I.T.O. 2(1)(3), MUMBAI V. ECLERX SERVICE LTD., MUMBAI

ITA 8321/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9327 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GIRIJA DAYAL
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT (MZ) AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.8321/M/2011 ASSESSMENT YEAR: 2008-2009 ITO-2(1)(3), ROOM NO.553, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. VS. M/S. ECLERX SERVICES LTD., 29, BANK STREET, 1 ST FLOOR, FORT, MUMBAI 400 001. PAN: AAACE7932L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GIRIJA DAYAL, CIT - DR RESPONDENT BY : SHRI HITEN VASANT, AR DATE OF HEARING: 21.11.12 DATE OF ORDER:2 3.11.2012 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 8.12.2011 IS DI RECTED AGAINST THE ORDER OF CIT (A)-4, MUMBAI DATED 15.9.2011 FOR THE ASSESSMEN T YEAR 2008-2009. 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD CIT (A) ERRED TO ALLOW ASSESSEES APPEAL BY HOLDING THAT FOR THE PUR POSE OF DEDUCTION / EXEMPTION U/S 10A, THE INSURANCE, INTEREST, TELEPHONE PROFESSIONAL CHARGES AND CONTRACT SERVICES IN FOREIGN EXCHANGE DO NOT HAVE AN ELEMENT OF TURNOVER AND THESE FOUR ITEMS HAVE TO BE EXCLUDE D FROM THE TOTAL TURNOVER PARTICULARLY IN ABSENCE OF A LEGISLATURE PRESCRIPTI ON TO THE CONTRARY. 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT (A) MAY BE SET ASIDE AND TH AT OF THE ASSESSING OFFICER RESTORED. 3. AT THE OUTSET, SHRI HITEN VASANT, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE REVENUE IS NOT HAPPY WITH THE FINDING OF THE CI T (A) WHO HELD THAT THE RECEIPTS LIKE INSURANCE, INTEREST ON FD, TELEPHONE, PROFESSI ONAL CHARGES AND CONTRACT SERVICES WHICH WERE NOT INCLUDED IN THE EXPORT TURNOVER SH OULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUC TION / EXEMPTION U/S 10A OF THE ACT. IN THIS REGARD, LD COUNSEL FILED A COPY OF TH E ORDER OF THE TRIBUNAL IN ASSESSEES 2 OWN CASE FOR THE ASSESSMENT YEARS 2005-2006 AND 200 7-2008 VIDE ITA NO.6451/MUM/2010 AND ITA NO. 6542/M/2010 DATED 21.1 .2012 IN SUPPORT OF THE CLAIM OF THE ASSESSEE. FURTHER, HE READ OUT THE RE LEVANT PARAGRAPH FROM THE SAID ORDER TO DEMONSTRATE THAT THE ISSUE RAISED IN THE G ROUND IS COMPARABLE AND THE DECISION OF THE TRIBUNAL IS, THEREFORE, DIRECTLY AP PLICABLE TO THE INSTANT ASSESSMENT YEAR OF THE ASSESSEE. HE ALSO MENTIONED ABOUT THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN INCOME TAX APPEAL (L) NO.466 OF 2011 DATED 26.7.2011 IN ASSESSEES OWN CASE WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE AND DISMISSING THE APPEAL OF THE REVENUE. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO. 5. WE HAVE PERUSED THESE ORDERS OF THE REVENUE AND ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE DATED 21.1.2012 AS WELL AS THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE (S UPRA) DATED 26.7.2011 WHEREIN THE APPEAL OF THE REVENUE WAS DISMISSED AND IN VIEW OF THE RELEVANCE OF PARAGRAPHS 3 AND 3.1, WE REPRODUCE THE SAME HERE UNDER: 2. WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-207 IN ITA NO . 5797/MUM/2009 VIDE ORDER DATED 22 ND OCTOBER, 2010 IN PARA NOS 4 & 5 AS UNDER: 4. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE A UTHORIZED REPRESENTATIVE AND I FIND FORCE IN THE ARGUMENT OF THE AUTHORIZED REPRESENTATIVE THAT THE TOTAL TURNOVER OF THE APPEL LANT IS TO BE EXCLUDED BY THE EXPENSES OF INSURANCE, INTEREST, PROFESSIONAL FEES AND TELEPHONE EXPENSES AS DECIDED IN THE CASE OF CIT VS. SUDARSHAN CHEMICAL INDUSTRIES LTD. 245 ITR 769 AND CONFIRMED BY THE SUPREME COURT IN THE C ASE OF LAKSHMI MACHINE WORKS , 290 ITR 667 (SC). EVEN THE SPECIAL BENCH OF ITAT , CHENNAI IN THE CASE OF SAK SOFT LTD REPORTED IN ITA NO. 691 OF 1953/MAD/2007 DATED 6 TH MARCH, 2009 HAS HELD THAT IF CERTAIN EXPENSES ARE EXCLUDED FROM EXPORT TURNOVER THEN THE SAME SHOULD BE EXCLUDE D FROM TOTAL TURNOVER. HENCE, THE ASSESSING OFFICER IS DIRECTED TO EXCLUDE THE EXPENSES MENTIONED ABOVE FOR COMPUTATION OF EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF DEDUCTION U/S 10A. THIS GROUND OF A PPEAL IS ALLOWED. HENCE THE PRESENT APPEAL. 5. WE HAVE CONSIDERED THE FACTS AND THE RIVAL CONTE NTIONS. THE LEARNED CIT-DR, WHILE AGREEING THAT THE ISSUE NOW STANDS CO VERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE SPECIAL BENCH, CHENNAI IN THE CASE OF SAK SOFT LTD., REPORTED IN (2009) 20 DTR 514, SUBMITTED THAT THE DEPARTMENT HAS NOT 3 ACCEPTED THE SAID ORDER AND HAS FILED AN APPEAL UND ER SECTION 260A BEFORE THE HIGH COURT. THE SPECIAL BENCH DECISION HAS BEEN FO LLOWED BY THE CIT (A), WHICH IS TO THE EFFECT THAT FOR PURPOSES OF SECTION 10B, WHICH IS SUBSTANTIALLY SIMILAR TO SECTION 10A, WHATEVER ITEMS ARE EXCLUDED FROM THE EXPORT TURNOVER BECAUSE OF THE DEFINITION IN EXPLANATION 2(IV) HAVE ALSO TO BE EXCLUDED FROM THE TOTAL TURNOVER, WHICH EXPRESSION HAS NOT BEEN D EFINED IN THE SECTION. THE SPECIAL BENCH HAS CONSIDERED THE RELEVANT STATUTORY PROVISIONS AND THE AUTHORITIES AND HAS COME TO THIS CONCLUSION. RESPE CTFULLY FOLLOWING THE ORDER OF THE SPECIAL BENCH, WE UPHOLD THE DECISION OF THE CIT (A) DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE FAVOUR ITEMS OF EXPENSES FROM THE COMPUTATION OF BOTH THE EXPORT TURNOVER AND THE TOTA L TURNOVER FOR THE PURPOSE OF ALLOWING DEDUCTION UNDER SECTION 10A. 3.1. WE FURTHER NOTE THAT THE APPEAL FILED BY THE R EVENUE AGAINST THE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2006-2007 H AS BEEN DISMISSED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE ORDER 26 TH JULY, 2011 IN ITA NO. 466 OF 2011 AS UNDER: THE LD COUNSEL FOR THE PARTIES STATE THAT THE QUES TIONS RAISED IN THIS APPEAL ARE COVERED AGAINST THE REVENUE BY THE DECISION OF THIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GEM PLUS JEWELRY IND IA LTD REPORTED IN (2010) 233 CTR 248. ACCORDINGLY, THE APPEAL IS DIS MISSED. 4. ACCORDINGLY, FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL, WHICH HAS BEEN CONFIRMED BY THE HONBLE JURISDICTIONAL HIGH COURT, WE DECIDE THIS ISSUE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. 6. FROM THE ABOVE, IT IS EVIDENT THE ISSUE IN QUEST ION IS OF SETTLED NATURE, WHICH HAS DIRECT APPLICATION TO THE FACTS OF THE CASE. FA CTS RELEVANT FOR THE PRESENT AY AND THE ITEMS FOR EXCLUSION FROM EXPORT TURNOVER AND TO TAL TURNOVER ARE ALSO COMPARABLE. THEREFORE, THE RATIO MENTIONED IN THE SAID ORDER OF THE TRIBUNAL AS WELL AS THE HONBLE JURISDICTIONAL HIGH COURT COVERS THE ISSUE RAISED IN THE PRESENT APPEAL. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOVEMBER, 2012. SD/- SD/- (D. MANMOHAN) (D. KARUN AKARA RAO) VICE PRESIDENT ACCOUNTANT MEMBER DATE : 23.11.2012 4 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPODENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR E, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI