HSBC Electronic Date Processing I. P. Ltd., Hyderabad V. ACIT, C2(2), Hyd., Hyderabad

MA 197/HYD/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1111 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 05-09-2013
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Keywords: Services rendered outside India

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER M.A. NO.197/HYD/2013 (IN ITA NO.763/HYD/12) : ASSESSMENT YEAR 200 4 - 05 M/S. HSBC ELECTRONIC DATA PROCESSING I. P. LTD., HYDERABAD (PAN AAACH 8235 M) V/S. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 2(2) HYDERABAD (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI RAVI BHARADWAJ RESPONDENT BY : SHRI R.LAXMA N DR DATE OF HEARING 27.09.2013 DATE OF PRONOUNCEMENT 11.10.2013 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: BY THIS MISCELLANEOUS APPLICATION UNDER S.254(2) OF THE ACT, ASSESSEE SEEKS RECTIFICATION/RECALL OF THE ORDER OF THIS TRIBUNAL DATED 17 .7.2013 IN ITA NO.763/HYD/2012 FOR THE ASSESSMENT YEARS 2004 - 05, ON THE GROUND THAT CERTAIN MISTAKES APPARENT FROM RECORD HAVE CREPT IN TO THE SAME. 2. REITERATING THE AVERMENTS MADE IN THE PRESENT APPLICATION, THE LEARNED COUNSEL FOR THE ASSESSEE, WH ILE NARRATING THE FACTS RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION UN DE R S.10A OF THE AC T, IN RESPE C T O F PROFITS DERIVED FROM STPI UNITS, SUBMITTED THAT THE ASSESSEE ALSO HAS A MARKETING OFFICE IN UK TO FACILITATE THE MIGRATION OF WORK FROM HSBC GROUP COMPANIES TO INDIA. THE COMPANY S UK B RANCH HAS INCURRED AN EXPENDITURE OF R S .8,27,65,569 IN FOREIGN CURRENCY WITH ATTRIBUTABLE REVENUE OF R S .9,01,65,686. THE ASSESSING OFFICER, IT IS SUBMITTED, COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.21,00,08 ,290 BY MA K ING THE FOLLOWING ADDITIONS - MA 19 7 /HYD/2013 (IN ITA NO. 763 / HYD/201 2 ) M/S. HSBC ELECTRONIC DATA PROCESSING I. P. L TD., HYDERABAD 2 TRA N SFER PRICING ADJUSTMENT OF BPO SER V I C ES - RS.19,10,88,959 R E CO M PU T ED DEDUCTION UNDER S.10A BY REDUCING THE FOLLOWING FROM THE PROFITS OF THE BUSINESS IN APPLYING THE PR E SCRIBED FORMULA - A ) FOREIGN EXC H A N GE GAIN RS.12,06,115 B ) INCOME AT T RIBUTED TO UK BRANCH RS.9,01,65,686 THE COMMISSIONER OF INCOME - TAX, WHILE EXERCISING THE JURISDICTION UNDER S.263 OF THE ACT, VIDE HIS O R DER DATED 26.3.2012 , W HICH IS IMPUGNED IN APPEAL NO. 763/HYD/2012 , BEFORE THE T RI BUNAL, HELD T HE SAID ASSESSMENT TO B E ERRONEOUS AND PRE J U D I C I A L TO THE INTEREST OF REVENUE UNDER S.263 OF THE AC T, AND ACCORDINGLY DIRE CT ED THE ASSESSING OFFICER TO REDUCE ALL EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER IN COMPUTING THE DEDUCTION U NDER S.10A OF TH E ACT. IT IS STATED FURTH E R THAT THE COMMISSIONER OF INCOME - TAX DID NOT APPRECIATE THE FACT THAT THE ASSESSING OFFICER HAD NO T ALLOWED DEDUCTION UN D ER S.10A FOR THE UK BRANCH BY REDUCING THE INCOME OF INCOME OF UK BRANCH FROM EXPORT