Income Tax Appellate Tribunal - Bangalore
Deputy Commissioner Of Income Tax ... vs M/S Sap India Pvt Ltd , Bangalore on 19 November, 2018
ITA.716 & 717/Bang/2017 Page - 1
IN THE INCOME TAX APPELLATE TRIBUNAL
BENGALURU BENCH 'C', BENGALURU
BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER
AND
SHRI. LALIET KUMAR, JUDICIAL MEMBER
I.T.A Nos.716 & 717/Bang/2017
(Assessment Year : 2009-10 & 2010-11)
Deputy Commissioner of Income-tax,
Circle -6(1)(1), Bengaluru .. Appellant
v.
M/s. SAP India P. Ltd,
Wing A, 2nd floor, Tower-B, Salarpuria,
Softzone, Sarjapur Outer Ring Road,
Belandur Post, Bengaluru 560 103 .. Respondent
PAN : AAICS7826B
Assessee by : Ms. Vachana, CA
Revenue by : Ms. Neera Malhotra, CIT - DR
Heard on : 19.11.2018
Pronounced on : 19.11.2018
ORDER
PER LALIET KUMAR, JUDICIAL MEMBER :
The present appeals are filed by the Revenue against the orders of the CIT (A), Bengaluru -6, Bengaluru, dt.27.12.2016 and 26.12.2016, for the assessment years 2009-10 & 2010-11, on the following effective ground :
ITA.716 & 717/Bang/2017 Page - 2 "2. On the facts and in circumstances of the case, the CIT (A) erred in citing the ratio laid down by the Hon'ble High Court in the case of CIT v. Tata Elxsi Ltd. reported in 349 ITR 98 and directing the AO to reduce expenses incurred in foreign currency, both from Export Turnover as well as from Total Turnover for the purpose of computation of deduction u/s.10A, without appreciating the fact that the statute allows exclusion of such expenditure ONLY from Export Turnover by way of a specific definition for Export Turnover in the Act. On the other hand, there is no specific provision in Section 10A warranting exclusion of the above expenses from the Total Turnover also.
02. The Ld. DR submitted that the CIT (A) was wrong in directing the AO to reduce the expenses deducted both from export turnover as well as from the total turnover for the purpose of computation of deduction u/s.10A of the Act. He further submitted that the CIT (A) had not appreciated the fact that the statute allows exclusion of such expenditure only from export turnover.
03. On the other hand the Ld. AR for the assessee supported the order of the lower authorities.
04. We have heard the rival contentions and perused the material on record. We find that this issue is put to rest by the judgment of the Hon'ble Supreme Court in the matter of CIT v. HCL Technologies Ltd [(2018) 93 taxmann.com 33], wherein the Hon'ble Supreme Court has decided the issue in favour of the assessee holding that the expenses be reduced both from the export turnover as well as from the total turnover. The Hon'ble Supreme Court in paras 20 and 21, held as under :
ITA.716 & 717/Bang/2017 Page - 3
20. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well.
21. On the issue of expenses on technical services provided outside, we have to follow the same principle of interpretation as followed in the case of expenses of freight, telecommunication etc., otherwise the formula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover. Respectfully following the above order of the Hon'ble Supreme Court, we direct that the expenses incurred shall be deducted both from the export turnover as well as the total turnover for arriving at the deduction u/s.10A of the Act.
05. In the result, appeals of the Revenue are dismissed. Order pronounced in the open court on 19th day of November, 2018.
Sd/- Sd/-
(A. K. GARODIA) (LALIET KUMAR)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Bengaluru
Dated : 19.11.2018
MCN*
Copy to:
1. The assessee
2. The Assessing Officer
3. The Commissioner of Income-tax
4. Commissioner of Income-tax(A)
5. DR
6. GF, ITAT, Bangalore
By order
Assistant Registrar
Income Tax Appellate Tribunal,
Bangalore.