Income Tax Appellate Tribunal - Bangalore
M/S. Electronics For Imaging India ... vs Assessee on 7 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH 'B'
BEFORE SHRI N. BARATHVAJA SANKAR, VICE-PRESIDENT
and
SHRI GEORGE GEORGE K, JUDICIAL MEMBER
ITA No.1171(Bang)/2010
(Assessment year: 2006-07)
M/s. Electronics for Imaging India Pvt. Ltd.
No.133, Salarpuria Hallmark,
Kadubeesanahalli,
Bangalore-560 076. ... Appellant
PAN:AAACG6053E
Vs.
Deputy Commissioner of Income-tax,
Circle 11(3),
Bangalore. ... Respondent
Appellant by: Shri Padamchand Khincha.
Respondent by : Shri Etwa Munda.
Date of hearing: 07-12-2011
Date of pronouncement: 31-01-2012
O R D E R
Per N. BARATHVAJA SANKAR, VP:
This is an appeal preferred by the assessee-M/s.Electronics for Imaging India Pvt. Ltd., against the assessment order made u/s 143(3) read with sec.144C of the Income-tax Act, 1961 [hereinafter referred to as "the Act"] for the assessment year 2006-07.
ITA 1171/Bang/2011 Page 2 of 18
2. Brief facts of the case are that the assessee-company is engaged in the business of developing software solutions for commercial printing and enterprise markets and also rendering sales and support services for its product. It filed return of income for the assessment year 2006-07 declaring income of `17,35,487/-. The return was processed u/s 143(1). Subsequently the case was selected for scrutiny as per guidelines issued by the Board and notice u/s 143(2) was issued and served on the assessee. In response to the notice, the Manager of the assessee-company appeared and produced books of account and furnished details called for. After examining the books of account and the details filed, the assessment was completed.
The AO noticed that during the relevant financial year, the assessee had international transactions exceeding `15 crores. Therefore, with the prior approval of the CIT, Bangalore-1, reference was made to the Transfer Pricing Officer (TPO) to determine the Arms' Length Price (ALP) as per the provisions of sec.92CA of the Act. The assessee filed an application before the Dispute Resolution Panel (DRP). The DRP issued directions under sub-sec.(5) of sec.144C read with sub-section (8) of sec.144C which was received by the AO on 31-8-2010. In conformity with the directions of the DRP, the AO has completed the assessment by making the following additions:
i) Adjustment u/s 92CA `1,84,11,998/-
ii) Excess claim of deduction u/s 10A `7,14,465/-
ITA 1171/Bang/2011 Page 3 of 18
3. Aggrieved by this order of the AO, assessee is on appeal before us. The assessee's appeal is broadly on three issues, viz.,
i) Determination of ALP in respect of international transactions;
ii) for not excluding telecommunication charges and foreign exchange loss from the total turnover while excluding the same from export turnover while computing deduction u/s 10A(3), and
iii) Levying a sum of `35,53,271/- as interest u/s 234B of the Act.
4. Let us first take up the issue relating to ALP. Shri Padam Khincha, learned AR of the assessee has filed on record two paper books.
(a) Paper book I:
Sl. Particulars Page
No. No.
i) Financial statement for the year ending 1-12
31-3-2006.
ii) Form No.3CEB for the year ending 31-3-2006. 13-23
iii) Transfer Pricing determination for the year 24-43 ending 31-3-2006.
iv) Copy of software development Agreement with 44-52 AE.
v) Show cause notice issued by TPO dt.23-7-2009. 53-80
vi) Submissions filed before TPO on 21-8-2009 81-192 against proposed additions.
vii) Relevant submission filed before DRP on 193-464 29-12-2009 against proposed additions. Viii) Additional submission before DRP on 465-474 29-7-2010.