TUR NOVER IN COMPUTING THE DEDUCTION UNDER S.10A OF THE ACT. THAT BEING SO, THE DIRECTION OF THE COMMISSIONER OF INCOME - TAX TO REDUCE ALL EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER IN COMPUTING THE DEDUCTION UNDER S.1 0 A OF THE ACT WOULD AM OUNT TO DOUBLE DISALLOWANCE. IT IS SUBMITTED THAT WHIL E THE TRIBUNAL VIDE ORDER DATED 17.7.2013 DIR E CTED THE ASSESSING OFFICER FOLLO W IN G SETTLED JU D ICI A L PRECEDENTS TO MAINTAIN PARITY IN COMPUTING DEDUCTION UNDER S.10 A OF THE ACT BY REDUCING THE EXPENDITUR E OF R S .23,96,50,668 INCURRED IN FOREIGN CURRENCY FROM THE E X PORT TURNOVER AND TOTAL TURNOVER, IT FAILED TO ADJU D I C ATE ON THE GROUND NO.4, WHICH STATED THAT THE COMMISSIONER OF INCOME - TAX ERRED IN CONCLU D IN G THAT THE EXPORT TU R NOVER OF THE COMPANY INCLU DE D THE E XPENDITURE OF THE UK BRANCH OFFICE. THE DIRECTION OF THE TRIBUNAL ON THIS ASPECT WOULD LEAD TO DOUBLE DISALLOWANCE AND NEEDS TO BE RECTIFIED. MA 19 7 /HYD/2013 (IN ITA NO. 763 / HYD/201 2 ) M/S. HSBC ELECTRONIC DATA PROCESSING I. P. L TD., HYDERABAD 3 3. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE TRIBUN AL AND SUBMITTED THAT THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE T RIBUNAL. 4. WE HEARD BOTH SIDES AND PERUSED THE ORDER OF THE TRIBUNAL DATE 17.7.2013, IN THE LIGHT OF THE MATERIAL ON RECORD. ON CAREFUL CONSIDERATION OF THE MATTER, WE FIND NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL. THE DIRECTION OF THE TRIBUNAL TO THE ASSESSING OFFICER , ON CONSIDERING THE CONTENTION OF THE ASSESSEE AND FOLLOWING THE SETTLED JUDICIAL POSITION ON PRINCIPLE OF PARITY , IS MERELY TO ENSUR E THAT THE EXPENDITURE IN FOREIGN CURRENCY RELATING TO SERVICES RENDERED OUTSIDE INDIA STANDS EXCLUDED BOTH FROM TH E TOTAL TURNOVER AS W ELL AS EXPORT TURNOVER WHILE COMPUTING THE DEDUCTION UNDER S.10A OF THE ACT. THAT BEING SO, THERE IS NO MISTAKE APPAREN T FROM RECORD IN THE ORDER OF THE TRIBUNAL. BY RAISING THE ISSUE OF WHAT SHOULD OR SHOULD NOT FORM PART OF THE EXPORT TURNOVER, THE ASSESSEE IS MERELY SEEKING REVIEW OF THE ORDER, WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF S.254(2) OF THE ACT. CONS EQUENTLY, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE IS DEVOID OF MERIT, AND IT IS ACCORDINGLY REJECTED. 5. IN THE RESULT, ASSESSEES MISCELLANEOUS APPLICATION IS REJECTED. ORDER PRONOUNCED IN THE COURT ON 11.10.2013 SD/ - SD/ - (CHANDRA POOJARI) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED/ - 1 1 TH OCTOBER, 2013 MA 19 7 /HYD/2013 (IN ITA NO. 763 / HYD/201 2 ) M/S. HSBC ELECTRONIC DATA PROCESSING I. P. L TD., HYDERABAD 4 C OPY FORWARDED TO: 1 M/S. HSBC ELECTRONIC DATA PROCESSING I. P. LTD., SURVEY NO.64, HI - TE CH CITY LAYOUT, MADHAPUR HYDERABAD 2 DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(2), HYDERABAD 3 COMMISSIONER OF INCOME - TAX, HYDERABAD 4 COMMISSIONER OF INCOME - TAX II, HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S