Infosys Technologies Ltd.,, Bangalore v. DCITCircle-11(4), Bangalore

ITA 1140/BANG/2009 | 2004-2005
Pronouncement Date: 21-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 114021114 RSA 2009
Bench Bangalore
Appeal Number ITA 1140/BANG/2009
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant Infosys Technologies Ltd.,, Bangalore
Respondent DCITCircle-11(4), Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 21-01-2011
Date Of Final Hearing 11-01-2011
Next Hearing Date 11-01-2011
Assessment Year 2004-2005
Appeal Filed On 02-12-2009
Judgment Text
PAGE 1 OF 21 ITA NO.1140/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K J.M. AND SHRI A MOHAN ALANKAMONY A.M. ITA NO.1140/BANG/2009 [ASSESSMENT YEAR 2004-05] M/S INFOSYS TECHNOLOGIES LTD. NO.44 & 97A 3 RD CROSS ELECTRONIC CITY HOSUR ROAD BANGALORE-560100. - APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(4) BANGALORE. - RESPONDENT APPELLANT BY : SHRI PADAM CHAND KHINCHA C.A. RESPONDENT BY : SHRI G V GOPAL RAO O R D E R PER GEORGE GEORGE K : THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER OF THE LEARNED CIT(A)-I BANGALORE DATED 5/10 /2009. THE RELEVANT ASST. YEAR IS 2004-05. 2. GROUND NO.1.1 AND 10.1 ARE GENERAL IN NATURE AN D NO SPECIFIC ADJUDICATION IS CALLED FOR. HENCE THE SAME ARE D ISMISSED. 3. GROUND NO.8.1 AND 9.1 ARE REGARDING LEVY OF INT EREST U/S 234B AND 234D OF THE ACT. PAGE 2 OF 21 ITA NO.1140/BANG/2009 2 3.1 THE LEVY OF INTEREST U/S 234B AND 234D OF THE ACT IS MANDATORY AND CONSEQUENTIAL. HENCE THESE GROUNDS A RE DISMISSED. 4. THE REST OF THE GROUNDS SHALL BE DEALT WITH IN CHRONOLOGICAL ORDER. GROUND NO.2.1 TO 2.3 (PAYMENT MADE TOWARDS B ANDWIDTH CHARGES) : 4.1 BRIEF FACTS IN RELATION TO THE ABOVE GROUNDS A RE AS FOLLOWS:- THE ASSESSEE IS A PUBLIC LIMITED COMPANY. IT IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. ASSESSMENT FOR T HE CONCERNED YEAR WAS COMPLETED VIDE ORDER DATED 29.12.2006 U/S 143(3 ) OF THE ACT. THE ASSESSEE IN THE RETURN OF INCOME HAD CLAIMED A SUM OF RS.10 37 42 694/- BEING BANDWIDTH CHARGES PAID TO FOREIGN COMPANIES F OR DATA COMMUNICATION. THE DETAILS OF PAYMENT ARE AS FOLLO WS:- 1) AT & T RS.8 68 44 524/- 2) MCI TELECOMMUNICATIONS RS.1 68 98 170/- TOTAL = RS.10 37 42 694 THE CONTENTION OF THE ASSESSEE BEFORE THE A.O. THAT THE IMPUGNED PAYMENTS MADE TO AT&T AND MCI TELECOMMUNICATIONS ARE NOT IN THE NATURE OF ROYALTY FEES FOR TECHNICAL SERVICES OR REL ATE TO ANY ITEM OF EXPENDITURE COVERED U/S 40(A)(I) OF THE ACT WAS RE JECTED BY THE AO. THE A.O. HELD THAT THE ASSESSEE WAS REQUIRED TO DEDUCT TAX AT SOURCE IN RESPECT OF THE SAID AMOUNT U/S 195 OF THE ACT AND H AVING NOT DONE SO DISALLOWANCE U/S 40(A)(I) WAS ATTRACTED. IN THIS R EGARD THE A.O. REFERRED TO THE EARLIER ASSESSMENT ORDERS IN THE CASE OF THE ASSESSEE RELATING TO ASST. YEARS 1998-99 1999-2000 AND 2002-03 WHEREIN IT WAS HELD THAT THE IMPUGNED AMOUNTS FALL WITHIN THE PROVISIONS OF SECT ION 195 OF THE ACT AND PAGE 3 OF 21 ITA NO.1140/BANG/2009 3 THEREFORE THE ASSESSEE WAS LIABLE TO DEDUCT THE TA X AT SOURCE IN RESPECT OF SUCH PAYMENTS. 4.2 AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4.3 THE CIT(A) AFFIRMED THE ACTION OF THE A.O. FOR TWO REASONS NAMELY (I) IF THE PAYER (ASSESSEE) WAS OF THE OPINIO N THAT THERE WAS NO TAX DEDUCTIBLE AT SOURCE WITH REFERENCE TO PAYMENT MADE TO THE FOREIGN COMPANY THE ONLY WAY OUT WAS TO GET A NO DEDUCTION CE RTIFICATE FROM THE A.O. (TDS). IT WAS HELD BY THE CIT(A) THAT THE ASSE SSEE CANNOT BE ALLOWED TO SIT IN PLACE OF AO (TDS) AND DECIDE THAT THE SUM PAYABLE/PAID TO THE NON-RESIDENT IN THIS CASE AT&T AND M/S MCIT TELECOMMUNICATIONS HAD NO ELEMENT OF INCOME SUFFERABLE TO TAX. (II) O N MERITS THE CIT(A) TOOK NOTICE OF THE TRIBUNAL DECISION DIRECTLY ON THE POINT WHICH WAS IN FAVOUR OF ASSESSEE. HOWEVER HE FOLLOWED THE ORDER OF AUTHORITY FOR ADVANCE RULING (AAR) IN THE CASE OF CARGO COMMUNITY NETWORK PVT. LTD. REPORTED IN 289 ITR 355. ACCORDING TO THE CIT(A) THE HONBLE AUTHORITY FOR ADVANCE RULING HAD HELD THAT FEES/CHARGES PAID FOR INTERNET ACCESS IS ROYALTY. 