M/s AXA Technology Services India Private Limited, Bangalore v. DCIT, Bangalore

ITA 287/BANG/2011 | 2006-2007
Pronouncement Date: 04-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 28721114 RSA 2011
Assessee PAN AAFCA0850L
Bench Bangalore
Appeal Number ITA 287/BANG/2011
Duration Of Justice 7 month(s) 17 day(s)
Appellant M/s AXA Technology Services India Private Limited, Bangalore
Respondent DCIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 31-10-2011
Assessment Year 2006-2007
Appeal Filed On 18-03-2011
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL BANGALORE BENCH B BANGALORE BEFORE SHRI N.K.SAINI ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI JUDICIAL MEMBER I.T.A. NO.287(BANG.)/2011 (ASSESSMENT YEAR : 2006-07) M/S AXA TECHNOLOGY SERVICES INDIA PVT.LTD. RMZ INFINITY TOWER B 2 ND AND 4 TH FLOOR OLD MADRAS ROAD BANGALORE PAN NO.AAFCA0850L APPELLANT VS THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-11(1) BANGALORE. RESPONDENT ASSESSEE BY : SHRI P.DINESH ADVOCATE REVENUE BY : SMT PREETI GARG CIT DATE OF HEARING : 31-10-2011 DATE OF PRONOUNCEMENT : 31-1 0-2011 O R D E R PER SMT P. MADHAVI DEVI JM ; THIS APPEAL BY THE ASSESSEE RELATES TO ASSESSMENT YEAR : 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS I N ITS APPEAL: 1. THAT THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE PROVISIONS OF LAW AND LIABLE TO BE QUASHED. ITA.NO.287(B)/11 2 2. A) THAT THE LD CIT(A)ERRED IN UPHOLDING THE ORDER OF THE AO IN NOT ALLOWING DEDUCTION U/S10A OF THE ACT OF THE ENTIRE PROFITS ELIGIBLE FOR DEDUCTION UNDER THE SAID SECTION. B) THAT THE LD. CIT(A) ERRED IN UPHOLDING THE CONTENTION OF THE AO THAT THE TELECOMMUNICATION CHARGES OF RS.7 508 320/- WERE ATTRIBUTABLE TO THE DELIVERY OF SOFTWARE OUTSIDE INDIA. C) THAT THE LD. CIT(A) ERRED IN HOLDING THAT SECTION 80HHE AND SEC.10A ARE NOT PARI MATERIAL AND THEREFORE ERRED IN OT APPLYING THE PRINCIPLES OF SEC.80HHE TO SEC.10A. CONSEQUENTLY THE LD.CIT(A) ERRED IN NOT RELYING ON THE VARIOUS JUDICIAL DECISIONS ON THE SAID MATTER. 3. WITHOUT PREJUDICE TO THE ABOVE THAT THE LD.CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO FOR NOT REDUCING THE TELECOMMUNICATION CHARGES OF RS.7 508 320/- FROM THE TOTAL TURNOVER. CONSEQUENT TO AND AS A COROLLARY TO SUCH REDUCTION FROM EXPORT TURNOVER. 4. THAT THE LD. CIT(A) ERRED IN NOT RELYING ON THE VARIOUS RULINGS OF JURISDICTION INCOME-TAX APPELLATE TRIBUNAL BANGALORE AND THE CHENNAI TRIBUNAL SPECIAL BENCH DECISION IN THE CASE OF ITO VS M/S SAK SOFT LTD. (ITA NOS.691 & 1953/MDS/2007) ON THE SAID ISSUE. 5. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ORDER OF THE AO INCONSEQUENTLY LEVYING INTEREST U/S 234B OF THE ACT. ITA.NO.287(B)/11 3 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE COMPANY HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT Y EAR 2006-07 ON 28-11-2006 DECLARING A TOTAL INCOME OF RS.3 38 68 030/-. THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS O F PROVIDING IT-ENABLED SERVICES TRADING IT EQUIPMENTS AND LEAS ING OF IT EQUIPMENTS CLAIMED DEDUCTION U/S10A OF THE IT ACT. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT THE A O CONSIDERED THE ISSUE OF EXCLUSION OF TELECOMMUNICATION EXPENSE S FROM EXPORT TURNOVER AND HELD THAT THESE EXPENSES ARE FOR THE D ELIVERY OF SOFTWARE OUTSIDE INDIA. THE ASSESSEE HOWEVER SUBM ITTED ITS DETAILED REPLY STATING THAT THE EXPENSES ARE INCURR ED FOR THE CONNECTIVITY WITH IN INDIA AND THEREFORE NOT ATTRI BUTABLE TO DELIVERY OF SOFTWARE OUTSIDE INDIA. THIS CONTENTION OF THE ASSESSEE WAS HOWEVER NOT ACCEPTED BY THE AO AND HE HELD THAT TH ESE EXPENSES ARE TO BE EXCLUDED FROM THE EXPORT TURNOVER. HE AC CORDINGLY COMPUTED DEDUCTION U/S 10A OF THE ACT. HE ALSO DID NOT ACCEPT THE ASSESSEES ALTERNATIVE CONTENTION THAT IF THE SAME IS EXCLUDED FROM THE EXPORT TURNOVER THEY ARE TO BE REDUCED FROM TH E TOTAL TURNOVER ALSO. ITA.NO.287(B)/11 4 3.1 AGGRIEVED BY THE ABOVE THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A O AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS TELECOMMU NICATION EXPENSES ARE ONLY FOR THE CONNECTIVITY WITH IN INDI A AND ARE NOT ATTRIBUTABLE TO DELIVERY OF SOFTWARE OUTSIDE INDIA. IN THE ALTERNATIVE HE SUBMITTED THAT IF THE SAID EXPENSES ARE TO BE REDUCED FROM THE EXPORT TURNOVER THE SAME ARE TO B E REDUCED FROM THE TOTAL TURNOVER ALSO IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL AT CHENNAI IN THE CASE OF M/S SAK S OFT LTD REPORTED IN 313 ITR 353 (SB) CHENNAI AND DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GEM PLUS JEWELLERY INDIA LTD. 2010- TIOL-456-HC-MUMBAI IT AND ALSO OF THE HONBLE KARN ATAKA HIGH COURT IN THE CASE OF CIT VS M/S QUALITY ENGINEERING & SOFTWARE TECHNOLOGIES PVT.LTD. AND OTHERS DATED 30-08-2011. ACCORDINGLY HE PRAYED THAT THE ALTERNATIVE GROUND OF APPEAL OF THE ASSESSEE MAY BE ALLOWED. 4.1 THE LEARNED DR HOWEVER SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW. 5. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS WE FIND THAT THE ALTERNATIVE GRO UNDS OF APPEAL ITA.NO.287(B)/11 5 RAISED BY THE ASSESEEE ARE COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT AND ALSO HONBLE BOMBAY H IGH COURT IN THE CASES CITED SUPRA IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE SAME WE ALLOW GROUND NO.3 & 4 OF THE ASSESEEE AND REJECT GROUNDS OF APPEAL NO.2. 6. GROUND NO.5 BEING CONSEQUENTIAL IN NATURE NEED S NO ADJUDICATION. GROUND NOS.1 & 6 BEING GENERAL IN NAT URE ALSO NEEDS NO ADJUDICATION. 7. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 31 ST OCTOBER 2011. SD/- SD/- ( N.K.SAINI) (SMT . P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIA L MEMBER PLACE: BANGALORE DATED: 31-10-2011 AM* COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3. CIT(A) 4. CIT 5. DR 6. GF(BLORE) BY ORDER AR ITAT BANGALORE