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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI S.V. MEHROTRA & SHRI SUDHANSHU SRIVASTAVA
ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: This appeal has been preferred by the revenue against the order of Ld. CIT, Delhi-VII, New Delhi dated 11.11.2009 and pertains to assessment year 2001-02.
Following grounds have been preferred by the revenue:- “1) On the facts in the circumstances of the case, the Ld.CIT(A) has erred in law and on facts in directing the AO to allow deduction u/s 1OA of the Act to the tune of 1. Assessment year 2001-02 Rs.54,58,97,581/-as against Rs.47,20,08,243/- allowed by the AO ignoring that (a) the services charges generated in India do not constitute export turnover (b) Interest income earned does not constitute business income of the undertaking 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any grounds(s) of appeal at any time before or during the hearing of this appeal.”
At the outset, Ld. AR submitted that as far as ground no.1 (b) regarding interest income is concerned, the Ld. CIT (A) in page 4, Para 7(a) of the impugned order has decided this issue against the assessee and, therefore, the department cannot raise this ground before the ITAT.
3.1 On ground No. 1(a) regarding the service charges, it was submitted that the same is covered in favour of the assessee by order of the ITAT in assessee’s own case in 2298, 2244, 2245/Del/2008 for assessment year 2003-04 and 2004-05.
Ld. DR agreed to the contentions of the ld. AR.
We have heard the rival submissions and carefully perused the material on record and we find that the submissions of the Ld. AR Assessment year 2001-02 are correct as far as ground nol. 1(b) of the department’s appeal is concerned. Ld. CIT (A) in Para 7(a) page 4 of the impugned order has held that the assessee had claimed deduction u/s 10A of the Act on the income from export of software as well as income from IT enabled services and also on interest income earned from fixed deposits and margin money kept as reserves. However, in the proceedings u/s 143(3) of the Act, the Assessing Officer excluded interest income from the business income for the purposes of computing deduction u/s 10A of the Act. On appeal, the Ld. CIT (A) confirmed the said disallowance. On further appeal, the Tribunal too confirmed the said disallowance. Para 7(a) reads as under-
(a) The appellant, being a company engaged in the business of software development and rendering services in the field of telecommunication, had claimed deduction under section 10A of the Act, on income from the aforesaid sale and services. In its return for assessment year 2001-02, the appellant claimed deduction under section 10A of the Act on the income from export of software as well as income from IT enabled services and also on interest income earned from fixed deposits and margin money kept as reserves. However, in the proceedings under section 143(3) of the Act, the assessing officer excluded interest income from the Assessment year 2001-02 business income for the purposes of computing deduction under section 10A of the Act. On appeal the learned CIT (Appeals) confirmed the said disallowance. On further appeal, the Hon'ble Tribunal too, confirmed the said disallowance.”
5.1 Thus, it is apparent that this issue has been held against the assessee and, therefore, this ground of the department is infructuous and is dismissed as such.
5.2 As far as ground no. 1(a) of the appeal is concerned, it is seen that the same is squarely covered in favour of the assessee by the order of the ITAT Delhi ‘I’ Bench in assessee’s own case for assessment years 2003-04, 2004-05. The relevant paragraph is Para 17.5 on page 20 of the said order and the same reads as under:-
“ 17.5 Having heard both the parties, we find that it is not disputed that PR. supply chain, CT head and SMG were incidental services to IT enabled services and, therefore in view of Notification no. 890(E) dated 26-9- 2000, these services being part of back office operation and support services are eligible to be considered as part of export turnover. In the result, this ground is allowed.”
Assessment year 2001-02 5.3 In the light of the aforesaid finding of the ITAT in favour of the assessee, we dismiss ground no. 1(a) of the department’s appeal.
In the result, the appeal of the revenue stands dismissed. Order pronounced in the open court on 11th May, 2017.