4.4 THE ASSESEE BEING AGGRIEVED IS IN APPEAL BEF ORE US. 4.5 IT WAS CONTENDED THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE SHOULD HAVE APPLIED FOR AND OBTAINED A CERTIFICATE U/S 195(2) OF THE ACT BEFORE MAKING THE PAYMENT OF BANDWIDTH CH ARGES. THE LEARNED AR RELIED ON THE LATEST DECISION OF THE HONBLE SUP REME COURT IN THE CASE PAGE 4 OF 21 ITA NO.1140/BANG/2009 4 OF GE INDIA TECHNOLOGY CENTRE P. LTD. V CIT 327 ITR 456. IT WAS CONTENDED THAT THE REMITTANCE TO THE FOREIGN PARTY H AS TO BE OF A TRADING RECEIPT THE WHOLE OR PART OF WHICH IS LIABLE TO BE TAXED IN INDIA. IF IT IS NOT SO ASSESSABLE IT WAS SUBMITTED THERE WAS NO Q UESTION DEDUCTION OF TAX AT SOURCE. IT WAS FURTHER SUBMITTED THAT THE C IT(A) ERRED IN RELYING ON THE DECISIONS OF THE AAR WHICH IS DISTINGUISHAB LE BOTH ON FACTS AND LAW. IT WAS FURTHER SUBMITTED THAT IN THE SUBSEQUE NT DECISION OF THE AAR IN THE CASE OF DELL INTERNATIONAL SERVICES INDIA (P ) LTD. V CIT (2008) 305 ITR 37 AND IN THE CASE OF ISRO SATELLITE CENTRE (IS AC) V DIT (2008) 307 ITR 59 THE AAR HAS HELD THAT THE PAYMENT FOR TWO-WA Y TRANSMISSION OF VOICE AND DATA THROUGH TELECOMMUNICATION BANDWIDTH IS NEITHER ROYALTY NOR FEES FOR TECHNICAL SERVICES. 4.6 THE LEARNED DR ON THE OTHER HAND SUPPORTED T HE FINDING/CONCLUSION OF THE CIT(A). 4.7 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE RECENT DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE P. LTD. V CIT 327 ITR 456 HAS HELD THE FOLLOWING:- THE EXPRESSION CHARGEABLE UNDER THE PROVISIONS OF THE ACT IN SECTION 195(1) SHOWS THAT THE REMITTANCE HA S GOT TO BE OF A TRADING RECEIPT THE WHOLE OR PART OF WH ICH IS LIABLE TO TAX IN INDIA. IF TAX IS NOT SO ASSESSABL E THERE IS NO QUESTION OF TAX AT SOURCE BEING DEDUCTED. IN THE LIGHT OF THE ABOVE DECISION OF THE HONBLE S UPREME COURT THE CIT(A)S REASONING THAT THE ONLY WAY OUT IS TO GET A NO-DEDUCTION PAGE 5 OF 21 ITA NO.1140/BANG/2009 5 CERTIFICATE FROM THE AO (TDS) IS LACKED MERIT IN S UBSTANCE AND THIS REASONING OF THE CIT(A) IS TO BE OUTRIGHTLY REJECTED . 4.8 SOFTWARE DEVELOPED BY COMPANIES IN INDIA IS EXP ORTED EITHER IN PHYSICAL MODE (I.E. THROUGH FLOPPY DISKS) OR THRO UGH WIRELESS COMMUNICATION USING SATELLITE LINKS. WHEN AN INDIA N COMPANY EXPORTS SOFTWARE TO COMPANIES OUTSIDE INDIA USING SATELLITE COMMUNICATION FACILITIES THE DIGITAL SIGNALS ARE CONVERTED INTO ANALOG SIGNALS THROUGH EARTH STATIONS AND ARE TRANSMITTED TO ONE OF THE GE O-STATIONERY SATELLITES USING THE REQUIRED BANDWIDTH PROVIDED BY VIDESH SANC HAR NIGAL LTD. (VSNL) OR SOFTWARE TECHNOLOGY PARKS OF INDIA (STPI). THE SIGNALS THAT HAVE BEEN BEAMED TO THE SATELLITE WILL BE DOWNLINKE D TO THE EARTH STATION IN THE UNITED STATES AND SENT TO THE CLIENT LOCATIO NS USING THE BANDWIDTH AND DOWNLINKING FACILITY PROVIDED BY INTERNATIONAL SE RVICE PROVIDERS SUCH AS AT&T MCI TELECOMMUNICATIONS ETC. THE ASSESSEE SHA RES THE BANDWIDTH PROVIDED BY THE INTERNATIONAL SERVICE PROVIDERS. BA NDWIDTH IN NORMAL PARLANCE REFERS TO THE AMOUNT OF TRAFFIC THAT COUL D BE CARRIED ON THE INTERNET. GREATER THE BANDWIDTH GREATER WOULD BE THE ABILITY TO TRANSMIT DATA AND OTHER COMMUNICATION. 4.9 THE PAYMENTS MADE TO SERVICE PROVIDERS SUCH AS AT&T OR MCI TELECOMMUNICATIONS ARE FOR THE USE OF BANDWIDTH PROVIDED FOR DOWNLINKING SIGNALS IN THE UNITED STATES. THE PAYME NTS MADE ARE NOT IN THE NATURE OF MANAGERIAL CONSULTANCY OR TECHNICAL S ERVICES NOR IS IT FOR THE USE OF OR RIGHT TO USE INDUSTRIAL COMMERCIAL OR SC IENTIFIC EQUIPMENT. THE SERVICE PROVIDES SUCH AS MCI TELECOMMUNICATIONS OR AT&T ONLY ENSURE PAGE 6 OF 21 ITA NO.1140/BANG/2009 6 THAT THE SUFFICIENT BANDWIDTH IS AVAILABLE ON AN ON GOING BASIS TO THE ULTIMATE USERS TO UPLINK AND DOWNLINK THE SIGNALS. 