Income Tax Appellate Tribunal - Chennai
Changepond Technologies Pvt Ltd., ... vs Department Of Income Tax on 1 October, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'A' BENCH, CHENNAI
BEFORE Dr. O.K. NARAYANAN, VICE-PRESIDENT
AND SHRI V. DURGA RAO, JUDICIAL MEMBER
I.T.A.No. 1169/Mds/2007
Assessment year : 2003-04
The Assistant Commissioner Vs. M/s. Changepond
of Income-tax, Technologies Pvt. Ltd.,
Company Circle-I(3), 7, II Crescent Park Road,
Chennai-34. Gandhi Nagar, Adyar,
Chennai - 600 020.
PAN - AABCC 3252 G
(Appellant) (Respondent)
Appellant by : Shri Shaji P. Jacob, IRS, Addl. CIT
Respondent by : Shri H. Padamchand Khincha, CA
Date of Hearing : 1st October, 2012
Date of Pronouncement : 3rd October, 2012
O R D E R
PER Dr. O.K. NARAYANAN, VICE-PRESIDENT This appeal is filed by the Revenue. The relevant assessment year is 2003-04. The appeal is directed against the order of the Commissioner of Income-tax(Appeals)-III at Chennai :- 2 -: ITA 1169/07 dated 14.2.2007 and arises out of the assessment completed under sec.143(3) of the Income-tax Act, 1961.
2. The first ground raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in holding that establishment and maintenance expenses pertaining to foreign branch are not excludible from export turnover while computing relief under sec.10A. This issue was considered by Income-tax Appellate Tribunal, Chennai in assessee's own case, in the appeal filed by the assessee for the assessment year 2003-04 reported in 119 TTJ 18 (Chennai). In the said appeal, the third ground raised by the assessee was that the Commissioner of Income-tax(Appeals) has erred in concluding that the expenses incurred outside India on salaries, travelling and other perquisites in respect of employees are incurred in connection with providing technical services outside India. The fourth ground was that the Commissioner of Income-tax(Appeals) has erred in not appreciating that the assessee is not engaged in providing any technical services outside India and, therefore, the question of exclusion of expenses from export turnover does not arise. :- 3 -: ITA 1169/07
3. These grounds were considered by the Tribunal in paragraphs 10 to 14 of their order dated 15.2.2008. The Tribunal held that the technical services provided outside India by the assessee was for development of computer software which was also a part of the requirement of the assessee in development of software as per the requirements and specifications of the clients. Therefore, the Tribunal held that the said activity of the assessee comes under the definition of on site development of computer software including services for development of software outside India as provided in Explanation 3 to sub-sec.(8) of sec.10A of the Act. Accordingly, the Tribunal held that the expenses incurred on salaries, travelling and other perquisites shall be included in the export turnover of the assessee.
4. In view of the above order of the co-ordinate Bench in assessee's own case, we find that the ground raised by the Revenue on this issue fails.
5. The second ground raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in directing the Assessing Officer to re-compute business profits after setting off :- 4 -: ITA 1169/07 brought forward losses and depreciation and allow deduction under sec.10A.
6. In the very same order cited above, the co-ordinate Bench of the Tribunal has allowed the deduction to the assessee under sec.10A without setting off of the brought forward losses and the issue was decided in favour of the assessee. The above order of the co-ordinate Bench is in conformity to the judgment of the Hon'ble Karnataka High Court rendered in the case of CIT v. Yokogawa India Ltd. and Others (246 CTR 226), wherein the Hon'ble Karnataka High Court has held that as the deduction under sec.10A has to be excluded from the total income of the assessee, the question of unabsorbed business loss being set off against such profits and gains of the undertaking would not arise.
7. In view of the above position and in the light of the decision of the co-ordinate Bench, we find that this ground is also to be dismissed. We uphold the order of the Commissioner of Income- tax(Appeals) on this point.
8. In result, this appeal filed by the Revenue is dismissed. :- 5 -: ITA 1169/07
Order pronounced on Wednesday, the 3rd of October, 2012 at Chennai.
Sd/- Sd/-
(V.DURGA RAO) (Dr.O.K.NARAYANAN)
Judicial Member Vice-President
Chennai,
Dated the 3rd October, 2012
mpo*
Copy to: 1. Assessee
2. Department
3. CIT
4. CIT(A)
5. DR
6. GF.