ITA 1171/Bang/2011 Page 4 of 18
(b) Paper book II:
Sl. Particulars Page
No. Nos.
i) Kals Information Systems Ltd. - reply to notice 1-38
u/s 133(6)
ii) Megasoft Ltd. - reply to notice u/s 133(6) and 39-57
extract from Annual report
iii) Tata Elxsi Ltd. - reply to notice u/s 133(6) and 58-69
extract from Annual report
iv) Accel Transmatic Ltd. - reply to notice u/s 70-81
133(6) and extract from Annual report
v) Mindtree Consulting Pvt. Ltd. - Annual report 82-96
extract for the financial year 2005-06
vi) TVS Infotech Ltd. - reply to notice u/s 133(6) 97-102 and extract from Annual report
vii) Goldstone Technologies Ltd. - reply to notice 103-111 u/s 133(6) and extract from Annual report Viii) VMF Softech Ltd.- reply to notice u/s 133(6) 112-124 and extract from Annual report
ix) Orient iNformation Technology Ltd. 125-136
x) Computing Systems Ltd. - reply to notice u/s 137-142 133(6).
143-146
xi) iGate Global Solutions Ltd. - reply to notice u/s 133(6).
Besides paper books I and II, the learned AR has also filed detailed written submissions. The learned CIT-DR has also filed detailed submissions. Apart from the detailed submissions, as desired by the Bench, both the assessee's AR and the ld. CIT-DR have filed concise synopsis of their arguments which are taken on record.
ITA 1171/Bang/2011 Page 5 of 18
4. The concise grounds of appeal by the assessee with regard to ALP are as under:
"The lower authorities (the learned Assessing Officer, learned Transfer Pricing Officer and Hon'ble Dispute Resolution Panel) have erred in:
1. Passing the order disregarding the principles of natural justice.
2. Making a reference to Transfer Pricing Officer for determining arms' length price.
3. Passing the order without demonstrating that appellant had motive of tax evasion.
4. Not appreciating that the members of Dispute Resolution Panel also being jurisdictional Commissioner/Director of Income Tax of the appellant, the constitution of the Disputes Resolution Panel is bad in law.
5. Not appreciating that the charging or computation provision relating to income under the head 'profits & gains of business or profession' do not refer to or include the amounts computed under Chapter X and therefore addition under Chapter X is bad in law.
6. Adopting a flawed process of issuing notices u/s 133(6) and relying on the same without providing complete information or opportunity to cross examine to the appellant.
7. Using current year data, rejecting cost plus method (CPM) as the most appropriate method and rejecting transfer pricing analysis of the appellant.
8. Considering the data which was not available to the appellant at the time of complying with the TP documentation requirements.
9. Adopting Transactional Net Margin Method (TNMM) as the most appropriate method and adopting inappropriate filters in doing fresh transfer pricing analysis.
10. Selecting inappropriate comparables and rejecting appropriate comparables.
11. Inappropriately computing the operating margins of comparables and the appellant.
ITA 1171/Bang/2011 Page 6 of 18
12. Not making proper adjustment for enterprise level and transactional level differences between the appellant and the comparable companies.
13. Not allowing the benefit of the +/-5% range mentioned in the proviso to section 92C(2).
5. At the time of hearing, the learned AR made elaborate submissions. However, the crux of the submissions made by him in respect of deficiencies in the orders of the TPO/DRO is as under:
i) No opportunity of hearing was provided by the TPO. Before the DRP, only one opportunity was provided.
ii) The TPO selected six comparables in the order passed u/s 92CA as comparables in addition to those proposed in notice without giving opportunity to the assessee to present its objections.
iii) During the course of proceedings before the DRP, the assessee submitted that computation of ALP, considering cash profit to assets employed and operating profits to asets employed as PLI, as an alternative justification of the international transactions being at arms' length. DRP has not made any comments on this aspect in its order.