4.10 THE MADRAS HIGH COURT IN THE CASE OF SKYCELL COMMUNICATION SERVICES LTD. V DCIT 251 ITR 53 HAS HELD THAT PAYMEN T FOR USE OF MOBILE PHONE SERVICES WOULD NOT CONSTITUTE ROYALTIES OR FEE S FOR TECHNICAL SERVICES. PAYMENTS MADE FOR BANDWIDTH ARE AKIN TO T HE PAYMENT MADE FOR USE OF MOBILE PHONE SERVICES. 4.11 THE BANGALORE BENCH OF THE ITAT IN THE CASE O F WIPRO LTD. V ITO 80 TTJ 191 HAS HELD THAT PAYMENT FOR BANDWIDTH W OULD CONSTITUTE NEITHER ROYALTIES NOR FEES FOR TECHNICAL SERVICES EI THER UNDER THE ACT OR UNDER THE AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATIO N WITH USA. THIS DECISION WAS FOLLOWED THE TRIBUNAL IN THE ASSESSEE S OWN CASE (ITA NO.532 & 533/BANG/2002 & ITA NO.365 & 367/BANG/2003 & ITA NO.365 & 367/BANG/2005 DATED 12.8.2005). MOREOVER THE RE CENT DECISIONS OF THE AAR IN THE FOLLOWING CASES HAVE DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE:- DELL INTERNATIONAL SERVICES INDIA (P) LTD. V CIT 30 5 ITR 37; ISRO SATELLITE CENTRE (ISAC) V DIT 307 ITR 59; & CABLE AND WIRELESS NETWORKS INDIA (P) LTD. V DIT 315 ITR 72. 4.12 IN THE LIGHT OF ABOVE REASONING THE GROUND N OS.2.1 TO 2.3 ARE ALLOWED. 5. GROUND NO.3.1 TO 3.3 PAYMENT MADE TO GARTNER GR OUP AND OTHER ENTITIES U/S 40(A)(I) OF THE I T ACT. BRIEF FACTS IN RELATION TO THE ABOVE GROUNDS ARE AS FOLLOWS:- PAGE 7 OF 21 ITA NO.1140/BANG/2009 7 DURING THE YEAR THE ASSESSEE MADE CERTAIN PAYMENT S TOWARDS SUBSCRIPTION CHARGES. THE ASSESSEE COMPANY PAID THE FOLLOWING AMOUNTS AS SUBSCRIPTION AMOUNT TO VARIOUS INTERNATIONAL ORGANI ZATIONS:- PARTICULARS AMOUNT (RS.) SUBSCRIPTION TO GARTNER GROUP 4 52 08 557.00 SUBSCRIPTION TO FORRESTER RESEARCH INC 1 96 97 148. 00 SUBSCRIPTION TO META GROUP 92 86 484.00 SUBSCRIPTION TO GIGA GROUP 33 95 700.00 TOTAL 7 75 87 889.00 THE A.O. WHILE COMPLETING THE ASSESSMENT AS IN THE LAST YEAR HELD THAT THE ASSESSEE COMPANY HAS GOT THE BENEFIT OF TECHNICA L CONSULTATION AND IT WAS CONCLUDED BY THE AO THAT THE PAYMENT FALLS WITHI N THE AMBIT OF SECTION 195 OF THE I T ACT. THEREFORE THE AO WAS OF THE VIEW THAT THE ASSESSEE COMPANY WAS LIABLE TO DEDUCT TAX AT SOURCE AND HENCE THE SUBSCRIPTION CHARGES CLAIMED AS DEDUCTION WAS DIS ALLOWED U/S 40(A)(I) OF THE I T ACT. 5.1 THE ABOVE VIEW OF THE AO WAS AFFIRMED BY THE CI T(A) IN HIS IMPUGNED ORDER VIDE PARAGRAPH 7.14 TO 7.17. 5.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN QUESTION IS COVERED BY VAR IOUS ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE. THE ORDERS OF THE TRIBUNAL WHICH ARE IN ASSESSEES OWN CASE ARE AS FOLLOWS:- INFOSYS TECHNOLOGIES LTD. V ITO (IN ITA NOS.145 TO 1 48/BANG/ 2004 AY 2000-01 2001-02 2002-03 AND 2003-04 DAT ED 11.11.2005). PAGE 8 OF 21 ITA NO.1140/BANG/2009 8 ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NOS.653 & 9 69/ BANG/2006 AY 2002-03 AND 2003-04 DATED 17.10.2007) ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NO.635/BANG /2006 AY 2001-02 DATED 2.11.2007) THE RELEVANT FINDING OF THE TRIBUNAL IN ITA NOS.145 TO 148/BANG/2004 CONCERNING ASST. YEARS 2000-01 2001-02 2002-03 AN D 2003-04 ARE AS FOLLOWS:- 2. IDENTICAL ISSUE AROSE BEFORE THIS TRIBUNAL IN TH E CASE OF WIPRO LTD. (94 ITD 9) (BANG.) WHEREIN IT WA S HELD THAT PAYMENT MADE TO GARTNER GROUP FOR PROVIDING ACC ESS TO INFORMATION AVAILABLE IN DATA BASE MAINTAINED BY SAID COMPANY IN FOREIGN COUNTRY IS NOT SUBJECT TO DEDUCTIO N OF TAX AT SOURCE U/S 195 OF THE ACT. THE FACTS IN THE PRESENT CASE ARE IDENTICAL WHEREIN IT WAS HELD THUS :- IT WAS UNDISPUTED THAT THE GG WAS WEB BASED PUBLISHING HOUSE GIVING ACCESS TO THE DATA BASE TO ALL THOSE WHO WERE WILLING TO PAY. THOSE PAYMENTS WERE TOWARDS OBTAINING OF MARKET DATA AND CLIENTS STRATEGY DETAILS ETC. THOSE WERE PUBLICATIONS AND NOT AN INFORMATION OR ADVICE GIVEN INDIVIDUALLY. THE INFORMATION WAS AVAILABLE ON SUBSCRIPTION TO AN YONE WILLING TO PAY. FURTHER IT WAS COPYRIGHTED INFORM ATION AND COULD NOT BE