DCIT, Bangalore V. M/s Dell International Services India Pvt. Ltd., Bangarpet

ITA 696/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0676 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-11-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 09-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: ANANDA PADMANABHAN

Judgement Text

PAGE 1 OF 4 ITA NO.696/B/09 1 IN THE INCOME TAX APPELLATE TRIBUNA L, BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K, J.M. AND SHRI A MOHAN ALANKAMONY, A.M ITA NO.696/BANG/2009 (ASSESSMENT YEAR 2004-05) THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. - APPELLANT VS M/S DELL INTERNATIONAL SERVICES INDIA (P) LOMITED, NO.12/1, 12/2A, 13/1A, DIVYASREE GREENS, CHALLAGHATTA VILLAGE, VARTHUR, HOBLI, BANGALORE-71. - RESPONDENT APPELLANT BY : SHRI JASON P BOAZ RESPONDENT BY : SHRI ANANDA PADMANABHAN ORD ER PER GEORGE GEORGE K : THIS APPEAL, FILED BY THE REVENUE, IS DIRECTED AG AINST THE ORDER OF LEARNED CIT(A)-IV, DATED 26TH MARCH, 2 009. THE ASST. YEAR CONCERNED IS 2004-05. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL, IS WHE THER THE CIT(A) IS JUSTIFIED IN DIRECTING THE ASSESSING OFFI CER TO ALLOW THE DEDUCTION ABOUT REDUCING TELECOMMUNICATION EXPENSES FROM THE PAGE 2 OF 4 ITA NO.696/B/09 2 EXPORT TURNOVER AS WELL AS THE TOTAL TURNOVER WHILE COMPUTING THE DEDUCTION U/S 10A IN RESPECT OF THE BANGALORE STP U NIT OF THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE AS FOLLOWS:- THE ASSESSEE COMPANY IS ENGAGED IN THE TRADE OF COMPUTER SYSTEMS, IN PROVIDING CALL CENTER, BACK OF FICE AND AFTER SALES SUPPORT, IT SUPPORT AND SHARED SERVICES. THE RETURN OF INCOME WAS FILED ON 29.10.2004 DECLARING A TOTAL IN COME OF RS.9,37,31,683/-. ASSESSMENT WAS COMPLETED ON 27TH DECEMBER, 2006 DETERMINING A TOTAL INCOME OF RS.44,59,68,980/ -. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER WA S OF THE VIEW, SECTION 10A REQUIRES THAT ANY AMOUNT OF FREIGHT, INS URANCE OR TELECOMMUNICATION CHARGES ATTRIBUTABLE TO THE DELIV ERY OF ARTICLE OR THING OR SOFTWARE OUTSIDE INDIA SHOULD BE EXCLUDED FOR THE PURPOSE OF ARRIVING AT THE EXPORT TURNOVER. ACCORDINGLY, SE CTION 10A DEDUCTION WAS REWORKED BY EXCLUDING TELECOMMUNICATIO N CHARGES AMOUNTING TO RS.19,11,69,979/- AS ATTRIBUTABLE TO D ELIVERY OF SOFTWARE OUTSIDE THE COUNTRY FROM THE EXPORT TURNOVE R. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WAS IN APPEAL BEFORE THE CIT(A). THE LEA RNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND AFTER PERUSING THE DECISIONS RELIED UPON BY THE ASSESSEE I N SUPPORT OF ITS CASE, DIRECTED THE ASSESSING OFFICER TO RE-WORK THE DEDUCTION U/S PAGE 3 OF 4 ITA NO.696/B/09 3 10A BY EXCLUDING FROM EXPORT TURNOVER AND TOTAL TURN OVER THE TELECOMMUNICATION CHARGES AMOUNTING TO RS.19,11,69, 976/-. 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), TH E REVENUE IS IN APPEAL BEFORE US. 6. WHEN THE MATTER WAS TAKEN UP FOR HEARING, THE LEARNED DR RELIED ON THE REASONING OF THE ASSESSING OFFICER. THE LEARNED AR FILED A LIST OF CASES RELIED UPON BY HIM AND ALSO THE DECISION OF THE ITAT IN ITA NO.251 & 309/BANG/2007 FOR THE ASST. YEARS 2002-03 AND 2003-04 IN ASSESSEE'S OWN CASE. 7. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CA SE CITED SUPRA. MOREOVER, THE DECISION OF SPECIAL BENCH IN THE CASE OF ITO V SAK SOFT LTD. 313 ITR (AT) 353 (CHENNAI) IS ALSO IN FAV OUR OF THE ASSESSEE WHEREIN IT WAS HELD THAT 'EXPENSES ON FREI GHT, TELECOMMUNICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTS IDE INDIA OR EXPENSES INCURRED IN FOREIGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA, WHICH ARE REQUIRED TO BE EX CLUDED FROM EXPORT TURNOVER IS ALSO TO BE EXCLUDED FROM THE TOT AL TURNOVER'. 8. RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DE CISION OF TRIBUNAL IN ASSESSEE'S OWN CASE AND THE SPECIAL BENCH CITED SUPRA, WE HOLD THAT THE CIT(A) IS JUSTIFIED IN DIRE CTING TO EXCLUDE PAGE 4 OF 4 ITA NO.696/B/09 4 TELECOMMUNICATION CHARGES OF RS.19,11,69,976/- NOT ONLY FROM THE EXPORT TURNOVER BUT ALSO FROM THE TOTAL TURNOVER WH ILE COMPUTING THE DEDUCTION U/S 10A OF THE ACT. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. PRONOUNCED IN THE OPEN COURT ON 27TH NOVEMBER, 2009 . SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED :27/11/2009 COPY TO : 1. THE REVENUE 2. THE ASSESSEE 3. THE CIT CONCERNED. 4. THE CIT(A) CONCERNED. 5. DR 6. GF 7. GF, ITAT, NEW DELHI. MSP/23/11/ BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.