iv) Even under TNMM, considering turnover range of `1 crore to `200 crores and `1 crore to `500 crores and rejecting certain comparables selected by TPO, the assessee's transactions are at arms' length. The two tables incorporating the above are as under:
ITA 1171/Bang/2011 Page 7 of 18 TABLE 1 - TURNOVER RANGE 1 TO 200 CRORES WC Sl. Name of the company Operating Operating Adjusted No. Revenues Margin on Operating cost Margin on Cost 1 Aztec Software Ltd. 1,286,136,000 18.09% 19.45% 2 Geometric Software Ltd. (seg) 985,957,838 6.70% 6.42% 3 .KALS Information Systems Ltd 19,690,390 39.75% 42.07% 4 R Systems International Ltd(Seg) 794,194,053 22.20% 21.05% 5 Tata Elxsi Ltd. (seg.) 1,888,125,000 27.65% 28.40% 6 Lucid Software Limited 10,191,181 8.92% 6.17% 7 Media Soft Solutions P.Ltd. 17,577,145 6.29% 4.90% 8 R S Software (India) Ltd. 915,707,164 15.69% 15.98% 9 SIP Technologies & Exports Ltd. 65,344,634 3.06% 1.80% 10 Bodhtree Consulting Ltd. 53,189,165 15.99% 15.69% 11 Accel Transmatics Ltd.(seg) 80,205,000 44.07% 43.11% 12 Synfosys Business Solutions Ltd 4,886,725 10.61% 8.09% 13 Megasoft Ltd 192,185,451 16.97% 10.24% 14 Lanco Global Solutions Ltd 356,293,560 5.27% 5.58% Arithmetic Mean 17.23% 16.35% NOTES After removing KALS - Mean - 15.50% & WC adjusted mean 14.38% After removing KALS and Tata Elxsi - Mean- 14.49% & WC adjusted mean 13.21% After removing KALS, Tata Elxsi & Accel - Mean- 11.80% & WC adjusted mean 10.49% TABLE 2 - TURNOVER RANGE 1 to 500 CRORES Sl. Name of the company Operating Operating WC No. Revenues Margin on Adjusted cost Operating Margin on Cost 1 Aztec Software Ltd. 1,286,136,000 18.09% 19.45% 2 Geometric Software Ltd. (seg) 985,957,838 6.70% 6.42% 3 .KALS Information Systems Ltd 19,690,390 39.75% 42.07% 4 Mindtree Consulting Ltd. 4,487,982,158 14.67% 14.16% 5 Persistent Systems Ltd. 2,091,776,542 24.67% 24.63% 6 R Systems International Ltd(Seg) 794,194,053 22.20% 21.05% ITA 1171/Bang/2011 Page 8 of 18 7 Sasken Communication 2,400,342,000 13.90% 13.96% Technologies Ltd. (seg) 8 Tata Elxsi Ltd. (seg.) 1,888,125,000 27.65% 28.40% 9 Lucid Software Ltd. 10,191,181 8.92% 6.17% 10 Media Soft Solutions P.Ltd. 17,577,145 6.29% 4.90% 11 R S Software (India) Ltd. 915,707,164 15.69% 15.98% 12 SIP Technologies & Exports Ltd. 65,344,634 3.06% 1.80% 13 Bodhtree Consulting Ltd. 53,189,165 15.99% 15.69% 14 Accel Transmatics Ltd.(seg) 80,205,000 44.07% 43.11% 15 Synfosys Business Solutions Ltd 44,886,725 10.61% 8.09% 16 Megasoft Ltd 192,185,451 16.97% 10.24% 17 Lanco Global Solutions Ltd 356,293,560 5.27% 5.58% Arithmetic Mean 17.32% 16.57% NOTES After removing KALS - Mean - 15.92% & WC adjusted mean 14.98% After removing KALS and Tata Elxsi - Mean- 15.14% & WC adjusted mean 14.08% After removing KALS, Tata Elxsi & Accel - Mean- 13.07% & WC adjusted mean 12.01%
v) Six companies which do not even appear in the initial search list of the TPO were issued notice u/s 133(6) to collate information. The process adopted in issuing notice u/s 133(6) has not been detailed. The information obtained in response thereto has not been fully shared.
vi) Details of information not given to the assessee. The TPO in her remand report (as extracted in DRP order, page 12) states that it is intentional. She further states that even the DRP has to seek information from her in case it wants the same.
vii) Copies of subsequent notices u/s 133(6) issued by the TPO and replies received there-from not given to the assessee. TPO in her remand report (as extracted in DRP order page
12) states that same is not relevant.
viii) Difference between replies received u/s 133(6) and annual report tabulated by the assessee. No comments either by the TPO or DRP. Assessee sought an opportunity to cross examine in case replies u/s 133(6) were relied upon. No opportunity to cross examine granted.
ix) The assessee had made detailed submissions for rejection ITA 1171/Bang/2011 Page 9 of 18 of KALS as a comparable. However, TPO and DRP have not commented on assessee's submissions.
x) At page 74 of the TP order it is stated that Megasoft was rejected as comparable in the show cause notice on the ground that it fails RPT filter and employee cost filter. On page 61 of the TP Order it is stated that if a company fails RPT filter or employee cost filter, no notice is issued. However, notice was issued to Megasoft.
xi) In case of Megasoft, TPO and DRP has considered entity-
wide margins on the ground that software product segment also consists software services and therefore at entity level software services are more than 75% of operating revenues. However, similar situation in case of other comparables have been ignored.
xii) Benefit of 5% deduction in determining the arms' length price in accordance with proviso to sec.92C(2) was not given.
6. Per contra, the CIT-DR, in his concise submissions has argued as under:
"(i) Adopting flawed process in issuing notices u/s 133(6) and relying upon such replies to compute ALP.
(ii) Not giving an opportunity to the assessee to cross examine the parties involved.
This issue has been discussed in my written submission on page no 4 to 7 and page no 21 where in stated that Section 92CA(3) empower the TPO to consider such evidence as he may require on any specified point and after taking into account all relevant materials which he has gathered, he shall determine the ALP in relation to the international transaction in accordance with the provisions of sec. 92C. Thus, if the information gathered by the TPO is relevant material for the purpose of determining the ALP in relation to the international transaction then there would be nothing wrong in using the updated data collected by issue of notice u/s 133(6) of the Act.
ITA 1171/Bang/2011 Page 10 of 18 Case law relied upon:
i) M/s.Genesis Integreting System (India) Pvt. Ltd. vs. DCIT (ITA 231/Bang/2010);
ii) M/s.Symantec Software Solution Vs. ACIT (ITA No.7894/Mum/2010) Ground No 7:-
(i) Determining the arm's length price margin / price using comparable data relating f.y.2005-06 which was not available to the assessee at the time of complying with the TP documentation requirements and hence could not have been used in computing the ALP. Regarding the use of current year data the TPO has made elaborate discussion in para 8 of the TP order similarly DRP drawn their conclusion in para-4.1 of the order u/s 144C (5) of the Act. Judicial pronouncement relied upon
1) M/s. Aztech Software Vs. 107 ITD 141 (SB) (Bang)
2) M/s. Mentor graphics (Noida) Pvt. Ltd Vs. DCIT (2007) 109 ITD (Delhi- ITAT)
3) M/s. Customer Services India Pvt. Ltd Vs. ACIT(2009) 30 SOT 486 (Delhi)
4) M/s.Symantec Software Solution Vs. ACIT, ITA No.7894/Mum/2010
5) M/s. Avaya India (P) Ltd. Vs. ACIT, ITA No.5150/DeI/2010
6) M/s. TNT India Pvt. Ltd Vs ACIT ITA No.1442/BNG/08
7) M/s. Deloitte Consulting India Pvt. Ltd Vs. DClT ITA No.1084/Hyd/2010
8) M/s. Honeywell Automation India Ltd. Vs. DCIT ITA No.4/PN/08
9) M/s. Howarth (India) Pvt. Ltd. Vs DClT (2011) ITA No.534/Del/2010.
10) M/s. Panasonic India Pvt. Ltd. Vs. ITO .'2010) 43 SOT 68 (Delhi-
ITAT
11) M/s. Geodis Overseas (P) Ltd Vs. DC IT (2011) 57 DTR (Del)(Trib)191
ii) Rejecting the cost plus method as the most appropriates method on unjustified reason.
Reason of rejection discussed at page no 9 to 14 the TPO and the DRP rejected the assessee CPM method by holding that ITA 1171/Bang/2011 Page 11 of 18
a) Absence of reliable data on functional comparability (some or similarity) of comparable companies i.e, degree of comparability existing between the international transaction and the uncontrolled transaction and between the enterprises entering into such transactions.
b) Absence of reliable gross margin data of comparable companies necessary for application of the method. Case laws relied up on:
i) ACIT Vs. Tara Ultimo Private Limited (ITA No 5098/Mum/2010)
ii) Geodis Ovearseas (P) Ltd vs. DClT (ITA No.4243/DeI/2010 )
iii) M/s. Altair Engineering India Pvt. Ltd Vs. DClT (ITA No. 1184/Bang/2010) Ground No 8 & 9 & 10 :- Doing fresh transfer pricing analysis in the absence of any defect in the transfer pricing analysis by the appellant the TPO rejected the comparables after analysing in detail as discussed in para-
ll (page no.40 to 54 of the TP order) issue has been discussed by me on specific contentions raised by the assessee on page no 21 to 40 of written submission.
