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Income Tax Appellate Tribunal - Mumbai

Ito 10(3)(4), Mumbai vs Praxis Interactive Services P. Ltd, ... on 13 July, 2017

                 आयकर अपीऱीय अधिकरण, मुंबई न्यायपीठ "सी " मुंबई
       IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI

BEFORE HON'BLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM)

                    आमकय अऩीर सं./I.T.A. No.5023/Mum/2015
                    (ननधधायण वषा / Assessment Year :2012-13)


     Income Tax Officer -10(3)(4),    बनाम/ M/s Praxis Interactive Services
     Room No.555, 5th Floor,           Vs.
                                            Pvt.Ltd,
     Ayakar Bhavan,                         607/608, Multi Stories Bldg,
                                            SEEPZ, Andheri (E),
     M.K.Road,                              Mumbai-400096
     Mumbai-400020
          (अऩीरधथी /Appellant)         ..       (प्रत्मथी / Respondent)

      स्थधमी रेखध सं ./जीआइआय सं ./PAN No. : AAECP5196M



           अऩीरधथी ओय से / Appellant by:      Shri Rajat Mittal
           प्रत्मथी की ओय से/Respondent by    Shri Jigar Mehta


          सुनवधई की तधयीख / Date of Hearing        : 5.7.2017
          घोषणध की तधयीख /Date of Pronouncement :13..7.2017


                                  आदे श / O R D E R

Per RAJESH KUMAR, Accountant Member:

This is an appeal filed by the revenue and is directed against the order of the Ld. CIT(A)-17, Mumbai dated 28.07.2015 pertaining to A.Y.2012-13.

2. In the grounds of appeal taken by the revenue are as under :

"1. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in directing the AO to exclude Rs.2.08 crores comprising of foreign travel expenses, US support office expenses, travelling expenses etc from the total turnover for the purpose of computation of deduction u/s 10AA of the Act, as these are spent in foreign currency for providing technical services outside India"

3. The issue raised by the revenue is against the direction of ld.CIT(A) to the AO to exclude Rs.2.08 crores on account of foreign travel expenses, US support office expenses etc from the total turnover for the purpose of computation of deduction u/s 10AA of the Income Tax Act, 1961.

4. The facts of the case are that the assessee filed return of income on 29.10.2012 declaring NIL income under the normal provisions of Act and Rs.11,98,35,828/- under the provisions of section 115JB of the Act and thereafter rectification application was also moved. Thereafter, the case of the assessee was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. During the year, the assessee claimed deduction u/s 10AA of the Act amounting to Rs.11,90,62,930/- by claiming exemption on the entire export turnover which was on 30,48,50,399/- as per the Form 56F. The AO upon going through the same found that the assessee incurred following foreign expenses:

     S.No.   Nature of expenses                Amount in Rs.
     1       US Support office expenses           1,76,28,223/-
     2       Business entertainment foreign            1,89,977
     3       Foreign travel expenses-hotel and         2,22,244
             boarding
     4       Foreign travel expenses-Misc.             1,63,012
     5       Foreign travel exp-taxi/shuttle           3,43,703
     6       Foreign travel ex--telephone                14,484
     7       Travelling expenses-per diem            22,91,718
             Total                                2,08,56,360/-

According to the AO, the turnover for the purposes of calculation of exemption u/s 10AA of the Act has to be reduced by foreign exchange exp ITA No.5023/M/15 3 for providing technical services outside India. The AO further noticed that in the earlier year also the said expenses were reduced from the export turnover and not from the total turnover of the undertaking. Accordingly, the AO calculated the exemption at Rs.10,41,38,083/- as under :

      Export turnover:             Rs.30,48,50,339/-.
      Less                        Rs. 2,08,56,360/-
      Export turnover             Rs.28,39,93,979/-

Exemption u/s 10AA = Business profit x export turnover Total turnover =11,17,85,926 x 28,39,93,979 30,48,50,339 Exemption u/s 10AA = 10,41,38,083/-

5. In the appellate proceeding, the ld.CIT(A) allowed the appeal of the assessee by holding that the similar issue has been decided by his predecessor in the assessment years 2010-11 and 2011-12 in favour of the assessee and since the facts of both the cases are same, the ld. CIT(A) directed the AO to exclude the aforesaid expenses including US Support office expenses, Business entertainment foreign and Foreign travel ex-- telephone etc. from the total turnover for the purpose of calculation of exemption u/s 10AA of the Act.

6. At the outset, the ld.AR submitted that the issue in the present appeal is covered by the following decisions:

a) ITO V/s M/s Praxis Interactive Technologies Pvt Ltd in ITA No.3953/Mum/2010 (AY-2006-07) dated 16.9.2011;

b) ITO V/s M/s Praxis Interactive Technologies Pvt Ltd in ITA No.8015/Mum/2010 (AY-2007-08) dated 7.9.2012;

c) CIT V/s Gem Plus Jewellery India Ltd ((2011) 330 ITR 175(Bom).

The ld.AR, therefore prayed that the appeal of the revenue be dismissed.

7. The ld. DR fairly agreed with the contentions of the ld.AR.

8. We have carefully considered the rival submissions and perused the material placed before us including the impugned orders of authorities below. We find that the issue raised in the present appeal stands covered in favour of the assessee by the decision of co-ordinate bench of the Tribunal in assessee's own case as mentioned above and the decision of Hon'ble Jurisdictional High Court in the case of Gem Plus Jewellery India Ltd (supra). The operative part of the decision of the co-ordinate Bench of the Tribunal is reproduced below (ITA No.8015/Mum/2010 (AY-2007-08) dated 7.9.2012):

"4. At the time of hearing before us, the Ld. Representatives of both the sides have agreed that the issue involved in this appeal of the revenue is squarely covered by the decision of the Co-ordinate Bench of this Tribunal in assessee's own case for the Assessment Year 2006- 07 rendered vide its order dated 16.09.2011 in ITA No.3953/MA/2010, wherein similar issue has been decided in favour of the assessee relying on the decision of Special Bench of ITAT at Chennai in the case of ITO vs. SAK Soft Ltd. (supra). As the issue involved in the year under consideration as well as all the material fact relevant there to are similar to the Assessment Year 2006- 07, we respectively follow the order of the Co-ordinate Bench of the Tribunal for the Assessment Year 2006-07 passed in the assessee's own case and uphold the impugned order of the CIT(A) directing the Assessing Officer not to exclude the expenditure in question incurred in foreign currency from the export turnover for the purpose of computing deduction u/s 10A."

We, therefore, respectfully following the ratio laid down by the Tribunal and Hon'ble High Court uphold the order of ld.CIT(A) by dismissing the appeal of the revenue.

5

9. In the result the appeal of the revenue is dismissed.

The above order was pronounced in the open court on 13th July, 2017. घोषणध खर ु े न्मधमधरम भें ददनधंकः 13 July, 2017 को की गई ।

      Sd                                                       sd

(JOGINDER SINGH)                                   ( RAJESH KUMAR)
 Judicial Member                                   Accountant Member

भुंफई Mumbai: 13.7.2017
व.नन.स./ SRL , Sr. PS

आदे श की प्रतिलऱपप अग्रेपिि/Copy of the Order forwarded to :

1. अऩीरधथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमुक्त(अऩीर) / The CIT(A)- concerned

4. आमकय आमुक्त / CIT concerned

5. ववबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai concerned

6.

गधर्ा पधईर / Guard file.

आदे शधनुसधय/ BY ORDER, True copy सहधमक ऩंजीकधय (Asstt. Registrar) आमकय अऩीरीम अधधकयण, भुंफई /ITAT, Mumbai