ACIT Corporate Circle 6(1), CHENNAI V. Sanmina SCI Technology India Pvt Ltd., Kancheepuram

ITA 917/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4644 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 16-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: N V BALAJI
• Section: 143(3); 10AA

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.917/CHNY/2018 / ASSESSMENT YEAR :2013-14 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 6(1), AAYAKAR BHAVAN, WANAPARTHY BLOCK, 7 TH FLOOR, 121, M.G. ROAD, CHENNAI 34. VS. M/S. SANMINA SCI TECHNOLOGY INDIA PVT. LTD., OZ-1, SIPCOT HI-TECH SEZ, ORAGADAM, SRIPERUMBUDUR TALUK, KANCHEEPURAM DT., TAMIL NADU 602 105. [PAN:AAKCS8133K] ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT / RESPONDENT BY : SHRI N.V. BALAJI, ADVOCATE / DATE OF HEARING : 16.08.2018 /DATE OF PRONOUNCEMENT : 22.10.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 15, CHENNAI DATED 30.11.2017 RELEVANT TO THE ASSESSMENT YEAR 2013-14. IN THIS APPEAL, THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS VIZ., (I) THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE THE EXPENSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER AND (II) THE LD. CIT(A) I.T.A. NO.917/M/18 2 HAS ERRED IN DELETING THE DISALLOWANCE UNDER SECTION 2(24)(X) R.W.S 36(1)(VA) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] OF .2,66,724/-. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 30.11.2013 DECLARING CURRENT YEAR LOSS OF .74,92,136/-. THE CASE WAS TAKEN UP FOR SCRUTINY AND AGAINST STATUTORY NOTICES AND ASSESSEE FURNISHED THE DETAILS. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. 2.1 THE ASSESSEE HAS EXCLUDED COMMUNICATION EXPENSES OF .29,11,701/- FROM THE EXPORT TURNOVER OF THE 10AA UNIT AS WELL AS THE TOTAL TURNOVER IN COMPUTING DEDUCTION UNDER SECTION 10AA OF THE ACT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND SINCE THE DEPARTMENT PREFERRED FURTHER APPEAL BEFORE THE HONBLE MADRAS HIGH COURT AGAINST THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. 313 ITR 353 (SB), THE ASSESSING OFFICER EXCLUDED THE ABOVE EXPENSES FROM EXPORT TURNOVER ALONE FOR THE PURPOSE OF DEDUCTION UNDER SECTION 10AA OF THE ACT. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. (SUPRA), THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO EXCLUDE THE EXPENSES INCURRED IN FOREIGN CURRENCY BOTH FROM EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER. I.T.A. NO.917/M/18 3 4. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL HAS ATTAINED ITS FINALITY BY THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. HCL TECHNOLOGIES LTD. IN CIVIL APPEAL NOS. 8489-8490 OF 2013 DATED 24.04.2018 PRAYED FOR CONFIRMING THE ORDER PASSED BY THE LD. CIT(A). ON THE OTHER HAND, THE LD. DR FAIRLY CONCEDED THE ABOVE SUBMISSIONS OF THE LD. COUNSEL. 5. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE COMPUTATION OF ADMISSIBILITY OF DEDUCTION UNDER SECTION 10A OF THE ACT WAS SUBJECT MATTER IN APPEAL AND ATTAINED ITS FINALITY IN THE CASE OF CIT V. HCL TECHNOLOGIES LTD. (SUPRA) AND CONSEQUENTLY VIDE CIRCULAR 4/2018 DATED 14.08.2018, THE CBDT HAS CLARIFIED AND DIRECTED THAT THE FREIGHT, TELECOMMUNICATION CHARGES AND INSURANCE EXPENSES ARE TO BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER WHILE WORKING OUT THE DEDUCTION ADMISSIBLE UNDER SECTION 10A OF THE ACT TO THE EXTENT THEY ARE ATTRIBUTABLE TO THE DELIVERY OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA. SIMILARLY, THE EXPENSES INCURRED IN FOREIGN EXCHANGE FOR PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA ARE TO BE EXCLUDED FROM BOTH EXPORT TURNOVER AND TOTAL TURNOVER WHILE COMPUTING DEDUCTION ADMISSIBLE UNDER SECTION 10A OF THE ACT AND THUS, ALL CHARGES/ EXPENSES SPECIFIED IN EXPLANATION 2(IV) TO SECTION 10A OF THE ACT, ARE LIABLE TO BE EXCLUDED FROM TOTAL TURNOVER ALSO FOR THE PURPOSE OF COMPUTATION OF I.T.A. NO.917/M/18 4 DEDUCTION UNDER SECTION 10A OF THE ACT. IN VIEW OF THE DIRECTIONS OF THE CBDT IN PURSUANCE TO THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. HCL TECHNOLOGIES LTD. (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED. 6. WITH REGARD TO THE DISALLOWANCE OF DEDUCTION FOR EMPLOYEES CONTRIBUTION TO PF AND ESI DUE TO BELATED REMITTANCE, THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THOSE PAYMENTS WERE MADE BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. HOWEVER, THE ASSESSING OFFICER TREATED THE DELAYED PAYMENTS REPRESENTING EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND OF .2,66,794/- AS INCOME OF THE ASSESSEE AND BROUGHT TO TAX UNDER SECTION 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING VARIOUS DECISIONS INCLUDING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TCA NOS. 585 & 586 OF 2015 & M.P. NO. 1 OF 2015 DATED 24.07.2015, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE, IT IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS NOT PAID THE EMPLOYEES CONTRIBUTION RECEIVED BY IT BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER I.T.A. NO.917/M/18 5 SECTION 139(1) OF THE ACT. VARIOUS COURTS INCLUDING THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. (SUPRA) HELD THAT THERE CAN BE NO DEEMED ADDITION UNDER SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT, IF THE IMPUGNED AMOUNT HAS BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN. THE LD. DR COULD NOT CONTROVERT THE ABOVE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. JUST BECAUSE THE DEPARTMENT HAS NOT ACCEPTED THE ABOVE DECISION AND PREFERRED REVIEW PETITION, WE CANNOT TAKE A DIFFERENT VIEW, OTHER THAN THE VIEW TAKEN BY THE HONBLE MADRAS HIGH COURT, WHICH IS BINDING ON THE TRIBUNAL. IN VIEW OF THE ABOVE, WE SUSTAIN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 22 ND OCTOBER, 2018 AT CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 22.10.2018 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.