DCIT, BANGALORE vs. M/S CEDEGIM SOFTWARE INDIA PVT. LTD., BANGALORE

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ITA 1393/BANG/2015Status: DisposedITAT Bangalore13 October 2016AY 2008-093 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal followed the Karnataka High Court's decision in Tata Elxsi, holding that if an expense is reduced from export turnover, the total turnover also reduces by the same amount. Therefore, the CIT(A)'s order was upheld.

What were the facts?

The revenue appealed against the CIT(A)'s order which directed the exclusion of foreign currency expenses from both export turnover and total turnover. The AO had only reduced these expenses from export turnover.

What were the issues?

Whether expenses incurred in foreign currency, deducted from export turnover, should also be deducted from total turnover for the purpose of Section 10A benefits.

Which sections of the Income-tax Act were involved?

Section 10A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SHRI A.K. GARODIA & SMT ASHA VIJAYARAGHAVAN

For Appellant: Ms. Vidya Kurup, Advocate
For Respondent: Smt. Meera Srivastava, Additional CIT
Hearing: 26.09.2016Pronounced: 13.10.2016

Assessee by : Ms. Vidya Kurup, Advocate Revenue by : Smt. Meera Srivastava, Additional CIT Date of hearing : 26.09.2016 Date of Pronouncement : 13.10.2016 O R D E R

Per A.K. Garodia, Accountant Member

1.

This is a revenue’s appeal directed against the order of learned CIT (Appeals), Bangalore – 2 dated 27.8.2015 for assessment year 2008-09.

2.

The grounds raised by the revenue are as under:-

1. The order of the Ld. CIT (A) is contrary to the facts and circumstances of the case and hence not sustainable.

2. The CIT (A) has erred in directed the AO to exclude the expenditure incurred in foreign currency from both export turnover as well as from total turnover by placing its reliance on the case of Tata Elxsi Ltd., Vs. ACIT ((349 ITR 98)) without appreciating that there is no provision in section 10A that such expenses should be reduced from the total turnover, as clause (iv) of the Explanation to section 10A provides that such expenses are to be reduced only from the export turnover. 3. 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.

4. The appellant craves leave to add, alter, amend and/or delete ant of grounds mentioned above.

3.

The learned DR of the revenue supported the assessment order, whereas learned AR of the assessee supported the order of learned CIT (Appeals). He also submitted that this issue is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of Tata Elxsi Vs. ACIT is reported in 349 ITR 98.

4.

We have considered the rival submissions. We find that the issue is whether the amount incurred by the assessee on telecommunication charges and travelling expenses outside the country amounting to Rs.331.08 lacs reduced by the AO from export turnover is also required to be reduced from total turnover or not. In this regard, it was held by Hon’ble Karnataka High Court that the total turnover is sum total of domestic turnover and export turnover and therefore, if an amount is reduced from export turnover, the amount of total turnover also goes down by the same amount. Hence, by respectfully following this judgment of Hon’ble Karnataka High Court, we decline to interfere in the order of CIT (Appeals).

5.

In the result, the appeal of the revenue is dismissed.

Pronounced in the open court on this 13th day of October, 2016.

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