ACIT, New Delhi v. M/s Genpact India, New Delhi

ITA 5556/DEL/2010 | 2004-2005
Pronouncement Date: 04-03-2011 | Result: Dismissed

Appeal Details

RSA Number 555620114 RSA 2010
Bench Delhi
Appeal Number ITA 5556/DEL/2010
Duration Of Justice 2 month(s) 27 day(s)
Appellant ACIT, New Delhi
Respondent M/s Genpact India, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 04-03-2011
Date Of Final Hearing 10-02-2011
Next Hearing Date 10-02-2011
Assessment Year 2004-2005
Appeal Filed On 08-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C DELHI BEFORE SHRI RAMESH P. TOLANI AND SHRI K.G. BANS AL ITA NO. 5556(DEL)/2010 ASSESSMENT YEAR: 2004-05 DY. COMMISSIONER OF INCOME M/S GENPA CT INDIA (FORMERLY TAX CIRCLE 12(1) NEW DELHI. VS. KNOWN AS GE CAPITAL INTERNATIONAL SERVICES) DELHI IT PARK SHASTRI PARK NEW DELHI. PAN-AAACG9163H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.D. MEHROTRA CIT DR RESPONDENT BY : SHRI TARANDEEP SINGH C.A. ORDER PER K.G. BANSAL :AM THE ONLY GROUND TAKEN BY THE REVENUE IN THIS APP EAL IS TO THE EFFECT THAT THE LD. CIT(APPEALS) ERRED IN DIRECTING THE AO TO COMPUTE DEDUCTION U/S 10A BY EXCLUDING TELECOMMUNICATION EXPENSES INC URRED IN CONVERTIBLE FOREIGN EXCHANGE FROM THE TOTAL TURNOVER. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSM ENT WAS COMPLETED U/S 143(3) ON 29.12.2006 DETERMINING THE TOTAL INCOM E OF THE ASSESSEE AT RS. 88 75 09 180/- AGAINST THE RETURNED INCOME OF RS. 51 63 78 520/-. THIS ORDER WAS RESTORED TO THE FILE OF THE AO BY THE LD. COMMISSIONER OF INCOME-TAX U/S 263 IN RESPECT OF THE ISSUE OF E XCLUDING THE COMMUNICATION ITA NO. 5556(DEL)/2010 2 EXPENSES FROM THE EXPORT TURNOVER. CONSEQUENTLY THE ASSESSEE WAS HEARD. IT WAS SUBMITTED THAT THE CLAIM OF DEDUCTION U/S 10A HAS BEEN MADE ON THE BASIS OF AUDIT REPORT FILED WITH THE RETURN OF I NCOME. THE EXPENSES CAN BE EXCLUDED FROM THE EXPORT TURNOVER ONLY IF THES E ARE INCLUDED IN THE SALE CONSIDERATION. IT WAS FURTHER SUBMITTED THAT IF THE EXPENSES ARE REDUCED FROM THE EXPORT TURNOVER THE SAME SHOULD ALSO B E REDUCED FROM THE TOTAL TURNOVER. HOWEVER THE AO DID NOT AGREE WITH THE ASSESSEE AND EXCLUDED THE EXPENSES ONLY FROM THE EXPORT TURNOVER. THE TOTAL INCOME WAS CONSEQUENTLY DETERMINED AT RS. 91 12 60 070/-. 3. THE MATTER WAS AGITATED BEFORE THE CIT(APPE ALS)-XV NEW DELHI WHO DISPOSED OFF THE SAME IN HIS ORDER DATED 1 3.9.2010 IN APPEAL NO. 143/09-10. AFTER CONSIDERING VARIOUS SUBMISSIONS IT WAS HELD THAT THE TOTAL TURNOVER SHOULD ALSO BE REDUCED BY THE SAME AMOUN T BY WHICH THE EXPORT TURNOVER HAS BEEN REDUCED. AGGRIEVED BY THIS ORD ER THE REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US IT WAS THE ADMITTED POSITION OF BO TH THE PARTIES THAT THE ISSUE STANDS COVERED BY THE ORDER OF E BENCH OF DELHI TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 -05 IN ITA NO. ITA NO. 5556(DEL)/2010 3 2170(DEL)/2009 DATED 13.10.2009. THE TRIBUNAL HELD THAT TELECOMMUNICATION EXPENSES INCURRED IN CONVERTIBL E FOREIGN EXCHANGE ARE REQUIRED TO BE REDUCED FROM THE EXPORT TURNOVER. I T WAS ALSO HELD THAT THE AMOUNT BY WHICH EXPORT TURNOVER IS REDUCED ON A CCOUNT OF TELECOMMUNICATION EXPENSES SHOULD ALSO BE REDUCE D FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION ADMISSIBLE TO THE ASSESSEE U/S 10A OF THE ACT. PARAGRAPH 7 DEALS WITH THIS ASPECT WHICH IS REPRODUCED BELOW:- 7. REGARDING THE THIRD ASPECT I.E. IF COMMUNICA TION CHARGES ARE EXCLUDED FROM EXPORT TURNOVER IT IS THE CLAIM OF THE ASSESSEE THAT THE SAME SHOULD ALSO BE REDUCED FROM TOTAL TURNOVER. ON THIS ASPECT LEARNED COUNSEL OF THE ASSESSEE HAS RELIED UPON THE TRIBUNAL DECISION RENDERED IN THE CASE OF MOTOROLA INDIA PVT. LTD. (SUPRA) AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CAS E OF SAK SOFT LTD. (SUPRA). WE FIND THAT IN THE CASE OF SAK SO FT LTD. (SUPRA) THE SPECIAL BENCH OF THE TRIBUNAL WAS CONSIDERING SUCH ISSUES IN CONNECTION WITH SECTION 10B OF THE ACT. IN THE CASE OF MOTOROLA INDIA PVT. LTD. (SUPRA) SIMILAR CLAIM WAS CONSIDERED BY THE TRIBUNAL WITH REGARD TO CLAIM O F THE ASSESSEE REGARDING BENEFITS U/S 10A OF THE ACT. THE TRIBUNAL HAS FOLLOWED THE SPECIAL BENCH DECISION RENDE RED IN THE CASE OF SAK SOFT LTD. (SUPRA) BY OBSERVING THAT IN THE CASE OF SAK SOFT LTD. (SUPRA) THE SPECIAL BENCH HAS HELD THAT THE EXPENSES WHICH ARE TO BE DEDUCTED FROM THE EXPO RT TURNOVER AS PER THE DEFINITION OF SECTION 10B HAS ALSO TO BE DEDUCTED FROM THE TOTAL TURNOVER ALTHOUGH THE WORDS TOTA L TURNOVER HAVE NOT BEEN DEFINED. IT IS ALSO OBSERVED BY THE TRIBUNAL IN THE CASE OF MOTOROLA INDIA PVT. LTD. (SUPRA) THAT THE POSITION IS THE SAME AS FAR AS SECTION 10A IS CONCERNED AND ITA NO. 5556(DEL)/2010 4 THIS ASPECT HAS BEEN RECOGNIZED BY THE SPECIAL BENCH IN PARA NO. 38 OF ITS ORDER WE FIND THAT IN PAR A NO. 38 IT IS OBSERVED BY THE SPECIAL BENCH THAT AS PER SEVERAL JUDGMENTS OF CHENNAI AND BANGALORE BENCHES OF THE TRIBUNAL I T HAS BEEN HELD THAT WHATEVER IS EXCLUDED FROM THE EXPORT T URNOVER SHOULD ALSO BE EXCLUDED FROM TOTAL TURNOVER FOR THE PURPOSE OF SECTION 10A OR 10B OF THE ACT. IT IS ALSO OBSERVED BY THE SPECIAL BENCH THAT THEY ARE IN AGREEMENT WITH T HE CONCLUSION REACHED IN THESE ASPECTS WHICH ARE NOT BEING DE ALT INDIVIDUALLY. RESPECTFULLY FOLLOWING THIS TRIB UNAL DECISION RENDERED IN THE CASE OF MOTOROLA INDIA PVT. LTD. (SUPRA) WE DECIDE THIS ASPECT OF THE MATTER IN FAVOUR OF THE ASSESSEE AND THE ASSESSING OFFICER IS DIRECTED THAT THE AMOUNT BY WHICH THE EXPORT TURNOVER IS REDUCED ON ACCOUNT OF COMMUNICA TION EXPENSES SHOULD ALSO BE REDUCED FROM TOTAL TURNOVE R FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 10A OF THE ACT. THIS ASPECT IS DECIDED IN FAVOUR OF THE ASSESSEE. 5. AS THE MATTER HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH RESPECTFULLY FOLLOWING THE SAME IT IS HELD THA T THE TOTAL TURNOVER IS ALSO REQUIRED TO BE REDUCED BY AN AMOUNT BY WHICH T HE EXPORT TURNOVER HAS BEEN REDUCED IN RESPECT OF TELECOMMUNICATION EXPE NSES. 6. IN THE RESULT THE APPEAL IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 4 MARCH 2011. SD/- SD/- (RAMESH P. TOLANI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 4TH MARCH 2011. SP SATIA ITA NO. 5556(DEL)/2010 5 COPY OF THE ORDER FORWARDED TO: GENPACT INDIA NEW DELHI. DCIT CIRCLE 12(1) NEW DELHI. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REG ISTRAR.