PASSED ON TO ANYONE ELSE. THERE WAS NO LICENSE GRANTED TO THE ASSESSEE TO USE IN ANY MANNER OR QUOTE TO ANYONE ELSE. EVEN THE ACCESS WAS RESTRICT ED TO SPECIFIC INDIVIDUALS NAMED BY THE ASSESSEE AND DID N OT EXTEND TO ANYONE WANTING TO USE. ANNUAL SUBSCRIPTI ON WAS AN ACCESS FEE TO GARTNER DATABASE MAINTAINED OUTSIDE INDIA. FEE WAS PAYABLE EVEN IF NO SERVICE WAS UTILIZED. IT WAS LIKE A GATE PASS OR ENTRY FEE AND COULD NOT BE TREATED AS IMPARTING OF INFORMATION. THE PAYMENT WAS FOR OBTAINING DATA AND USE IN THE WAY ASSESSEE WANTED IT TO BE USED. IT WAS FOR USE OF A PAGE 9 OF 21 ITA NO.1140/BANG/2009 9 COPYRIGHTED ARTICLE AND NOT FOR TRANSFER OF RIGHT IN THE COPYRIGHT IN THE ARTICLE. JUST AS A BOOK IT IS A COP YRIGHT ARTICLE. PURCHASE OF THE BOOK ALLOWS USE OF INFORMA TION CONTAINED THEREIN BUT DOES NOT TRANSFER OF THE COPYR IGHT THEREIN. EVEN IF THE PAYMENT FOR USE OF ANY COPYRIGH T IS COVERED THE COPYRIGHT SHOULD BE OF A LITERARY ARTIST IC OR SCIENTIFIC WORK AND NO OTHER. SINCE IN THE INSTAN T CASE THE COPYRIGHT WAS NOT OF A LITERARY ARTISTIC OR SCIE NTIFIC WORK THE PAYMENT WAS NOT COVERED AS ROYALTIES UNDER ARTICLE 12(3)(A) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA. THE DATA SERVER WAS INDISPUTABLY LOCATED OUTSIDE INDIA. CONSEQUENTL Y THE PROVISION OF SERVICES OF OFFERING THE DATA BASE TO ITS CUSTOMERS WAS AN EVENT OUTSIDE THE TAXABLE TERRITOR IES OF INDIA. IT WAS ALSO AN ACCEPTED FACT THAT GG DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA. FURTHER SUCH AN ACCESS TO DATA BASE COULD NOT FALL WITHIN THE SC OPE OF ARTICLE 12(3)(A) AS FOUND IN THE DTAA WITH USA. THE EXPERIENCE MENTIONED IN THE DTAA SHOULD BE ONES OWN EXPERIENCE IN THE REALM OF INDUSTRIAL COMMERCIAL AND SCIENTIFIC AND NOT COMPILATION OF SOMEBODY ELSES EXPERIENCE. SUCH EXPERIENCE SHOULD GIVE RISE TO SOME KNOWN FORM OF INTELLECTUAL PROPERTY RIGHTS. IN THE INSTANT CASE NO SUCH THING EXISTED AND CONSEQUENTLY RECEIPT OF WEB BASED MATERIAL OFFERED BY GG OUTSIDE INDIA WAS NOT AMENABLE FOR TAXATION IN INDIA. IT IS TRITE LAW THAT PROVISION OF SEC. 195 CAN BE INVOKED ONLY IF THE PAYMENT IS OTHERWISE TAXABLE IN INDIA. THE ONLY PROVISION INVOKED IS SEC. 9(1)(VI) TO BRING THE PAYMENT AS CHARGEABLE TO TAX IN INDIA. SINCE SAID SECTION WAS NOT ATTRACTED PAYMENT MADE WAS NOT SUBJECT TO DEDUCTION OF TAX AT SOURCE U/S 195. THE LAW IS VERY CLEAR THAT THE PAYMENTS TO GG WERE NOT LIABLE FOR TAXATION IN INDIA PAGE 10 OF 21 ITA NO.1140/BANG/200 9 10 AND CONSEQUENTLY THE ASSESSEE HAD NO OBLIGATION TO DEDUCT TAX U/S 195. WHEN THE LAW IS CLEAR AND UNAMBIGUOUS ON THE LIABILITY TO TAX IT IS NOT POSSIBLE TO CONFIRM THE LIABILITY ON EMOTIONAL PLEA OF NATIONAL INTEREST. THE ORDER OF THE AUTHORITIES BELOW WAS TO BE CANCEL LED AS UNSUSTAINABLE. ACCORDINGLY BOTH THE TAX LIABILITY U /S 201(1) AND INTEREST LEVIED U/S 201(1A) WERE DELETED . 5.3 MOREOVER IN THE CASE OF GARTNER THE BOMBAY TR IBUNAL IN THE CASE OF GARTNER IRELAND LIMITED IN ITA NO.1452/MUM/08 DA TED 30 TH JULY 2010 HAS HELD THAT THE SUBSCRIPTION AMOUNT RECEIVED FROM INF OSYS GARTNER IS NOT LIABLE FOR TAX IN INDIA. SINCE THE AMOUNTS FOR SUBSCRIPTI ON TO FOREIGN ENTITIES MENTIONED ABOVE ARE NOT CHARGEABLE TO TAX IN INDIA THE ASSESSEE IS NOT LIABLE FOR TAX DEDUCTION AT SOURCE. HENCE DISALLOWANCE OF THESE EXPENSES CANNOT BE MADE UNDER THE PROVISIONS OF SECTION 40(A)(I) OF TH E ACT. IT IS ORDERED ACCORDINGLY. THEREFORE GROUND NOS.3.1 TO 3.3 ARE A LLOWED. 6. GROUND NO.4.1 PROVISION FOR WARRANTY FOR POST SALES CUSTOMER SUPPORT THE A.O. WHILE COMPLETING THE ASSESSMENT HAD DI SALLOWED THE DEDUCTION CLAIMED IN RESPECT OF PROVISION FOR WARRA NTY AMOUNTING TO RS.29 87 075/-. ACCORDING TO A.O. PROVISION FOR W ARRANTY IS NOT REQUIRED OR THE SAME IS IN EXCESS OF REQUIREMENT. 