DCIT, CHENNAI V. Ceequence Technologies Pvt. Ltd., CHENNAI

ITA 79/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9203 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 14-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIRAMAN
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.79/MDS/2016 ( / ASSESSMENT YEAR: 2011-12) THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-I(2 ), CHENNAI-600 034. VS M/S.CEEQUENCE TECHNOLOGIES PVT.LTD. 131, G.N. CHETTY ROAD, T.NAGAR, CHENNAI-600 017. PAN:AABCC7920M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.B.KOLI, JCIT /RESPONDENT BY : MR. A.S.SRIRAMAN, ADVOCATE /DATE OF HEARING : 28 TH MARCH, 2016 /DATE OF PRONOUNCEMENT : 6 TH JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)- 1, CHENNAI, DATED 04.09.2015 IN ITA NO.114/CIT(A)-1 (2013- 14) PASSED UNDER SECTION 143(3) OF THE ACT. 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEAL, HOWEVER THE CRUX OF THE ISSUE IS AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING THAT THE EXPENSES INCURRED IN FOREIGN CURRENCY ATTRIBUTABLE TO FREIGHT/TELECOMMUNICATION CHARGES AND INSURANCE SHOULD BE EXCLUDED BOTH FROM EXPORT TURNOVER AND 2 ITA NO.79 /MDS/2016 TOTAL TURNOVER WHILE COMPUTING DEDUCTION UNDER SECTION 10A OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.09.2011 ADMITTING TOTAL INCOME OF ` 38,16,306/-. SUBSEQUENTLY THE CASE WAS TAKEN UP FOR SCRUTINY; AN D THE ASSESSMENT WAS COMPLETED BY THE LEARNED ASSESSING O FFICER UNDER SECTION 143(3) OF THE ACT ON 13.09.2013 AFTER MAKING CERTAIN ADDITIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED ASSESSING OFFICER NOTICED THAT THE ASSESSEE WHILE WORKING OUT THE DEDUCTION UNDER SECT ION 10A OF THE ACT HAS EXCLUDED THE EXPENDITURE INCURRED IN FOREIGN CURRENCY AMOUNTING TO ` 61,37,952/- TOWARDS FREIGHT, TELECOMMUNICATION CHARGES AND INSURANCE CHARGES ATTRIBUTABLE TO DELIVERY OF SOFTWARE SERVICES OUTSI DE INDIA FROM BOTH EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER. HOWEVER, THE LEARNED ASSESSING OFFICER WAS OF THE V IEW THAT AS PER THE AMENDED PROVISIONS OF SECTION 10A OF THE ACT, EXPENSES INCURRED IN FOREIGN CURRENCY IN RELATION T O FREIGHT / TELECOMMUNICATION CHARGES SHOULD BE EXCLUDED ONLY F ROM 3 ITA NO.79 /MDS/2016 EXPORT TURNOVER AND NOT FROM TOTAL TURNOVER AND ACC ORDINGLY HE RECOMPUTED THE DEDUCTION CLAIMED BY THE ASSESSE E 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 MUST SAY THAT THE ISSUE IS COV ERED BY THE DECISION OF THE HONBLE MUMBAI HIGH COURT AND T HE SPECIAL BENCH OF THE TRIBUNAL CITED SUPRA AGAINST T HE REVENUE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ONLY FOLLOWED THE AFORESAID DECISIONS AND GIVEN RELIEF TO THE ASSESSEE. IN THIS SITUATION, WE DO NOT FIND IT 4 ITA NO.79 /MDS/2016 NECESSARY 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 6 TH JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 6 TH JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /