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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI PAVAN KUMAR GADALE
O R D E R Per Bench These two appeals are filed by the revenue and these two C. Os. Are filed by the assessee and these all are directed against two separate orders of ld. CIT(A)- 4, Bangalore both dated 02.01.2018 for Assessment Years 2012- 13 & 2013-14.
All these appeals and C.Os. were heard together and are being disposed of by way of this common order for the sake of convenience.
At the very outset, it was submitted by ld. AR of assessee that both the C.Os. filed by the assessee are merely in support of the order of CIT (A)
& 1197/Bang/2018& C.O. Nos. 94 & 95/Bang/2018 Page 2 of 4 and hence, both these C.Os. are not pressed and accordingly both the C.Os. are dismissed as not pressed.
Regarding the appeal of the revenue for Assessment Year 2012-13 in it was submitted by him that in this year, the tax effect in the appeal of the revenue is below Rs. 20 Lakhs and therefore, this appeal of revenue is not maintainable because of low tax effect in view of the latest instructions of CBDT as per Circular No. 3/2018 dated 11.07.2018. Regarding the amount of tax effect, he drawn our attention to the assessment order and pointed out that total addition made by the AO is of Rs. 54,77,248/- only out of which the disallowance of Rs. 1,47,279/- is upheld by the ld. CIT(A) and only two disallowances are deleted by him of Rs. 52,84,163/- and Rs. 45,806/- total of Rs. 53,29,969/-. He submitted that for the deletion of both these disallowances, revenue is in appeal but the tax effect is less than Rs. 20 Lakhs and therefore, the revenue’s appeal is not maintainable. In reply, ld. DR of revenue could not show that tax effect in this case is more than Rs. 20 Lakhs. Hence in view of latest CBDT instructions as per Circular No. 3/2018 dated 11.07.2018, we hold that this appeal of revenue is not maintainable because of low tax effect.
In the result, the appeal of the revenue for Assessment Year 2012-13 and both the C.Os. of assessee are dismissed.
Now we take up the appeal of the revenue for Assessment Year 2013-14 in . The grounds raised
by the revenue are as under. “1. The Order of the Ld. CIT(A) is opposed to the law and the facts of the case.
2. The CIT(A) was not justified in directing the AO to recompute the deduction allowable u/s 10A of the Act after reducing expenditure incurred in foreign currency towards telecommunication expenses&foreign travel expenses from the export turnover.
3. The Ld. CIT(A) ought to have appreciated that there is no provision in Sec. 10A which requires the concerned expenses, which are required to be reduced from the export turnover as per clause (iv) of the Explanation to Section 10A to be reduced from the total turnover & 1197/Bang/2018& C.O. Nos. 94 & 95/Bang/2018 Page 3 of 4 also.
4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in directing to follow the ratio laid down by the Hon’ble HC in the case of CIT Vs. Tata Elxsi Ltd while computing the deduction u/s. 10A, when the Department has filed a SLP before the Hon'ble SC on this issue which is pending adjudication.
5. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
6. The appellant craves leave to add, alter, amend and/or delete any of the grounds that may be urged.”
7. The ld. DR of revenue supported the assessment order whereas the ld. AR of assessee supported the order of ld. CIT(A). He further pointed out in Para 5.3 of his order, ld. CIT(A) has followed the judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. as reported in 349 ITR
98. He also submitted that now this issue is now covered in favour of the assessee by the judgement of Hon’ble Apex Court also having been rendered in the case of CIT Vs. HCL Technologies Ltd. as reported in [2018] 93 taxmann.com 33 (SC). He submitted a copy of this judgement of Hon’ble Apex Court.
We have considered the rival submissions. We find that the issue in dispute in this appeal is on this aspect as to whether for the purpose of computing the deduction allowable to the assessee u/s. 10AA, various expenses incurred on telecommunication expenses incurred in foreign currency for rendering services outside India is to be reduced from export turnover only or from total turnover also. As per the judgement of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. (supra), it is held that total turnover is sum total of domestic turnover and export turnover and therefore, if any amount is reduced from export turnover then total turnover also goes down by the same amount automatically. This view of Hon'ble Karnataka High Court has been approved by the Hon’ble Apex Court in the case of CIT Vs. HCL Technologies Ltd. (supra) and therefore, respectfully & 1197/Bang/2018& C.O. Nos. 94 & 95/Bang/2018 Page 4 of 4 following these two judgments of Hon’ble Apex Court and of Hon'ble Karnataka High Court as noted above, we decline to interfere in the order of CIT (A) on this issue.
In the result, this appeal filed by the revenue is dismissed.
In the combined result, both the appeals of the revenue and both the C.Os. of the assessee are dismissed. Order pronounced in the open court on the date mentioned on the caption page.