Ground No 11: Not recognizing that the company was insulated from risk as against comparables which assume these risks and therefore have to be credited with risk premium on this account. The TPO discussed this issue in details in para 15 (page 79 to 101) of her order. In my written submission discussed this issue on page no 40 to 42. The case laws relied upon.
i) M/s.Marubeni India Private Limited Vs Addl. CIT (ITA No 945/ Del/2009)
ii) Symantec Software Solution Private Limited Vs ACIT (ITA No/7894/Mum/2010)
iii) Exxon Mobil Company India Pvt. Ltd Vs DClT (ITA No.8311/Mum/2010
iv) ADP (P) Ltd Vs. DClT, (ITA No 106/Hyd/2009)
v) Vedaris Technology (P) Ltd Vs. ACIT (2010) 131 TIJ (Del) 309
vi) M/s. Deloitte Consulting India Pvt. Ltd Vs DClT ITA 1171/Bang/2011 Page 12 of 18
vii) ST Micro Electronics Pvt. Ltd Vs. CIT(A), ITA No 1806, 1807/De1/2008 Ground No 12: Assuming without admitting that adjustment is to be made, the lower income tax authorities have erred in not allowing the benefits of the +/-5% range mentioned in the proviso to section 92C(2) The TPO rejected the assesses claim benefit of 5% as per proviso to section 92C(2) of the Act as discussed in para 16 of TP order. The DRP also discussed in details and upheld the TPO's stand.
In my written submissions I discussed this issue at page 42 to 44. Further, I have placed reliance on the case laws as follows:
i) DCIT vs. Global Vantadge Pvt. Ltd. (2010-TIOL-24-ITAT-DEL)
ii) DCIT vs. Basf India Ltd. (41 SOT 10)
iii) M/s.Deloitte Consultancy India Pvt. Ltd. vs. DCIT (ITA No.1084/Hyd/2010
iv)Exxon Mobil Company India Pvt. Ltd. vs. DCIT ITA No.8311/Mum/2010
v) ST Micro Electronics Pvt. Ltd. vs. CIT (A) ITA No.1806, 1807/De/2008
vi) ADP (P)Ltd. Vs. DCIT, ITA No.106/Hyd/2009.
7. In his rejoinder, the learned AR submitted as under:
(i) It is stated that the assessee was provided with three opportunities. However, the assessee was provided with only one opportunity of personal hearing by the DRP on 27-7-2009.
(ii) It is stated that the assessee did not raise the issue of cross-examination before the TPO/DRP. In this regard, the assessee submits that it has made specific request for cross ITA 1171/Bang/2011 Page 13 of 18 examination before TPO as well as DRP. (pages 121, 116 & 129 of paper book-I).
(iii) It is stated that in case of KALS, `1.27 crores which was contended by the assessee as inventory is actually receivable from customers (reliance placed by learned DR on Annexure A of Note). In this regard, the assessee submits that as per annual report, `1.27 crores is inventory. Sundry debtors are separately mentioned in the annual report.
(iv) It is stated that the assessee did not raise the issue of conversion of warrants in case of Mindtree before the TPO/DRP.
The assessee submits that the same is incorrect and made the submissions both before the TPO and DRP (refer page 127 & 324 of paper book-I).
8. In a nut-shell, learned AR submitted that in similar facts and circumstances, the Tribunal, by its order dated 5-8-2011 in ITA No.1231/Bang/2010 in the case of M/s.Genesis Integrating Systems (India) Pvt. Ltd., remitted the matter back to the file of the TPO with certain directions and similar directions can be given in this case also.
9. We have heard rival submissions and considered the facts and materials on record including the contents of the paper books and the case-laws cited therein. After consideration of the entire submissions in the light of the facts of the case before us and following the decision of the Tribunal in the case of M/s.Genesis Integrating Systems (India) Pvt. Ltd., we deem it fit and proper to accept the contention of the assessee that the ITA 1171/Bang/2011 Page 14 of 18 matter is to be remitted back to the file of the TPO for fresh consideration. Hence, we are remitting the matter to the file of the TPO with the following directions:
(i) The operating revenue and the operating cost of the transactions relating to associated enterprises only shall be considered.