6.1 THE VIEW OF THE AO WAS AFFIRMED BY THE CIT(A) I N PARAGRAPH 8.4 OF HIS IMPUGNED ORDER. PAGE 11 OF 21 ITA NO.1140/BANG/200 9 11 6.2 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BE FORE US. 6.3 THE LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSION MADE BEFORE THE INCOME TAX AUTHORITIES. 6.4 THE LEARNED DR ON THE OTHER HAND SUPPORTED T HE FINDING/ CONCLUSION OF THE FIRST APPELLATE AUTHORITY. 6.5 ON IDENTICAL ISSUE IN ASSESSEES OWN CASE THE TRIBUNAL HAS HELD THAT THE PROVISION FOR WARRANTY AT THE RATE OF 2% OF THE SALES TURNOVER IS JUSTIFIABLE. THE FOLLOWING ARE THE DETAILS OF THE TRIBUNAL ORDERS:- ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NO.471/ BAN G/ 2003 AY 1999-00 DT.9.9.2005); INFOSYS TECHNOLOGIES LTD. V JCIT (IN ITA NO.1022/BAN G/ 2003 AY 1998-99 DT.7.4.2006); ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NO.653/BANG / 2006 AY 2002-03 DT.17.10.2007); & ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NO.635/BANG / 2006 AY 2001-02 DT.2.11.2007) 6.6 THE RELEVANT FINDING OF THE TRIBUNAL IN THE CA SE OF INFOSYS TECHNOLOGIES LTD. V JCIT (IN ITA NO.1022/BANG/ 2003 AY 1998-99 DT.7.4.2006) READS AS FOLLOWS:- WE HAVE CAREFULLY CONSIDERED THE RELEVANT FACTS ARGUMENTS ADVANCED AND THE DECISIONS CITED. IN RES PECT OF SALES EFFECTED DURING THE YEAR THE ASSESSEE COL LECTS ENTIRE SALE PROCEEDS. SUCH SALE PROCEEDS ARE PART OF INCOME CHARGED TO TAX. THE ASSESSEE IS ALSO REQUIR ED TO RENDER POST SALES CUSTOMER SERVICES IN THE NATURE O F CLAIMS WITHIN THE WARRANTY PERIOD. THUS THOUGH SUC H PAGE 12 OF 21 ITA NO.1140/BANG/200 9 12 WARRANTY CLAIMS MAY OR MAY NOT ARISE THE ASSESSEE IS UNDER OBLIGATION TO FULFILL SUCH CLAIM IF CLAIM IS MADE. THE PROVISION IS MADE AT THE RATE OF 2% OF SALE PRI CE. THOUGH NO PRECISE BASE IS INDICATED BY THE ASSESSEE YET IT CAN BE CONSIDERED TO BE REASONABLE HAVING REGARD TO THE CLAIM MADE IN THE PART. THE PROVISION IS MADE ON MATCHING PRINCIPLE I.E. MATCHING COST WITH REVENU E. SUCH MATCHING PRINCIPLE HAS BEEN RECOGNIZED IN THE CASE OF TAPARIA TOOLS LTD. V JCIT (260 ITR 102). THUS THE PROVISION REPRESENTS A LIABILITY IN PRASENTI THOUGH DISCHARGED AT A LATER DATE. IN FOLLOWING CASES IT HAS BEEN HELD THAT THE PROVISION FOR WARRANTY LIABILITY O R PROVISION FOR POST SALES CUSTOMER SUPPORT IS NOT A CONTINGENT LIABILITY BUT AN ACCRUED LIABILITY AND HEN CE ALLOWABLE:- INLAND REVENUE V MITSUIBUSH MOTORS NEW ZEALAND 222 ITR 697) SINGHAL & CO. V ITAT (1 ITD 477) (CHD.) WANSON (INDIA) LTD. V ITO (5 ITD 102) (PUNE) MAJESTIC AUTO V ITO (47 ITD 1) VOLTAS LTD. V DCIT (64 ITD 232) (MUM.) JAYBEE INDUSTRIES V DCIT (1998) (61 TTJ 403) CIT V BREMA MFRS. (P) LTD. (2003) 130 TAXMAN 400 WIPRO GE MEDICAL SYSTEMS (2003) (81 TTJ 457) (BANG. ) HAMILTON RESEARCH & TECHNOLOGY V ITO (88 TTJ 891) LATER ON HONBLE KERALA HIGH COURT IN THE CASE OF C IT V INDIAN TRANSFORMERS LTD. (270 ITR 259) AND HONBLE DELHI HIGH COURT IN THE CASE OF CIT V VINITEC CORPO RATION PVT. LTD. (278 ITR 337) HELD THAT PROVISION MADE FO R THE WARRANTY LIABILITY WAS AN ASCERTAINED LIABILITY AND TH AT IT COULD NOT BE TREATED AS A CONTINGENT LIABILITY. IN VIEW OF THE ABOVE WE HOLD THAT THE LIABILITY CAN NOT BE CONSIDERED AS CONTINGENT LIABILITY AS HELD IN THE CA SE BY ITAT PUNE. SINCE THE LIABILITY IS A ACCRUED LIABIL ITY AND THE ESTIMATE IS ON SOUND ACCOUNTING PRINCIPLE THE LIABILITY IS ALLOWABLE. THE DISALLOWANCE OF RS.46 77 452/- I S DELETED. PAGE 13 OF 21 ITA NO.1140/BANG/200 9 13 6.7 THE CONCEPT OF PROVISION IS INTEGRAL TO THE PRINCIPLE OF PRUDENCE. THE TERM PROVISION IS DEFINED IN PARAGRAPH 7(1)(A ) OF PART III OF SCHEDULE VI TO THE COMPANIES ACT TO MEAN ANY AMOUNT WRITTEN OF F OR RETAINED BY WAY OF PROVIDING FOR DEPRECIATION RENEWALS OR DIMINUTION IN THE VALUE OF ASSETS OR RETAINED BY WAY OF PROVIDING FOR ANY KNOWN LIABILITY O F WHICH THE AMOUNT CANNOT BE DETERMINED WITH SUBSTANTIAL ACCURACY. 