Toluna India Private Ltd., Gurgaon v. DCIT, New Delhi

ITA NO. 4696/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 4696/DEL/2010 A.Y. : 2006-07 TOLUNA INDIA PRIVATE LIMITED (FORMERLY KNOWN AS GREENFIELD ONLINE PRIVATE LIMITED) 1 ST FLOOR UNITECH TRADE CENTER SUSHANT LOK PHASE-I GURGAON HARYANA (PAN/GIR: AACCG0003G) VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(1) NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : MS. GEETIKA GUPTA CA DEPARTMENT BY : SH. AMRENDRA KUMAR SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDERS OF THE ASSESSING OFFICER DATED 27.9.2010 PASSED U/S. 143( 3) READ WITH SECTION 144(C) OF THE IT ACT PERTAINING TO ASSESSMEN T YEAR 2006-07. 2. THE ISSUE RAISED IS THAT ASSESSING OFFICER AS WELL AS DRP ERRED IN COMPUTING THE DEDUCTION U/S 10A OF THE ACT BY RED UCING A SUM OF ` 1 375 406/- BEING COMMUNICATION EXPENSES AND ` 827 /- BEING INSURANCE EXPENSES FROM THE EXPORT TURNOVER BY ALLEG ING THAT THE SAME ARE ATTRIBUTABLE TO DELIVERY OF SERVICES OUTSIDE IN DIA. IT HAS FURTHER ITA NO. 4696/DEL/2010 2 BEEN URGED THAT IF THE EXPENDITURE HAS TO BE REDUC ED FROM EXPORT TURNOVER THEN IT SHALL BE REDUCED FROM TOTAL TURNOV ER. 3. IN THIS CASE ASSESSING OFFICER NOTED THAT ASSES SEE HAS CLAIMED DEDUCTION U/S 10A OF THE IT ACT. FROM THE DETAIL S SUBMITTED BY THE ASSESSEE THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN FOLLOWING EXPENSES WHICH MIGHT BE ATTRIBUTABLE TO DE LIVERY OF GOODS (I) INSURANCE CHARGES - ` 4 75 829/- AND (II) COMMU NICATION - ` 1 37 54 066/-. 3.1 THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HA S NOT FURNISHED ANY DETAIL IN RESPECT OF COMMUNICATION EXPENDITURE A TTRIBUTABLE TO THE DELIVERY OF GOODS. THEREFORE HE ESTIMATED THAT 10% OF THE COMMUNICATION EXPENSES WHICH COMES TO ` 1 37 54 06/- WOULD BE EXPENSES ATTRIBUTABLE TO THE DELIVERY OF GOODS AND WERE EXCLUDED FROM THE EXPORT TURNOVER. IN RESPECT OF INSURANCE EXPE NSES RELATED TO EXPORT TURNOVER AMOUNTING TO ` 827/-. ASSESSING OFF ICER EXCLUDED THAT TOO FROM THE EXPORT TURNOVER. THUS ASSESSING OFF ICER HELD THAT THESE EXPENSES NEED TO BE EXCLUDED FROM THE EXPORT TURNOVE R FOR THE CALCULATION U/S 10A. 4. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. ITA NO. 4696/DEL/2010 3 5. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE RECORDS. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF C.I.T. VS. GEM PLUS JEWELLERY INDIA LTD. IN ITA NO. 2426 OF 2009 VI DE ORDER DATED 23.6.2010. IN THIS CASE IT WAS HELD THAT FREIGHT AND INSURANCE CHARGES DO NOT HAVE AN ELEMENT OF TURNOVER AND HAVE TO BE E XCLUDED FROM THE TOTAL TURNOVER FOR THE PURPOSE OF CLAIMING EXEMP TION U/S 10A. THUS WE FIND THAT ASSESSING OFFICER IS NOT CORRECT IN INCLUDING THE INSURANCE AND COMMUNICATION EXPENSES IN TOTAL TURNOVER BUT RED UCING THE SAME FROM THE EXPORT TURNOVER. RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE WE DIRECT BOTH THESE AMOUNTS TO BE REDUCED FR OM THE TOTAL EXPORT TURNOVER AS WELL AS TOTAL TURNOVER. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 25/2/2011 UP ON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 25/2/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES