HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS TATA ELXSI LTD.,. PAGE 4 OF 5 IT(TP)A 689/BANG/2016 & IT(TP)A 591/BANG/2016 A. Y : 2011 12 ACCORDINGLY, GROUND NO.1 RAISED BY REVENUE STANDS DISMISSED AND GROUND NO.12 RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO. 2 IN REVENUES APPEAL IS REGARDING DISALLOWANCE DELETED PERTAINING TO BELATED REMITTANCES OF EPF/ESI. 9.1. LD. DR SUBMITTED THAT LD. AO ERRED IN NOT DISALLOWING DELAYED REMITTANCE OF EMPLOYEES CONTRIBUTION OF PF AND ESI. HE SUBMITTED THAT ANY DELAY IN REMITTANCE OF EMPLOYEES CONTRIBUTION ARE TO BE TREATED AS INCOME IN THE HANDS OF ASSESSEE IN TERMS OF PROVISIONS OF SECTION 2 (24) (X) READ WITH SECTION 36 (1) (VA) OF THE ACT. ON THE CONTRARY, LD. AR SUBMITTED THAT, ASSESSEE DELAYED REMITTANCE OF PF FOR THE MONTH OF JANUARY BY 6 DAYS AND ESI FOR THE MONTH OF JANUARY AND FEBRUARY BY 33 DAYS AND 5 DAYS RESPECTIVELY. HE SUBMITTED THAT AS PER 36 (I) (VA) IF EMPLOYEE CONTRIBUTION IS REMITTED BEFORE THE SPECIFIED DUE DATE FOR FILING OF RETURN UNDER SECTION 139 (1), THE SAME IS AN ALLOWABLE EXPENDITURE. HE PLACED RELIANCE UPON DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS SARABAI ENTERPRISES REPORTED IN 298 ITR 141 AND SPECTRUM CONSULTANTS INDIA PVT LTD., REPORTED IN (2013) 34 TAXMANN.COM 20 . 10. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. LD. AR HAS SUBMITTED THAT BOTH SECTIONS 36 (1) (VA) AND SECTION 43B ALLOWS SUCH PAYMENT TO BE CONSIDERED AS EXPENSES, IF THEY ARE MADE BEFORE THE DUE DATE FOR FILING RETURN OF INCOME DURING RELEVANT YEAR. WE THEREFORE SET ASIDE THIS ISSUE TO LD.AO FOR VERIFICATION IN ACCORDANCE WITH THE RATIO LAID PAGE 5 OF 5 IT(TP)A 689/BANG/2016 & IT(TP)A 591/BANG/2016 A. Y : 2011 12 DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS SARABAI ENTERPRISES AND SPECTRUM CONSULTANTS INDIA PVT LTD (SUPRA). ACCORDINGLY, THIS GROUND RAISED BY REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, APPEAL FILED BY ASSESSEE STANDS DISMISSED AS WITHDRAWN IN RESPECT OF TRANSFER PRICING ISSUES. IN RESPECT OF CORPORATE GROUNDS RAISED BY ASSESSEE THE GROUND STANDS ALLOWED. INSOFAR AS CORPORATE GROUNDS RAISED BY REVENUE IN THEIR APPEAL, THEY ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH FEBRUARY, 2020. SD/- SD/- (A. K. GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 07 TH FEBRUARY, 2020. /MK/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.