6.8 THE HONBLE SUPREME COURT IN THE CASE OF ROTOR K CONTROL INDIA (P) LTD. V CIT (314 ITR 62) HELD A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISION IS RECOGNIZED WHEN: (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WILL BE REQUIRED TO SETTLE THE OBLIGATION; AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CONDITIONS ARE NOT MET NO PR OVISION CAN BE RECOGNIZED. 6.9 THEREFORE THE ESTIMATION IS IMPLICIT IN THE C ONCEPT OF PROVISION AND IF THE ESTIMATION IS ON RELIABLE BASIS IT IS T O BE ACCEPTED. IN THE CASE OF ROTORK CONTROLS INDIA (P) LTD. V CIT 314 ITR 62 IT WAS HELD BY THE HONBLE SUPREME COURT THAT PROVISION FOR WARRANTY AT THE RAT E OF 2% OF TURNOVER BASED ON PAST EXPERIENCE WAS FOUND TO BE ACCEPTABLE. 6.10 IN THE LIGHT OF THE ABOVE REASONING GROUND N O.4.1 IS ALLOWED. 7. GROUND NO.5.1 REDUCTION OF TELECOMMUNICATION C HARGES FROM THE TOTAL TURNOVER WHILE CALCULATING DEDUCTION U/S 10A OF THE ACT. THE ASSESSEE WHILE COMPUTING DEDUCTION U/S 10A O F THE ACT HAD REDUCED TELECOMMUNICATION CHARGES OF RS.10 37 42 69 4/- FROM BOTH EXPORT PAGE 14 OF 21 ITA NO.1140/BANG/200 9 14 TURNOVER AS WELL AS TOTAL TURNOVER. THE A.O. RECOM PUTED THE DEDUCTION U/S 10A OF THE ACT BY REDUCING FROM THE EXPORT TURNOVER THE FOLLOWING ITEMS OF EXPENDITURE:- PARTICULARS RS. TRAVEL EXPENSES 41 39 49 711 PROFESSIONAL CHARGES 2 42 98 265 DATA COMMUNICATION CHARGES 10 37 42 694 EMPLOYEE RELATED EXPENSES 9 97 34 56 911 TOTAL 10 51 54 47 581 ACCORDING TO THE A.O. AS PER THE DEFINITION OF EXP ORT TURNOVER CONTAINED IN CLAUSE (IV) OF EXPLANATION 2 TO SECTION 10A OF THE ACT THE TELECOMMUNICATION CHARGES (I.E. DATA COMMUNICATION CHARGES) BEING ATT RIBUTABLE TO THE DELIVERY OF COMPUTER SOFTWARE OUTSIDE INDIA AND OTHER EXPENSES IN FOREIGN EXCHANGE INCURRED FOR PROVIDING TECHNICAL SERVICES OUTSIDE I NDIA ARE REQUIRED TO BE REDUCED FROM THE EXPORT TURNOVER. 7.1 ON FURTHER APPEAL THE CIT(A) FOLLOWED HIS ORD ER IN THE CASE OF M/S JAIPURIA SILK MILLS (P) LTD. IN ITA NO.1112/BAN G/2009 DATED 12.4.2010 AND AFFIRMED THE COMPUTATION MADE BY THE A.O. FOR THE PU RPOSE OF DEDUCTION U/S 10A OF THE ACT. 7.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE DECISION RELIED ON BY THE CIT(A) HAS B EEN REVERSED BY THE TRIBUNAL BY ITS ORDER DATED 12.4.2010 IN ITA NO.1112/BANG/20 09. NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE. THE RELEVANT FINDI NG OF THE TRIBUNAL IN M/S JAIPURIA SILK MILLS (P) LTD. IS REPRODUCED BELOW:- PAGE 15 OF 21 ITA NO.1140/BANG/200 9 15 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL PLACED ON RECORD. THE ISSUE IN QUESTI ON STANDS COVERED DIRECTLY IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FO R THE ASST. YEAR 2005-06 (ITA NO.406/BANG/2008 DATED 10.7.2009) WHICH IN TURN FOLLOWED THE DECIS ION OF THE SPECIAL BENCH CITED SUPRA. THE RELEVANT PORTION OF THE TRIBUNAL'S ORDER IN ASSESSEE'S OWN C ASE CITED SUPRA READS AS FOLLOWS:- 'WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL PERUSAL OF THE FACTS AND CIRCUMSTANCES OF THE ASSESSEE'S CASE OUR CONSIDERED OPINION IS THAT NOW THE ISSUE STANDS SETTLED BY THE SPECIAL BENCH DECISION OF THE ITAT CHENNAI IN THE CASE OF ITO V SAK SOFT LTD. REPORTED IN 313 ITR (AT) 353 DATED 6.3.09 THEREFORE DOES NOT REQUIRE ANY FURTHER DELIBERATION. THE ISSUE STANDS COVERED AS ALSO HELD BY THE LEARNED CIT(A) WHICH DOES NOT CALL FOR ANY FURTHER INTERFERENCE'. 9. THE SPECIAL BENCH OF TRIBUNAL IN THE CASE OF ITO V SAK SOFT LTD. REPORTED IN 313 ITR (AT) 353 WAS CONSIDERING AN IDENTICAL SITUATION WHEREIN IT W AS HELD AS FOLLOWS:- 'THE COMMON THREAD RUNNING THROUGH SECTIONS 80HHC 80HHE AND 80HHF IS THAT THEY ARE ALL PROVISIONS GRANTING RELIEF TO THE ASSESSEES IN RESPECT OF PROFITS DERIVED FROM EXPORT. THE DIFFERENCE BETWEEN CHAPTER III IN WHICH SECTION 10B FALLS AND CHAPTER VI-A IN WHICH THESE SECTIONS FALL IS THAT WHILE THE FORMER EXCLUDES THE INCOME IN QUESTION TOTALLY FROM THE PURVIEW OF TOTAL PAGE 16 OF 21 ITA NO.1140/BANG/200 9 16 INCOME AND GIVES TOTAL EXEMPTION FROM TAX THE LATTER GIVES DEDUCTION OF A PART OF