Additional Commissioner of Income TAx (LTU) , Bangalore V. M/s Dell International Services India Pvt Ltd , Bangalore

ITA 930/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1824 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, BENGALURU BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT(TP)A NO.930/BANG/2018 (ASSESSMENT YEAR: 2007-08) ADDL. COMMISSIONER OF INCOME - TAX,LTU BENGALURU. VS. APPELLANT M/S.DELL INTERNATIONAL SERVICES (I) PVT. LTD. 12/1, 12/2A, 13/1A, DIVYASHREE GREENS, CHALLAGHATTA VILLAGE, BENGALURU-560 071. PAN:AAACH 1925 Q RESPONDENT APPELLANT BY : MS. NEERA MALHOTRA, CIT(DR) RESPONDENT BY : SMT. RASHMI, ADVOCATE. DATE OF HEARING: 04/06/2019 DATE OF PRONOUNCEMENT: 17/06/2019 O R D E R PER PAVAN KUMAR GADALE, JM: THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A)-V, BENGALURU, PASSED U/S 143(3) R.W.S 144C A ND 250 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT]. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL: WHETHER THE LD.CIT(A) IS CORRECT IN DIRECTING TO CONSIDER TELECOMMUNICATION CHARGES IN EXPORT TURNOVER WHILE COMPUTING 10A DEDUCTION RELYING ON THE KARNATAKA HIGH COURT DECISION IN THE CASE OF TATA ELXSI LTD. IT(TP)A NO.930/BANG/2018 PAGE 2 OF 4 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN COMPUTER SYSTEMS AND PRO VIDING CALL- CENTRE SERVICES, BACK OFFICE, IT SUPPORT AND SHARES SERVICES, FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 30/10/2007 WITH NIL INCOME. THE RETURN OF INCOM E WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED. IN RESPONSE, THE LEARNED AR OF THE ASSESSE E APPEARED FROM TIME TO TIME AND SUBMITTED THE INFORMATION. A O FOUND THAT THERE ARE INTERNATIONAL TRANSACTIONS BY THE AS SESSEE WITH ITS AE AND THEREFORE, WITH THE APPROVAL OF THE CIT, THE MATTER WAS REFERRED TO THE TRANSFER PRICING OFFICER (TPO). TPO, AFTER CONSIDERING THE TRANSFER PRICING REPORT AND BUSINES S PROFILE AND FINANCIAL PROFILE HAS DETERMINED THE ADJUSTMENT U/S 92CA AND PASSED THE ORDER WITH ADJUSTMENT TOWARDS SOFTWARE DEVELOPMENT SERVICES AND ALSO CALL CENTRE SERVICES. THE LD. AO RESTRICTED THE CLAIM OF DEDUCTION U/S 10A AND PASSE D DRAFT ASSESSMENT ORDER WITH TRANSFER PRICING ADJUSTMENT A S SUGGESTED BY THE TPO AND ASSESSED THE TOTAL INCOME UNDER NORMAL PROVISIONS U/S 1,79,59,71,433/- VIDE ORDER U /S 143(3) R.W.S. 144C OF THE ACT DATED, 21/02/2011. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED APPEA L WITH THE CIT(A). THE CIT(A) HAVING CONSIDERED THE GROUN DS OF APPEAL AND THE SUBMISSIONS IN RESPECT OF EXCLUSION OF IT(TP)A NO.930/BANG/2018 PAGE 3 OF 4 COMPARABLES AND INCLUSION AND DEALT ON CORPORATE G ROUNDS AND HAS GRANTED PARTIAL RELIEF. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE THE TRIBUNAL. THE LEARNED DR SUBMITT ED THAT THE CIT(A) HAS ERRED IN DIRECTING TO CONSIDER TELECOMMU NICATION CHARGES IN EXPORT TURNOVER WHILE COMPUTING DEDUCTIO N U/S 10A OF THE ACT AND SUPPORTED THE ORDER OF THE AO. WHER EAS, THE LD. AR RELIED ON THE CIT(A)S ORDER SUPPORTED WITH JUDI CIAL DECISIONS. 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE SOLE DISPUTED ISSUE RAISED BY THE LEAR NED DR IS WITH RESPECT TO CONSIDERING TELECOMMUNICATION CHARG ES REDUCTION IN EXPORT TURNOVER WHILE COMPUTING DEDUCT ION U/S 10A OF THE ACT. WHEREAS THE LD. AR SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TATA ELXSI (349 ITR 98). WE FOUND THAT THE LD.CIT(A) FOLLOWED THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF TATA ELXSI (SUPRA) WHEREIN IT WAS HELD THAT WHERE CERTAIN EXPENSES ARE EXCLUDED FROM THE EXPORT TURNOVER FOR PURPOSES OF CALCULATING DEDUCTION U/S 10A OF THE ACT, SUCH E XPENSES SHOULD ALSO BE EXCLUDED FROM TH TOTAL TURNOVER AS T HE EXPORT TURNOVER FORMS PART OF THE TOTAL TURNOVER, AND GRAN TED RELIEF TO IT(TP)A NO.930/BANG/2018 PAGE 4 OF 4 THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE CIT(A) AND FURTHER REVENUE COULD NOT C ONTROVERT THE FINDINGS OF THE CIT(A) WITH NEW OR COGENT EVIDE NCE THEREFORE, WE UPHOLD THE ORDER OF THE CIT(A) AND DI SMISS THE GROUNDS OF APPEAL OF THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JUNE, 2019. SD/- SD/- (A.K.GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU DATED : 17/06/2019 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)- 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE