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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SMT. ASHA VIJAYARAGHAVAN & SHRI JASON P. BOAZ
O R D E R Per Shri Jason P. Boaz, A.M. : These appeals by Revenue are directed against the combined order of the Commisisoner of Income Tax (Appeals)-4, Bangalore dt.12.3.2015 for Assessment Years 2008-09 & 2009-10. Having common issues and being heard together, these appeals are disposed off by way of this common order.
The facts of the case, briefly, are as under :- 2.1 The assessee, a company engaged in the business of software development and services, filed its return for Assessment Year 2008-09 on 30.9.2008 declaring income of Rs.50,460 2 & 842/Bang/2015 after claiming deduction of Rs.2,79,00,530 under Section 10A of the Income Tax Act, 1961 (in short 'the Act'). For Assessment Year 2009-10, the assessee filed its return of income on 30.9.2009 declaring income of Rs.7,62,704 after claiming deduction of Rs.1,96,11,592 under Section 10B of the Act. These two returns of income were processed under Section 143(1) of the Act and the case was taken up for scrutiny for both assessment years 2008-09 & 2009-10. The assessments were completed under Section 143(3) rws 144C(1) of the Act vide order dt.20.12.2011 for Assessment Year 2008-09 and under Section 143(3) of the Act vide order dt.23.12.2011, for Assessment Year 2009-10. In both these years, the income of the assessee was determined at Rs.89,74,627 and Rs.25,82,507 respectively in view of the Assessing Officer restricting the deduction under Section 10A/10B of the Act by excluding the value of telecommunication and travel expenses incurred in foreign exchange for rendering technical services abroad from export turnover. 2.2 Aggrieved by the orders of assessment for Assessment Years 2008-09 dt.20.12.2011 & 2009-10 dt.23.12.2011, the assessee preferred appeals before the CIT (Appeals) – 4, Bangalore. The learned CIT (Appeals) vide his common order dt.12.3.2015 for both assessment years 2008- 09 & 2009-10 allowed the assessee's appeals.
Aggrieved by the order of the CIT (Appeals) – 4, Bangalore dt.12.8.2015 for both assessment years 2008-09 & 2009-1, the Revenue has preferred these two appeals raising the following common grounds of appeal :- “
1. The order of the learned CIT (Appeals) is opposed to the law and facts of the case.
2. The CIT (Appeals) was not justified in directing the Assessing Officer to recompute the deduction allowable under Section 10A of the Act after reducing telecommunication and travel expenses from the export turnover.
3 & 842/Bang/2015 3. The learned CIT (Appeals) ought to have appreciated that there is no provision in section 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 also.
4. On the facts and circumstances of the case, the learned CIT (Appeals) 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 under Section 10A, when the Department has filed a SLP before the Hon'ble Supreme Court 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 tht the order of the CIT (Appeals) in so far as it is relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
The appellant craves leave to add, alter, amend and/or delete any of the grounds that may be urged.”
The Grounds at S.Nos.1, 5 & 6 are general in nature and therefore no adjudication is called for thereon.
Grounds No.2 to 4 – Deduction u/s.10A/10B of the Act. 5.1 Revenue challenges the action of the learned CIT (Appeals) in directing the Assessing Officer to exclude the expenses incurred in foreign currency towards telecommunication and travel expenses from both export turnover and total turnover while computing the deduction under Section 10A of the Act by placing reliance on the decision of the Hon'ble High Court of Karnataka in the case of CIT Vs. Tata Elxsi Ltd. (2012) 349 ITR 98 (Kar). It is submitted that this decision has not been accepted by the Department and the SLP filed by the Department is pending disposal before the Hon'ble Apex Court. 5.2 We have heard both the learned Departmental Representative and the learned Authorised Representative in the matter. Following the decision rendered by the Hon'ble High Court of Karnataka in the case of Tata Elxsi Ltd. (supra), we are of the view that the impugned order of the learned CIT (Appeals), in directing the Assessing Officer that telecommunication 4 ITA Nos.841 & 842/Bang/2015 charges and travel charges incurred in foreign currency are to be excluded from both export turnover as well as total turnover while computing the deduction under Section 10A of the Act, is in order and no interference is called for therein. Consequently, Grounds raised
by Revenue at S.Nos.2 to 4 in this appeal are dismissed.
6. In the result, Revenue’s appeals for both Assessment Years 2008-09 & 2009-10 are dismissed. Order pronounced in the open court on 28th October, 2015.