ACIT, CHENNAI V. M/s. Sanmina SCI India (P) Ltd., CHENNAI

ITA 773/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6554 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. ITA NO.773/MDS./11 ASSESSMENT YEAR:2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(1) AAYAKAR BHAVAN, NEW BLOCK, 121,M.G.ROAD, 7 TH FLOOR, CHENNAI 600 034. VS. M/S.SANMINA SCI INDIA (P) LTD., A-51,PLOT NO.90,II AVENU,ANNANAGAR EAST, CHENNAI 600 102. PAN AAFCS 8737 E (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P JACOB ASSESSEE BY : NONE O R D E R PER N.S.SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-V, CHENNAI DATED 09.02.2011 BY TAKING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1.THE LD. COMMISSIONER OF INCOME TAX(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE EXPEN SES IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER ALSO FOR T HE PURPOSE OF CALCULATING DEDUCTION U/S.10A OF THE ACT . PAGE 2 OF 6 ITA. 773/MDS/11 2.2. THE LD. COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THAT THE CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10A STATES THAT EXPORT TURNOVER MEANS THE CONSIDERATION IN RESPEC T OF EXPORT BY THE UNDERTAKING OF ARTICLES OR THINGS OR COMPUTER SOFTWARE RECEIVED IN, OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE IN ACCORDANCE WITH SUB- SECTION(3) BUT DOES NOT INCLUDE FREIGHT, TELECOMMUN ICATION CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY O F THE ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE IND IA OR EXPENSES IF ANY, INCURRED IN FOREIGN EXCHANGE IN PR OVIDING THE TECHNICAL SERVICES OUTSIDE INDIA. 2.3. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRE D INRELYING ON THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. LAKSHMI MACHINE WORKS ( 290 ITR 667). 2.4 THE LD. COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THAT THE SAID JUDGEMENT WAS RENDERED IN THE CONTEXT OF CALCULATION OF DEDUCTION U/S.80HHC AND H ENCE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 2.5. THE LD. COMMISSIONER OF INCOME TAX(A) FAILED T O APPRECIATE THAT THE HONBLE SUPREME CFOURT ITSELF H AS STATED IN THE JUDGEMENT THAT OUR REASONING IN THIS JUDGEMENT IS CONFINED TO THE WORKABILITY OF THE FORMULA IN SECTION 80HHC(3) OF T HE ACT AS IT STOOD AT THE MATERIAL TIME.. 2.6. THE LD. COMMISSIONER OF INCOME TAX(A) FAILED TO APPRECIATE THAT SEC.80HHC COMES UNDER CHAPTER VI AS A DEDUCTION FROM THE GROSS TOTAL INCOME WHEREAS 10A PAGE 3 OF 6 ITA. 773/MDS/11 COMES UNDER CHAPTER III AND HENCE THE DECISION OF T HE HONBLE SUPREME COURT IS NOT COMPARABLE TO THE FACT S OF THIS CASE. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF PROVIDING INFORMATION TE CHNOLOGY SUPPORT, BACK OFFICE SUPPORT SERVICES AND PROJECT M ANAGEMENT SERVICES. WHILE COMPUTING TAXABLE INCOME, ASSESSEE DEDUCTED INSURANCE EXPENSES OF RS.1,90,936/- AND TELECOMMUNI CATION EXPENSES OF RS.38,40,278/- FROM EXPORT TURNOVER AND COMPUTED THE PROFIT ELIGIBLE FOR DEDUCTION U/S.10A AT RS.2,78,14,011/- AND AFTER CLAIMING DEDUCTION OF TH E SAME SHOWED NIL INCOME FOR THE YEAR UNDER CONSIDERATION. ON QUERY BY THE ASSESSING OFFICER FOR DEDUCTING INSURANCE EX PENSES AND TELECOMMUNICATION EXPENSES FROM THE TOTAL EXPORT TU RNOVER AND TOTAL TURNOVER, THE ASSESSEE RELIED ON DECISION OF THE SPECIAL BENCH OF THE ITAT,CHENNAI IN THE CASE OF ITO VS. SA KSOFT LTD. IN ITA NOS.691 & 1593/MDS./2007 DATED 06.03.2009. T HE ASSESSING OFFICER OBSERVED THAT AS THE REVENUE HAS GONE ON APPEAL AGAINST THE ABOVE TRIBUNAL ORDER, TRIBUNAL O RDER IS NOT FINAL. HENCE, THE SAID EXPENDITURE IS NOT DEDUCTED FROM THE TOTAL TURNOVER. PAGE 4 OF 6 ITA. 773/MDS/11 3. ON APPEAL, THE COMMISSIONER OF INCOME TAX(A) A LLOWED THE APPEAL OF ASSESSEE BY OBSERVING THAT AS UNDER:- 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND CONSIDERED THE SUBMISSIONS MADE BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT. IN VIEW OF THE FA CTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOL LOWING THE DECISION OF THE HON.BLE SUPREME COURT IN COMMISSIONER OF INCOME TAX VS. LAKSHMI MACHINE WORK S REPORTED IN (2007) (290 ITR 667), THE ASSESSING OFF ICER IS DIRECTED TO EXCLUDE THE IMPUGNED EXPENSES FROM THE TOTAL TURNOVER ALSO.. 4. NOTICE OF HEARING WAS SENT TO THE RESPONDENT ASS ESSEE BY REGISTERED POST WITH ACKNOWLEDGEMENT DUE, WHICH WAS RETURNED BY THE POSTAL AUTHORITIES WITH A REMARK LEFT. TH E BENCH WAS OF THE VIEW THAT THE APPEAL OF THE REVENUE CAN BE DISP OSED OF WITHOUT THE ASSISTANCE OF THE RESPONDENT ASSESSEE. THEREFORE, THE BENCH PROCEEDED TO DISPOSE OF THE APPEAL ON THE BASIS OF THE MATERIALS AVAILABLE ON RECORD AND CONSIDERING T HE SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE. 5. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT THE ISSUE WAS CORRECTLY DECIDED BY THE COMMISSIONER OF INCOME TAX(A) BY FOLLOWING THE DECISION OF SPECIAL BENCH O F THIS TRIBUNAL IN THE CASE OF ITO VS. SAKSOFT LTD. IN ITA NOS.691 & 1593/MDS/2007 DT.06.03.2009 AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS.LAKSHMI MACHINE WORKS IN (2007) 290 ITR 667 (SC) . PAGE 5 OF 6 ITA. 773/MDS/11 6. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. DR, THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 7. IN RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 14 TH JULY, 2011. SD/- SD/- ( GEORGE MATHAN ) ( N.SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 14 TH JULY, 2011. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE PAGE 6 OF 6 ITA. 773/MDS/11 DATE INITIALS 1. DRAFT DICTATED ON 14.07.1 1 2. DRAFT PLACED BEFORE AUTHORITY 15.07.11 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S. 6. KEEP FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE 9. DATE OF DISPATCH OF ORDER