Prithvi Information Solutions Ltd, Hyderabad v. ITO, Hyderabad

ITA 115/HYD/2010 | 2002-2003
Pronouncement Date: 31-03-2011 | Result: Allowed

Appeal Details

RSA Number 11522514 RSA 2010
Assessee PAN AACCP5281F
Bench Hyderabad
Appeal Number ITA 115/HYD/2010
Duration Of Justice 1 year(s) 2 month(s) 3 day(s)
Appellant Prithvi Information Solutions Ltd, Hyderabad
Respondent ITO, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-03-2011
Date Of Final Hearing 03-03-2011
Next Hearing Date 03-03-2011
Assessment Year 2002-2003
Appeal Filed On 27-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ' HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO. ASST YEAR APPELLANT RESPONDENT 24/HYD/2010 25/HYD/2010 26/HYD/2010 27/HYD/2010 28/HYD/2010 2002-03 2003-04 2004-05 2005-06 2006-07 DY. COMMISSIONER OF INCOME-TAX CIRCLE 16(3) HYDERABAD M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYDERABAD (PAN AACCP 5281F) 89/HYD/2010 90/HYD/2010 2002-03 2003-04 M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYDERABAD (PAN AACCP 5281F) INCOME-TAX OFFICER WARD-16(2) HYDERABAD 115/HYD/2010 116/HYD/2010 117/HYD/2010 2002-03 2003-04 2004-05 M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYDERABAD (PAN AACCP 5281F) INCOME-TAX OFFICER WARD-16(2) HYDERABAD 103/HYD/2010 104/HYD/2010 105/HYD/2010 2004-05 2005-06 2006-07 M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYDERABAD (PAN AACCP 5281F) DY. COMMISSIONER OF INCOME-TAX CIRCLE 16(3) HYDERABAD ASSESSEE BY : SHRI P.MURALI MOHAN RAO RESPONDENTS BY : SHRI A.BHASKAR REDDY O R D E R PER BENCH: THERE ARE THIRTEEN APPEALS IN ALL IN THIS BUNCH. SINCE A COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS THESE ARE B EING DISPOSED OFF WITH THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. LET US FIRST TAKE UP FOR CONSIDERATION THE ASSE SSEES APPEALS. ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 2 ASSESSEES APPEALS: ITA NO.89/HYD/2010 : ASSESSMENT YEAR -2002-03 ITA NO.90/HYD/2010 : ASSESSMENT YEAR -2003-04 ITA NO.103/HYD/2010 : AS SESSMENT YEAR -2004-05 ITA NO.104/HYD/2010 : AS SESSMENT YEAR 2005-06 ITA NO.105/HYD/2010 : ASSE SSMENT YEAR 2006-07 3. THESE FIVE APPEALS OF THE ASSESSEE FOR THE ASSE SSMENT YEARS 2002-03 TO 2006-07 ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS). 4. GROUNDS OF APPEAL OF THE ASSESSEE IN ALL THESE APPEALS CENTRE AROUND THE ISSUE OF THE APPELLATE ORDER PASSED BY T HE CIT(A) DATED 28.10.2009 IN APPEAL AGAINST THE ORDER OF ASSESSMEN T PASSED UNDER S.143(3) READ WITH S.263 OF THE INCOME-TAX ACT 196 1 AND THE GRIEVANCE OF THE ASSESSEE RELATES TO COMPUTATION OF RELIEF UNDER S.10A OF THE ACT. 5. WE HAVE HEARD THE PARTIES. WE FIND THAT THE CIT (A) HAS ALLOWED THE APPEALS OF THE ASSESSEE BY FOLLOWING THE DECISI ON OF THE HYDERABAD BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSE SSMENT YEAR 2001-02 IN ITA NO.225/HYD/2005 DATED 12.10.2009 AND HAS DIRECT ED THE ASSESSING OFFICER TO EXCLUDE THE EXPENDITURE IN QUESTION FR OM BOTH THE EXPORT TURNOVER AS WELL AS TOTAL TURNOVER FOR THE PURPOSE OF COMPUT ATION OF BENEFIT UNDER S.10A OF THE ACT. THE CIT(A) HAS REPRODUCED THE OP ERATIVE PART OF THE ORDER OF THE TRIBUNAL IN HIS ORDER WHICH IS REPRODUCED H EREUNDER- 8. THE NEXT ISSUE IS WITH REGARD TO THE TREATMEN T OF THE FEES PAID FOR TECHNICAL SERVICES TO ONSITE PROFESSIONAL AMOUNTING TO RS.8 03 13 960. AT THE TIM E OF HEARING LEARNED. COUNSEL RESTRICTED HIS ARGUMENT TO THE ALTERNATIVE CONTENTION I.E. IF THE SAID EXPENDITURE IS EXCLUDED FROM THE EXPORT TURNOVER WHILE WORKING OUT THE BENEFIT U/S. 10A OF THE ACT EQUIVALENT AMOUNT HAS TO BE EXC LUDED FROM THE TOTAL TURNOVER ALSO AND IN THIS REGARD RELIED UPON THE DECISION OF THE ITAT D BENCH DELHI IN THE CASE OF SCIT VS. BINARY SEMANTICS LIMITED (2007) 109 TTJ(DEL) 556. ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 3 9. ON THE OTHER HAND LEARNED. DR RELIED ON THE O RDER PASSED BY THE TAX AUTHORITIES. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE DECISION CITED (SUPRA) WE ACCEPT THE ALTERNATIVE CONTENTION OF THE ASSESSEE AND DIRECT T HE AO TO EXCLUDE THE EXPENDITURE INCURRED ON ON-SITE PROFESSIONALS FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF THE BENEFIT U/S. 10A OF THE ACT. IN VIEW OF THIS THE CIT(A) HAS ALLOWED THE APPEALS OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE HYDERABAD BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 CITED SUPR A WE HOLD THAT THERE IS NO GRIEVANCE OF THE ASSESSEE IN THE PRESENT APPEALS AND ACCORDINGLY GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REJECTED. 6. IN THE RESULT THESE APPEALS OF THE ASSESSEE A RE DISMISSED. ASSESSEES APPEALS: ITA NO.115/HYD/2010 : AS SESSMENT YEAR - 2004-05 ITA NO.116/HYD/2010 : ASSESSMENT YEAR 2005-06 ITA NO.117/HYD/2010 : AS SESSMENT YEAR - 2006-07 7. THESE THREE APPEALS OF THE ASSESSEE FOR THE AS SESSMENT YEARS 2004-05 TO 2006-07 ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX PASSED UNDER S.263 OF THE ACT SETTING A SIDE THE ASSESSMENT S TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRE CTIONS WITH REGARD TO COMPUTATION OF RELIEF TO THE ASSESSEE UNDER S.10A O F THE ACT. 8. WE HAVE HEARD THE PARTIES. WE FIND THAT IDENTI CAL ISSUE IN ASSESSEES OWN CASE WAS DECIDED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO.225/HYD/2005 DATED 12.10.2009 WH EREIN THE TRIBUNAL HAS HELD AS FOLLOWS- ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 4 8. THE NEXT ISSUE IS WITH REGARD TO THE TREATMEN T OF THE FEES PAID FOR TECHNICAL SERVICES TO ONSITE PROFESSIONAL AMOUNTING TO RS.8 03 13 960. AT THE TIM E OF HEARING LEARNED. COUNSEL RESTRICTED HIS ARGUMENT TO THE ALTERNATIVE CONTENTION I.E. IF THE SAID EXPENDITURE IS EXCLUDED FROM THE EXPORT TURNOVER WHILE WORKING OUT THE BENEFIT U/S. 10A OF THE ACT EQUIVALENT AMOUNT HAS TO BE EXC LUDED FROM THE TOTAL TURNOVER ALSO AND IN THIS REGARD RELIED UPON THE DECISION OF THE ITAT D BENCH DELHI IN THE CASE OF SCIT VS. BINARY SEMANTICS LIMITED (2007) 109 TTJ(DEL) 556. 9. ON THE OTHER HAND LEARNED. DR RELIED ON THE O RDER PASSED BY THE TAX AUTHORITIES. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE DECISION CITED (SUPRA) WE ACCEPT THE ALTERNATIVE CONTENTION OF THE ASSESSEE AND DIRECT T HE AO TO EXCLUDE THE EXPENDITURE INCURRED ON ON-SITE PROFESSIONALS FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF THE BENEFIT U/S. 10A OF THE ACT. 9. IN VIEW OF THE ABOVE DECISION OF THE HYDERABD B ENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 WE ARE OF THE VIEW THAT THE ORDER OF THE ASSESSING OFFICER CO ULD NOT BE SAID TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. THE ASSESSMENTS IN THESE CASES WERE FINALIZED AS SCRUTINY ASSESSME NTS UNDER S.143(3) OF THE ACT AND THE ASSESSING OFFICER HAS TAKEN A POSSIBLE VIEW WHICH COULD NOT BE SAID TO BE UNSUSTAINABLE IN LAW. THE RATIO OF THE D ECISION OF THE HONBLE APEX COURT IN MALABAR INDUSTRIAL COMPANY LTD. V/S. CIT(2 43 ITR 83) IS APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. IN THESE CASES TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE PO SSIBLE VIEW AND THEREFORE THE ORDERS OF ASSESSMENT COULD NOT BE SAID TO BE ER RONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN THIS VIEW OF THE MATTER WE HOLD THAT THE ORDERS OF THE COMMISSIONER OF INCOME-TAX PASSED UND ER S.263 ARE UNSUSTAINABLE IN LAW. THEY ARE ACCORDINGLY CANCELL ED. 10. IN THE RESULT THE THREE APPEALS OF THE ASSES SEE ARE ALLOWED. ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 5 REVENUES APPEALS: ITA NO.24/HYD/2010 : ASS ESSMENT YEAR - 2002-03 ITA NO.25/HYD/2010 : ASS ESSMENT YEAR 2003-04 ITA NO.26/HYD/2010 : ASSES SMENT YEAR - 2004-05 ITA NO.27/HYD/2010 : ASS ESSMENT YEAR - 2005-06 ITA NO.28/HYD/2010 : ASS ESSMENT YEAR 2006-07 11. THESE FIVE APPEALS OF THE REVENUE ARE DIRECTE D AGAINST THE ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEARS 2002-03 TO 2 006-07 12. IDENTICAL GROUNDS OF APPEAL OF THE REVENUE IN THESE APPEALS ARE AS UNDER- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE HONBLE COMMISSIONER OF INCOME-TAX(APPEALS) V HYDERABAD WAS CORRECT IN HOLDING THAT EXPENDITURE TOWARDS TELE-COMMUNICATION CHARGES AND FOR PROVIDIN G TECHNICAL SERVICES OUTSIDE INDIA WHICH WERE EXCLUDE D BY THE ASSESSING OFFICER FROM EXPORT TURNOVER HAVE ALS O TO BE EXCLUDED FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION UNDER SECTION 10A OF I.T. ACT? 2. WHEN THE STATUTE IS VERY CLEAR IN DEFINING EXPO RT TURNOVER AND EXPLICITLY PROVIDED TO EXCLUDE FREIGHT TELE- COMMUNICATION CHARGES INSURANCE CHARGES ATTRIBUTAB LE TO THE EXPORT OF THE SOFTWARE AND EXPENSES IF ANY INCURRED IN FOREIGN EXCHANGE IN PROVIDING TECHNICAL SERVICES OUTSIDE INDIA VIDE EXPLANATION 2(IV) TO SECTION10A WHETHER THE HONBLE COMMISSIONER OF INCOME-TAX(APPEALS) V HYDERABAD WAS CORRECT IN EXTENDING SIMILAR TREATMENT TO TOTAL TURNOVER. 13. WE HAVE HEARD THE PARTIES. WE FIND THAT THE C IT(A) HAS FOLLOWED THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASES FOR THE ASSESSMENT YEAR 2001-02 IN ITA NO.225/HYD/2 005 DATED 12.10.2009 WHEREIN THE TRIBUNAL HAS HELD AS UNDER- 8. THE NEXT ISSUE IS WITH REGARD TO THE TREATMEN T OF THE FEES PAID FOR TECHNICAL SERVICES TO ONSITE PROF ESSIONAL AMOUNTING TO RS.8 03 13 960. AT THE TIM E OF HEARING LEARNED. COUNSEL RESTRICTED HIS ARGUMENT TO THE ALTERNATIVE CONTENTION I.E. IF THE SAID EXPENDITURE IS EXCLUDED FROM THE EXPORT TURNOVER WHILE WORKING OUT THE BENEFIT U/S. 10A OF THE ACT ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 6 EQUIVALENT AMOUNT HAS TO BE EXCLUDED FROM THE TOTAL TURNOVER ALSO AND IN THIS REGARD RELIED UPON THE DECISION OF THE ITAT D BENCH DELHI IN THE CASE OF SCIT VS. BINARY SEMANTIC S LIMITED (2007) 109 TTJ(DEL) 556. 9. ON THE OTHER HAND LEARNED. DR RELIED ON THE O RDER PASSED BY THE TAX AUTHORITIES. HAVING REGARD TO THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE DECISION CITED (SUPRA) WE ACCEPT THE ALTERNATIVE CONTENTION OF THE ASSESSEE A ND DIRECT THE AO TO EXCLUDE THE EXPENDITURE INCURRED ON ON-SITE P ROFESSIONALS FROM THE EXPORT TURNOVER AS WELL AS FROM THE TOTAL TURN OVER FOR THE PURPOSE OF COMPUTATION OF THE BENEFIT U/S. 10A OF THE ACT. 14. THE CIT(A) HELD THAT FROM THE JUDGMENT OF THE JURISDICTIONAL TRIBUNAL IT IS CLEAR THAT THAT THE PAYMENTS IN QUE STION HAVE BEEN ORDERED TO BE REDUCED FROM THE EXPORT TURNOVER AS WELL AS THE TOTAL TURNOVER I.E. BOTH THE NUMERATOR AS WELL AS THE DENOMINATOR AND THAT T HE ISSUE IN THE CURRENT YEAR IS ALSO IDENTICAL WITH THAT OF THE ISSUE BEFOR E THE TRIBUNAL IN ASSESSMENT YEAR 2001-02. IN THESE FACTS OF THE CASE THE CIT( A) HAS DIRECTED THE ASSESSING OFFICER TO EXCLUDE THE EXPENDITURE IN QUE STION FROM BOTH EXPORT TURNOVER AND THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING THE BENEFIT UNDER S.10A OF THE ACT. THE ISSUE BEING COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2001-02 CITED SUPRA AND WE BEING IN AGREEMEN T WITH THE DECISION OF THE TRIBUNAL FOR THAT YEAR HOLD THAT THERE IS NO M ISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE. WE THEREFORE HOLD THAT THE GROUNDS OF APPEAL OF THE REVENUE HAVE NO MERIT AND THEY ARE ACCORDINGLY REJ ECTED. 15. IN THE RESULT REVENUES APPEALS ARE DISMISSE D. 16. TO SUM UP ALL THE FIVE APPEALS OF THE REVENU E BEING ITA NOS.24 TO 28/HYD/2010 ARE DISMISSED AND OUT OF EIGHT APPE ALS OF THE ASSESSEE WHILE FIVE APPEALS BEING ITA NOS.89 & 90 AND 103 T O 105/HYD/2010 ARE ITA NO.24/HYD/10 & 12 OTHERS M/S. PRITHVI INFORMATION SOLUTIONS LTD. HYD 7 DISMISSED THE REMAINING THREE APPEALS BEING ITA N OS.115 TO 117/HYD/2010 ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 31.3.2011 SD/- SD/- (CHANDRA POOJARI) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- 31ST MARCH 2011 COPY FORWARDED TO: 1. M/S. PRITHVI INFORMATION SOLUTIONS LTD. C/O. M/S.P .MURALI & CO. CHARTERED ACCOUNTANTS 6-3-6755/2/3 1ST FLOOR SOM AJIGUDA HYDERABAD-82 2. 3. DY. COMMISSIONER OF INCOME-TAX CIRCLE-16(3) HYD ERABAD INCOME-TAX OFFICER WARD 16(2) HYDERABAD 6. 7. COMMISSIONER OF INCOME - TAX(APPEALS) - IV HYDERABAD COMMISSIONER OF INCOME-TAX IV HYDERABAD 8 . THE DEPARTMENTAL REPRESENTATIVE ITAT HYDERABAD. B.V.S