THE PROFITS AND GAINS OF THE CONCERNED BUSINESS FROM THE GROSS TOTAL INCOME. BOTH HOWEVER ARE CHAPTERS WHICH GIVE RELIEF TO ASSESSEES FROM TAXATION SUBJECT TO THE CONDITIONS BEING FULFILLED AND IN THAT SENSE THEY ARE OF THE SAME GENRE. THE OBJECT OF THESE SECTIONS IS TO ENCOURAGE THE EARNING OF FOREIGN EXCHANGE AND PROVIDE INCENTIVE TO PROMOTE EXPORTS. IF SOME OF THE SECTIONS SUCH AS SECTIONS 80HHE AND 80HHF PROVIDE FOR A FORMULA FOR CALCULATING THE DEDUCTION WHICH IS IDENTICAL WITH THE FORMULA PRESCRIBED BY SECTION 10B IT WOULD BE INCONGRUOUS TO INTERPRET SECTION 10B IN A MANNER DIFFERENT FROM THOSE TWO SECTIONS MERELY BECAUSE THERE IS NO DEFINITION OF 'TOTAL TURNOVER' IN THAT SECTION. 'EXPORT TURNOVER' AS DEFINED IN THESE SECTIONS EXCLUDES FREIGHT TELECOM CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY OF THE COMPUTER SOFTWARE OUTSIDE INDIA OR EXPENSES IF ANY INCURRED IN FOREIGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA. THUS STATUTORILY PARITY IS MAINTAINED BETWEEN EXPORT TURNOVER AND TOTAL TURNOVER IN THESE SECTIONS. THERE IS NO REASON WHY SUCH PARITY CANNOT BE MAINTAINED BETWEEN EXPORT TURNOVER AND TOTAL TURNOVER IN SECTION 10B JUST BECAUSE 'TOTAL TURNOVER' HAS NOT BEEN DEFINED IN THAT SECTION'. 10. THE FIRST APPELLATE AUTHORITY HAS ATTEMPTED TO DISTINGUISH THE CASES CITED ON THE BAS IS THAT THE WORD 'TOTAL TURNOVER' OR 'GROSS RECEIPT' A S IT APPEARS IN SECTION 44AB OF THE I T ACT 1961 BASED ON ICAI GUIDANCE NOTE INCLUDES ALL RECEIPTS INCLUDI NG REIMBURSEMENT OF EXPENSES. THE CONTEXT IN WHICH TH E PAGE 17 OF 21 ITA NO.1140/BANG/200 9 17 WORDS 'TOTAL TURNOVER' AND 'GROSS RECEIPTS' APPEAR IN SECTION 44AB OF THE I T ACT 1961 IS TOTALLY DIFFERE NT TO THAT OF THIS CASE. THERE THE WORD 'TOTAL TURNOV ER' IS USED TO BRING IN AMBIT OF TAX AUDIT ALL THE TRANSACTIONS OF SALES AND SERVICES. THE DEFINITION IS REPRODUCED HEREIN BELOW:- 'THE AGGREGATE AMOUNT FOR WHICH SALES ARE EFFECTED OR SERVICES RENDERED BY AN ENTERPRISE. THE TERM 'GROSS TURNOVER' AND 'NET TURNOVER' (OR 'GROSS SALES' AND 'NET SALES') ARE SOMETIMES USED TO DISTINGUISH THE SALES AGGREGATE BEFORE AND AFTER DEDUCTION OF RETURNS AND TRADE DISCOUNTS'. THE WORD 'TOTAL TURNOVER' IS NOT DEFINED U/S 44AB O F THE I T ACT 1961. HENCE THIS DEFINITION IS BEING CONSIDERED AS GUIDING DEFINITION TO DETERMINE TURNO VER FOR TAX AUDIT. THE FIRST APPELLATE AUTHORITY HAS ADOPTED THE MEANING OF WORDS STATED IN SECTION 44AB WHICH IS WHOLLY UNNECESSARY IN THE INSTANT CASE AND HAS CONCLUDED THAT TURNOVER AND GROSS RECEIPTS ARE SYNONYM AND CAN BE USED INTERCHANGEABLY. THIS LINE OF ANALYSIS CANNOT BE APPLIED IN THIS CASE BECAUSE GROS S RECEIPT IS USED FOR SERVICES RENDERED BY BUSINESS ENTERPRISE OR FOR PROFESSIONAL INCOME AND WORD 'TURNOVER' FOR SALES EFFECTED OR FOR BUSINESS INCOM E. THE ASSESSEE'S BUSINESS IS WHOLLY OF EXPORT OF MANUFACTURED SILK FABRIC AND HENCE WORD 'GROSS RECEIPT' CANNOT BE APPLIED TO EXPORT TURNOVER HERE. 11. FOR THE ABOVE SAID REASONS WE REVERSE THE ORDER OF THE AUTHORITIES BELOW AND DIRECT THE ASSESSING OFFICER TO EXCLUDE FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER A SUM O F RS.96 39 523/- AND RS.2 43 763/- BEING FREIGHT AND INSURANCE EXPENSES RESPECTIVELY WHILE CALCULATING DEDUCTION U/S 10B OF THE ACT. PAGE 18 OF 21 ITA NO.1140/BANG/200 9 18 7.3 IN THE LIGHT OF THE ABOVE WE HOLD THIS GROUND IN FAVOUR OF THE ASSESSEE. THEREFORE GROUND NO.5.1 IS ALLOWED. 8. GROUND NO.6.1 TO 6.3 DEDUCTION U/S 80HHE OF T HE ACT. BRIEF FACTS IN RELATION TO THE ABOVE GROUNDS ARE AS FOLLOWS:- THE ASSESSEE WHILE CLAIMING DEDUCTION U/S 80HHE CONSIDERED THE TOTAL TURNOVER OF ONLY THOSE UNITS WHICH WERE ELI GIBLE FOR DEDUCTION U/S 80HHE. THE A.O. COMPLETED THE ASSESSMENT AND ADOPT ED THE ENTIRE TURNOVER AS PER THE P&L ACCOUNT IN ALLOWING DEDUCTION U/S 80 HHE. 8.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY. 8.2 IT WAS CONTENDED BY THE ASSESSEE THAT THE AO HA S ERRED IN ADOPTING THE TOTAL TURNOVER OF THE COMPANY AS A WHOL E IN APPLYING THE FORMULA U/S 80HHE FURTHER SUBMITTING THAT ONCE THE COMPONE NTS OF PROFITS OR EXPORT TURNOVER AND TOTAL TURNOVER HAVE BEEN CONSIDERED FO R COMPUTING THE DEDUCTION U/S 10A THE SAME CANNOT AGAIN FORM PART OF THE FORM ULA FOR COMPUTING THE DEDUCTION U/S 80HHE. IT WAS ALSO SUBMITTED THAT AS SUMING WITHOUT ADMITTING THAT THE TOTAL TURNOVER OF THE ASSESSEE AS A WHOLE IS TO BE CONSIDERED FOR THE PURPOSES OF SECTION 80HHE BY THE SAME LOGIC IT SHOUL D BE THE ENTIRE PROFITS OF THE ASSESSEE AS A WHOLE AS WELL AS THE EXPORT TURNO VER OF THE ASSESSEE AS A WHOLE THAT SHOULD BE TAKEN INTO ACCOUNT IN APPLYING THE FORMULA U/S 80HHE FURTHER CONTENDING THAT PICKING AND CHOOSING OR MOD IFYING ONLY ONE OF THE LIMBS OF THE FORMULA AND NOT MAINTAINING CONSISTENCY IN UN DERSTANDING THE VARIOUS PAGE 19 OF 21 ITA NO.1140/BANG/200 9 19 TERMS OF THE FORMULA WOULD BE CONTRARY TO LAW AND TO THE PRINCIPLES GOVERNING DEDUCTION U/S 80HHE. 8.3 THE FIRST APPELLATE AUTHORITY AT PARA (E) AT PA GE 45 OF HIS IMPUGNED ORDER DECIDED THE MATTER AGAINST THE ASSESSEE. HE FOLLOWED HIS ORDER IN THE CASE OF M/S JAIPURIA SILK MILLS (P) LTD. 8.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ABOVE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE FOLLOWING ORDERS OF THE TRIBUNAL:- WIPRO LTD. V ITO 96 TTJ 211 ITAT BANG. ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NOS.653 & 9 69/ BANG/2006 AY 2002-03 AND 2003-04 DATED 17.10.2007 . ACIT V INFOSYS TECHNOLOGIES LTD. (IN ITA NO.635 /BANG/2006 AY 2001-02 DT.2.11.2007) THE RELEVANT FINDING OF THE TRIBUNAL IN THE CASE OF WIPRO LTD. READS AS FOLLOWS:- WHAT ESSENTIALLY SECTION 80HHE IS DEALING WITH IS W ITH REFERENCE TO THE TURNOVER OF COMPUTER SOFTWARE. TH E TOTAL TURNOVER FOR THE PURPOSE OF SECTION 80HHE CAN ONLY MEAN THE TOTAL TURNOVER OF THE COMPUTER SOFTWARE BO TH IN INDIA AND OUTSIDE INDIA. UNDER THE SCHEME OF THE SAID SECTION IT IS NOT CORRECT TO INCLUDE ANY OTHER TURN OVER NOT CONNECTED WITH THE COMPUTER SOFTWARE BUSINESS. WE ARE THEREFORE OF THE OPINION THAT THE DENOMINATOR ADOPTED BY THE DEPARTMENT IS WRONG AND IS NOT IN ACCORDANCE WITH THE SCHEME OF DEDUCTION U/S 80HHE O F THE ACT. IF WE APPROVE THE CALCULATION OF THE DEPARTMENT THE VERY OBJECT OF INTENDING AND GIVING DEDUCTION U/S 80HHE IS LIKELY TO BE DEFEATED IF THE ASSESSEE IS HAVING OTHER TURNOVER NOT CONNECTED WIT H THE COMPUTER SOFTWARE. PAGE 20 OF 21 ITA NO.1140/BANG/200 9 20 8.5 IN THE LIGHT OF THE ABOVE WE DECIDE THE GROUN D NOS.6.1 TO 6.3 IN FAVOUR OF ASSESSEE. 9. GROUND NO.7 LEVY OF SURCHARGE BEFORE GRANTING R ELIEF UNDER DOUBLE TAXATION IN THE RETURN OF INCOME THE ASSESSEE FIRST CLAIM ED DOUBLE TAXATION RELIEF AND THEREAFTER COMPUTED SURCHARGE ON THE AMOUNT OF TAX REMAINING AFTER CLAIMING SUCH RELIEF. HOWEVER IN THE ASSESSMENT COMPLETED THE A.O. FIRST COMPUTED SURCHARGE AND THEREAFTER AL LOWED DOUBLE TAXATION RELIEF. 9.1 ON FURTHER APPEAL THE CIT(A) FOLLOWING THE T RIBUNAL ORDER IN ASSESSEES OWN CASE IN ITA NO.140/BANG/2001 & C.O.N O.25/BANG/2001 DATED 5 TH JULY 2005 DECIDED THE MATTER AGAINST THE ASSESSEE. 9.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASSESSEE HAS F AIRLY ADMITTED THAT THE ABOVE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE T RIBUNAL REFERRED SUPRA. THE RELEVANT FINDING OF THE TRIBUNAL IS EXTRACTED A T PARA 11.3 OF THE CIT(A)S ORDER AND HENCE THE SAME IS NOT REITERATED HERE. THEREFORE THIS GROUND IS DISMISSED. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER PRONOUNCED ON FRIDAY THE 21 ST DAY OF JANUARY 2011 AT BANGALORE. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER PAGE 21 OF 21 ITA NO.1140/BANG/200 9 21 COPY TO :- 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT(A) CONCERNED. 4. THE CIT CONCERNED. 5. THE DR 6. GF BY ORDER MSP/19/1/ ASSISTANT REGISTRAR ITAT BANGALORE.