(ii) The comparables having the turnover of more than `1 crore but less than `200 crores only shall be taken into consideration.
(iii) All the information relating to comparables which are sought to be used against the assessee shall be furnished to the assessee.
(iv) The assessee shall be given an opportunity to cross examine the parties whose replies are sought to be used against the assessee if the assessee so desires.
(v) To consider the objections of the assessee that relate to additional comparables sought to be adopted by the TPO and pass a detailed order, and
(vi) to give the standard deduction of 5% under the proviso to sec.92C(2) of the Act.
10. Now let us turn to the next issue relating to deduction u/s 10A of the Act. The relevant concise ground reads as under:
"The lower authorities (the learned Assessing Officer, learned Transfer Pricing Officer and Hon'ble Dispute Resolution Panel) have erred in:
ITA 1171/Bang/2011 Page 15 of 18 Not excluding the telecommunication charges and foreign exchange loss from the total turnover while excluding the same from export turnover while computing deduction u/s 10A."
11. We have heard rival submissions and considered the facts and circumstances and materials on record. The learned AR appearing for the assessee submitted that the issue in question is now squarely covered by the judgment of the Hon'ble High Court of Karnataka in the case of CIT v M/s. Tata Elxsi Ltd. & Others (2011-TIOL-684-HC-KAR-II), Hon'ble Mumbai High Court in the case of CIT v Gem Plus Jewellery India Ltd. (330 ITR 175) and the order of the Special Bench of the Tribunal in the case of Sak Soft (313 ITR 353). In the case of M/s.Tata Elxsi Ltd. & Others (supra) the Hon'ble High Court of Karnataka has observed as under:
"...........Section 10A is enacted as an incentive to exporters to enable their products to be competitive in the global market and consequently earn precious foreign exchange for the country. This aspect has to be borne in mind. While computing the consideration received from such export turnover, the expenses incurred towards freight, telecommunication charges, or insurance attributable to the delivery of the articles or things or computer software outside India, or expenses if any incurred in foreign exchange, in providing the technical services outside India should not be included. However, the word total turnover is not defined for the purpose of this section. It is because of this omission to define 'total turnover', the word 'total turnover' falls for interpretation by this Court;
........In section 10A, not only the word 'total turnover' is not defined, there is no clue regarding what is to be ITA 1171/Bang/2011 Page 16 of 18 excluded while arriving at the total turnover. However, while interpreting the provisions of section 80HHC, the courts have laid down various principles, which are independent of the statutory provisions. There should be uniformity in the ingredients of both the numerator and the denominator of the formula, since otherwise it would produce anomalies or absurd results. Section 10A is a beneficial section which intends to provide incentives to promote exports. In the case of combined business of an assessee, having export business and domestic business, the legislature intended to have a formula to ascertain the profits from export business by apportioning the total profits of the business on the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. In the case of section 80HHC, the export profit is to be derived from the total business income of the assessee, whereas in section 10-A, the export profit is to be derived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. To the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term 'total turnover' in section 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. When the statute prescribed a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding the ITA 1171/Bang/2011 Page 17 of 18 meaning of the total turnover, when the total turnover includes export turnover. If what is excluded in computing the export turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible. Thus, there is no error committed by the Tribunal in following the judgements rendered in the context of section 80HHC in interpreting section 10A when the principle underlying both these provisions is one and the same".
12. Respectfully following the Hon'ble High Court's decision, we direct that telecommunication charges and foreign exchange loss are to be excluded not only from total turnover but also from export turnover in computing deduction u/s 10A of the Act.
13. Turning to the last issue, relating to levy of interest u/s 234B, which is mandatory and consequential in nature, we do not deem fit to address the same.
14. In the result, the assessee's appeal is partly allowed for statistical purposes.
Order pronounced in the open court on 31st January, 2012.
Sd/- sd/-
(George George K) (N.Bharathvaja Sankar)
JUDICIAL MEMBER VICE-PRESIDENT
Place : Bangalore
Dated: 31st January, 2012.
Eks
ITA 1171/Bang/2011
Page 18 of 18
Copy to :
1. Appellant
2. Respondent
3. CIT(A) concerned
4. CIT
5. DR, ITAT, Bangalore
6. Guard file
By Order
Assistant Registrar, ITAT, Bangalore