DCIT, Bangalore V. M/s Quality Enginnering & Software Technologies Pvt. Ltd., Bangalore

ITA 807/BANG/2012

• Counselvise Citation: 80721114 RSA 2012
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S NAMBIRAJAN JT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.807/BANG/2012 ASSESSMENT YEAR : 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(2), BANGALORE. VS. M/S QUALITY ENGINEERING & SOFTWARE TECHNOLOGIES P. LTD., NO.55, QUEST TOWERS, WHITEFIELD MAIN ROAD, MAHADEVAPURA, BANGALORE 560 025. PAN : AAACQ 0369B APPELLANT RESPONDENT APPELLANT BY : SHRI S. NAMBIRAJAN, JT. CIT(DR) RESPONDENT BY : SHRI ANKUR PAI, CA DATE OF HEARING : 27.07.2015 DATE OF PRONOUNCEMENT : 30.07.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DA TED 02.03.2012 OF THE CIT(APPEALS)-III, BANGALORE RELATING TO ASSESSM ENT YEAR 2007-08. ITA NO.807/BANG/2012 PAGE 2 OF 4 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO WHETHER THE CIT(APPEALS) WAS JUSTIFIED IN DIRECTING THE AO TO EXCLUDE THE EXPENSES TOWARDS TELECOMMUNICATION CHARGES AMOUNTIN G TO RS.44,39,870 AS ATTRIBUTABLE TO DELIVERY OF SOFTWARE AND EXPENDI TURE INCURRED ON FOREIGN TRAVEL AND CONVEYANCE, IN FOREIGN CURRENCY, OF RS.1 2,59,20,855 AS EXPENDITURE INCURRED IN PROVIDING SERVICES OUTSIDE INDIA, FROM THE TOTAL TURNOVER AS WELL AS EXPORT TURNOVER, WHILE COMPUTI NG DEDUCTION U/S. 10A OF THE ACT. 3. ACCORDING TO THE AO, AS PER THE DEFINITION OF EX PORT TURNOVER GIVEN IN CLAUSE (IV) TO EXPLANATION 2, THE EXPENSES INCURRED FOR FREIGHT EXPENSES ATTRIBUTABLE TO THE DELIVERY OF THE PRODUCT OR EXPE NDITURE INCURRED IN PROVIDING SERVICES OUTSIDE INDIA SHOULD BE REDUCED FROM THE EXPORT TURNOVER. HOWEVER, THE PROVISIONS OF SECTION 10A D O NOT PROVIDE FOR EXCLUSION OF SUCH EXPENDITURE FROM TOTAL TURNOVER. IN THE ABSENCE OF A DEFINITION FOR TOTAL TURNOVER IN SECTION 10A, THE N ORMAL DEFINITION OF TOTAL TURNOVER HAS TO BE ADOPTED AND AS SUCH THE EXPENSES WHICH ARE REDUCED FROM THE EXPORT TURNOVER IN ACCORDANCE WITH THE SPE CIFIC DEFINITION CANNOT BE REDUCED FROM THE TOTAL TURNOVER. 4. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) FOLL OWING THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. TATA ELXSI LTD., 349 ITR 98 (KARN) , HELD THAT WHATEVER IS EXCLUDED FROM THE EXPORT TURNOVER, HAS ALSO TO BE EXCLUDED FROM THE TOTAL TU RNOVER. ITA NO.807/BANG/2012 PAGE 3 OF 4 5. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE DE CISION OF HON'BLE HIGH COURT OF KARNATAKA IN TATA ELXSI (SUPRA) HAS NOT ATTAINED FINALITY AND A SLP BY THE DEPARTMENT IS PENDING BEFORE THE HON'B LE SUPREME COURT. WE ARE OF THE VIEW THAT AS OF TODAY, LAW DECLARED B Y THE HON'BLE HIGH COURT OF KARNATAKA WHICH IS THE JURISDICTIONAL HIGH COURT IS BINDING ON US. WE THEREFORE HOLD THAT THE ORDER OF CIT(A) DOES NOT CA LL FOR ANY INTERFERENCE AND ACCORDINGLY THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL BY THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF JULY, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASU DEVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 30 TH JULY, 2015. /D S/ ITA NO.807/BANG/2012 PAGE 4 OF 4 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.