Income Tax Appellate Tribunal - Hyderabad
M/S. Deloitee Consulting India P. Ltd, ... vs Department Of Income Tax on 11 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH 'A', HYDERABAD
BEFORE SHRI D.MANMOHAN, VICE PRESIDENT
AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA No.470/Hyd/2011 : Assessment Year 2005-06
Asst. Commissioner of Income- V/s M/s. Deloitte Consulting India (P)
tax, Circle 1(2), Hyderabad Ltd., Hyderabad
(PAN - AABCD 9761 D )
(Appellant) (Respondent)
Appellant by : Smt. Nivedita Biswas DR
Respondent by : S/Shri Sistla Venkateswarlu &
Surya Kiran M. ARs
Date of Hearing 11.2.2016
Date of Pronouncement 11.2.2016
ORDER
Per D.Manmohan, Vice President :
This appeal by the Revenue is directed against the order passed by the Commissioner of Income-tax(Appeals) III, Hyderabad and it pertains to assessment year 2005-06.
2. The only issue urged by the Revenue in this appeal is with regard to computation of deduction under S.10A of the Act; whether communication charges are to be excluded from the total turnover for the purpose of computing deduction under S.10A.
3. The facts are narrated in brief. The assessee is engaged in the business of software development services and IT-enabled services. The assessee claimed deduction of Rs.3,00,30,869 under S.10A of the Act in the return of income filed for the assessment year 2005-06. While verifying the details of expenditure, the Assessing Officer found that a sum of Rs.2,07,13,351 was incurred by the 2 ITA No.470/Hyd/2011 M/s. Deloitte Consulting India (P) Ltd.
Hyderabad assessee towards communication charges. According to him, the same should not be deducted for computing the export turnover, under S.10A of the Act. In response thereto, the assessee submitted that the same was incurred in Indian currency and, even otherwise, if it is excluded from the export turnover, it should also be excluded from the total turnover.
4. The Assessing Officer rejected the contention of the assessee, referring to the meaning of 'export turnover' as given in Explanation 2(iv) to S.10A. The Assessing Officer concluded that the assessee incurred expenditure for delivery of goods outside India and the same deserves to be excluded from the figure of export turnover and he accordingly re-determined the claim of exemption under S.10A of the Act.
5. Aggrieved, assessee contended before the CIT(A) that the impugned expenditure was incurred in Indian Rupees and the same was not reimbursed by the client to the assessee in foreign currency, in which event, even as per the definition of export turnover in S.10(2)(iv), the claim should not be excluded from the export turnover. An alternative plea was raised that even if it is to be deducted from the export turnover, that would not lead to any disallowance since communication charges should have been correspondingly deducted from the total turnover while computing the deduction under S.10A of the Act. The learned CIT(A) accepted the alternative contention of the assessee in the light of decision of Chennai Special Bench in the case of ITO V/s. Sak Soft Ld. CIT(A). (313 ITR (AT)353)(Chennai(SB)).
6. Aggrieved, Revenue is in appeal before us.
3 ITA No.470/Hyd/2011M/s. Deloitte Consulting India (P) Ltd.
Hyderabad
7. At the time of hearing, Learned Departmental Representative strongly relied upon the order passed by the Assessing Officer, whereas the learned counsel for the assessee referred to para 4.3 of the order of the CIT(A) to submit that the issue is squarely covered by the decision of the Special Bench as well as by the decisions of the Hyderabad Bench of the ITAT. He also submitted that recently, the Hon'ble Karnataka High Court in the case of CIT V/s. Tata Elxsi Ltd. (349 ITR 98), referred to plethora of decisions on this point , including the decision of the Hon'ble Bombay High Court in the case of CIT V/s. Gem Plus Jewellery India Ltd. (330 ITR 175) as well as the decision of the ITAT Special Bench Chennai in the case of Sak Soft Ltd. (supra) to observe that 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 turnover, and while applying the formula, there should be uniformity in the ingredients of both the numerator and denominator, as otherwise, it will produce anomalies or absurd results. Hon'ble Karnataka High Court thus confirmed the view taken by the ITAT Special Bench Chennai in holding that any expenditure which is excluded from the export turnover should also be excluded from the total turnover.
8. We have carefully considered the rival submissions and perused the record. As could be noticed from the view taken by the various High Courts as well as ITAT Special bench Chennai in the cases referred to above, the communication charges having been excluded from the export turnover, it should also be excluded from the total turnover for the purpose of computation of deduction under S.10A of the Act. Since the view taken by the CIT(A) is in conformity with the view taken in the aforesaid decisions, we do not find any infirmity in the order passed by the learned CIT(A).
4 ITA No.470/Hyd/2011M/s. Deloitte Consulting India (P) Ltd.
Hyderabad
9. In the result, appeal filed by the Revenue is dismissed.
Pronounced accordingly in the open court.
Sd/- Sd/-
(S.Rifaur Rahman) (D.Manmohan)
Accountant Member. Vice President
Dt/- 11th February, 2016
Copy forwarded to:
1. M/s. Deloitte Consulting India Pvt. Ltd., RMZ Futura , Block B, 4th Floor, Plot No.14 & 15, Road No.2, Hitech City Layout, Madhapur, Hyderabad 500 081
2. Asst Commissioner of Income-tax Circle 1(2), Hyderabad
3. Commissioner of Income-tax(Appeals) III, Hyderabad
4. Commissioner of Income-tax I, Hyderabad
5. Departmental Representative ITAT, Hyderabad B.V.S.