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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ A ’
Before: SHRI N.V. VASUDEVAN & SHRI JASON P BOAZ
O R D E R Per Shri Jason P Boaz A.M. : This appeal by Revenue is directed against the order of the CIT(A)-1, Bangalore dated 31.07.2017 for Assessment Year 2005-06.
Briefly stated, the facts of the case are as under:-
2.1 The assessee, a company engaged in the business of providing software development services, filed its return of income for Assessment Year 2005-06 on 30.10.2005 declaring total income of Rs.50,070 after, inter alia, claiming deduction u/s. 10A of the Income Tax Act, 1961 (in short ‘the Act’). The case was taken up for scrutiny and the assessment was completed u/s. 143(3) of the Act vide order dated 26.12.2008 wherein the assessee’s income was determined at Rs.1,41,91,817 in view of, inter alia, the Assessing Officer (‘AO’) disallowing the assessee’s excess claim for deduction u/s. 10A of the Act and making a T.P. Adjustment of Rs.1,39,96,932 under Section 92CA of the Act. On appeal, the CIT(A)-1, Bangalore partly allowed the assessee’s appeal vide order dated 31.07.2017. In doing so, the ld. CIT(A) allowed the assessee’s claim for deduction u/s. 10A of the Act following the decision of the Hon’ble Karnataka High Court in the case of CIT v Tata Elxsi Ltd. (349 ITR 98) (Kar).
3.1 Aggrieved by the order of the CIT(A)-1, Bangalore dated 31.07.2017 for Assessment Year 2005-06, Revenue has filed this appeal, raising the following grounds:-
3.2 The ld. DR was heard in support of the grounds raised. 3.3 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncement cited. As regards the issue of reduction of the items of foreign travel expenditure incurred in foreign currency for rendering of technical services outside India, the jurisdictional High Court of Karnataka in the case of CIT v Tata Elxsi Ltd (349 ITR 98) (Kar) has held that when certain expenses are excluded from the export turnover for the purposes of computing deduction admissible under the Act; like u/s. 10A of the Act, such expenses are also to be excluded from total turnover, as export turnover is a part of total turnover. The decision in the case of Tata Elxsi Ltd (supra) has also been followed by the Hon’ble Court in its order in the case of DCIT v Motor Industries Co. Ltd., (ITA No. 776/2006, 744/2007 and 1155/2006 dated 13.06.2014), holding that if any expenditure is sought to be removed from export turnover, then it should also be reduced from total turnover for the purposes of computing the eligible deduction u/s. 10A of the Act. In this legal and factual matrix of the case, as discussed above, we find no reason to interfere with or deviate from the finding rendered by the ld. CIT(A) on this issue, and therefore uphold the same. Consequently, the grounds S.Nos. 1 to 4 raised by revenue are dismissed. 4. In the result, Revenue’s appeal for Assessment Year 2005-06 is dismissed. Order pronounced in the open court on 12th April, 2018. Sd/- Sd/- (N.V. VASUDEVAN) (JASON P BOAZ) Judicial Member Accountant Member Bangalore, Dt. 12.04.2018.