DCIT, CHENNAI V. SQS India BFSI Ltd., CHENNAI

ITA 998/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8314 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: BHAVYA
• Keywords: Business income
• Section: 143(3); 147; 148; 10

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 998 /MDS/2016 / ASSESSMENT YEAR :200 7 - 0 8 THE DEPUTY COMMISSIONER OF INCOME TAX, CO RPORATE CIRCLE 6(2 ), AAYAKAR BHAVAN, NEW BLOCK, 7 TH FLOOR, 121, M.G. ROAD, CHENNAI 600 034. VS. M/S. SQS IND IA BFSI LTD., [FORMERLY THINKSOFT GLOBAL SERVICES PVT. LTD.], 6A, SIXTH FLOOR, PRINCE INFOCITY II, NO. 283/3 & 283/4, RAJIV GANDHI SALAI (OMR), KANDANCHAVADI, CHENNAI 600 096. [PAN: AA B C T 0 976G ] ( APPELLANT ) ( R ESPONDENT ) DEPARTMENT BY : SHRI S HIV A SRINIVAS , J CIT ASSESSEE BY : MS. BHAVYA , ADVOCATE / DATE OF HEARING : 2 0 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 30 .0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSI ONER OF INCOME TAX (APPEALS) 15, CHENNAI DATED 1 1 . 0 1 .201 6 FOR THE ASSESSMENT YEAR 20 0 7 - 0 8 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO EXCLUDE FOREIGN EXPENDITURE IN B OTH EXPORT I.T.A. NO . 998 /M/1 6 2 TURNOVER AND TOTAL TURNOVER WHILE COMPUTING THE ELIGIBLE DEDUCTION UNDER SECTION 10 B OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND FIL ED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF THE ASSESSEE AT . 55,55,923/ - AS BUSINESS INCOME AFTER CLAIMING DEDUCTION OF .8,30,91,045/ - UNDER SECTION 10A OF THE ACT . THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 11.12.2009 ASSESSI NG THE INCOME AT .56,62,629/ - . SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT OF EXCESS CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT AND THEREAFTER, THE ASSESSMENT WAS COMPLETED UND ER SECTION 143(3) R.W.S. 147 OF THE ACT ON 12.03.2014 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT .2,36,34,828/ - AFTER MAKING VARIOUS ADDITIONS. 3 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4 . AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. DR HAS CONTENDED THAT THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. HAS N OT ATTAINED FINALITY SINCE THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON BLE MADRAS HIGH COURT AND PRAYED THAT THE ORDER OF I.T.A. NO . 998 /M/1 6 3 THE LD. CIT(A) SHOULD BE REVERTED . 5 . ON THE HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT SINCE THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. (SUPRA) HAS NOT BEEN STAYED BY THE HON BLE HIGH COURT, THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE SPECIAL BENCH OF ITAT, CHENNAI IN THE CASE OF ITO V. SAK SOFT LTD. [121 TT J 865]. 6 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE LD. CIT(A), BY FOLLOWING THE DECISION OF THE CHENNAI SPECIAL BENCH IN THE CASE OF ITO V. SAK SOFT LTD. (SUPRA), DIRECTED THE ASSESSING OFFICER TO REDUCE THE EXPENSES INCURRED IN FOREIGN EXCHANGE BOTH FROM EXPORT TURNOVER AS WELL AS TOTAL TURNOVER. THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF THE IT AT, CHENNAI SPECIAL BENCH IN THE CASE OF M/S. SAK SOFT LTD . (SUPRA) , WHEREIN, IT WAS HELD AS UNDER: ' .... WE HOLD THAT FOR THE PURPOSE OF APPLYING THE FORMULA UNDER SUB - S (4) OF S.10B, THE FREIGHT, TELECOM CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVER Y OF ARTICLES OR THINGS OR COMPUTER SOFTWARE OUTSIDE INDIA OR THE EXPENSES, IF ANY INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICES OUTSIDE INDIA ARE TO BE EXCLUDED BOTH FROM THE EXPORT TURNOVER AND FROM THE TOTAL TURNOVER, WHICH ARE THE NU MERATOR AND THE DENOMINATOR RESPECTIVELY IN THE FORMULA. .. ' JUST BECAUSE THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON BLE HIGH COURT, WE CANNOT TAKE A DIFFERENT VIEW AGAINST THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. (SUPRA). I.T.A. NO . 998 /M/1 6 4 THEREFORE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS) ON THIS ISSUE 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 30 TH SEPTEMBER, 201 6 AT CHENNAI. SD/ - SD/ - (A.MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 30 .0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.