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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI. A. K. GARODIA & SMT. BEENA PILLAI
Page 2 of 5 IT(TP)A 689/Bang/2016 & IT(TP)A 591/Bang/2016 A. Y : 2011 – 12 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal has been filed by assessee against the final assessment order dated 28/01/2016 passed by Ld. DCIT Circle 2 (1) (1), Bangalore.
At the outset, Ld. AR has letter dated 04/11/2019 by Ministry of Finance, Department of Revenue, CBDT, pursuant to which assessee wishes to withdraw assessee’s appeal filed for year under consideration. The said letter is regarding mutual agreement procedure reached between United States competent authority and Indian competent authority, with regard to transfer pricing adjustment in respect of international transactions, related to ITeS segment for year under consideration. 2.1. Ld. CIT DR do not object for the same.
Considering the submissions made by assessee in its letter dated 04/11/2019 by Ministry of Finance, Department of Revenue, CBDT filed before this Tribunal on, we allow withdrawal of present appeal. Accordingly, grounds raised
by assessee on transfer pricing issue in present appeal stands dismissed as withdrawn. And Ground No. 3 raised by revenue in their appeal stands dismissed.
4. There is Corporate tax Ground no.12 raised by assessee regarding disallowance of 10A deduction of Rs.3,43,54,527/-, being software expensed pertaining to Hyderabad Unit.
5. It has been submitted that, disallowance is regarding exclusion of telecommunication charges pertaining to delivery of computer Page 3 of 5 IT(TP)A 689/Bang/2016 & IT(TP)A 591/Bang/2016 A. Y : 2011 – 12 software outside India from export turnover and also expenditure incurred in foreign currency on travel. 6. Both sides submitted that there are corporate grounds raised in appeal filed by Revenue. It has been submitted that Ground no.1 in revenue appeal pertains to same issue. We have perused submissions advanced by both sides in light of records placed before us. 6.1. Ground no.1 in revenue appeal and Ground no. 12 of assessee appeal pertains to same issue.
7. Both sides also submitted that this issue stands settled by the decision of Hon’ble jurisdictional High Court in case of CIT vs Tata Elxsi Ltd reported in 349 ITR 98, wherein Hon’ble High Court held that; total turnover consists of export turnover and the turnover from local sales. Export turnover constituted numerator of the formula provided under section 10 A of the Act, and also forms a constitute element in denominator, in as much as the export turnover is part of the total turnover. Accordingly, if an amount is reduced from the export turnover, the same has to be reduced from the element of export turnover present in the total turnover. In this context, Hon’ble Karnataka High Court placed reliance on decision of Hon’ble Bombay High Court in case of CIT vs Gem Plus Jewellery India Ltd., reported in (2011) 330 ITR 175.
8. Respectfully following the above, we direct Ld. AO to recompute deduction under section 10 A in accordance with ratio laid down by Hon’ble Karnataka High Court in case of CIT vs Tata Elxsi Ltd.,.
Page 4 of 5 IT(TP)A 689/Bang/2016 & IT(TP)A 591/Bang/2016 A. Y : 2011 – 12 Accordingly, Ground No.1 raised by revenue stands dismissed and Ground No.12 raised by assessee stands allowed for statistical purposes.
Ground No. 2 in revenue’s appeal is regarding disallowance deleted pertaining to belated remittances of EPF/ESI. 9.1. Ld. DR submitted that Ld. AO erred in not disallowing delayed remittance of employee’s contribution of PF and ESI. He submitted that any delay in remittance of employee’s contribution are to be treated as income in the hands of assessee in terms of provisions of section 2 (24) (x) read with section 36 (1) (va) of the Act. On the contrary, Ld. AR submitted that, assessee delayed remittance of PF for the month of January by 6 days and ESI for the month of January and February by 33 days and 5 days respectively. He submitted that as per 36 (i) (va) if employee contribution is remitted before the specified due date for filing of return under section 139 (1), the same is an allowable expenditure. He placed reliance upon decision of Hon’ble Karnataka High Court in case of CIT vs Sarabai Enterprises reported in 298 ITR 141 and Spectrum Consultants India Pvt Ltd., reported in (2013) 34 Taxmann.com 20.
We have perused submissions advanced by both sides in light of records placed before us. Ld. AR has submitted that both sections 36 (1) (va) and section 43B allows such payment to be considered as expenses, if they are made before the due date for filing return of income during relevant year. We therefore set aside this issue to Ld.AO for verification in accordance with the ratio laid Page 5 of 5 IT(TP)A 689/Bang/2016 & IT(TP)A 591/Bang/2016 A. Y : 2011 – 12 down by Hon’ble jurisdictional High Court in case of CIT vs Sarabai Enterprises and Spectrum Consultants India Pvt Ltd (supra). Accordingly, this ground raised by revenue stands allowed for statistical purposes. In the result, appeal filed by assessee stands dismissed as withdrawn in respect of transfer pricing issues. In respect of corporate grounds raised by assessee the ground stands allowed. Insofar as corporate grounds raised by revenue in their appeal, they are partly allowed for statistical purposes.