DEPUTY COMMISSIONER OF INCOME TAX, BANGALORE vs. M/S INDEPENDENT TECHNOLOGY SYSTEMS INDIA PVT LTD, BANGALORE

Appellant By : Dr. Shankar Prasad K (D.R) Respondent By : Shri Manoj M Shenoy,C.A. Date of Hearing : 30.6.2015. Date of Pronouncement : 10.07.2015. O R D E R Per Shri Jason P. Boaz, A.M. : This appeal by Revenue is directed against the order of the Commissioner of Income Tax (Appeals)-V, Bangalore dt.19.08.2014 for Assessment Year 2009-10.

2.2 Aggrieved by the order of assessment dt.28.5.2013 for Assessment Year 2009-10, the assessee preferred an appeal before the CIT (Appeals) – IV, Bangalore. The learned CIT (Appeals) disposed off the appeal vide order dt.19.8.2014 allowing the assessee partial relief. 3. Revenue being aggrieved by the order of the CIT (Appeals) – IV, Bangalore dt.19.8.2014 for Assessment Year 2009-10 has preferred this appeal before the Tribunal raising the following grounds :- “

1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case.

2. The CIT (Appeals) erre4d in directing the Assessing Officer to follow the ratio laid down by the Hon'ble Court in the case ofTata Elxsi Limited 349 ITR 98 and exclude the telecommunication charges / freight charges incurred in foreign currency form the total turnover also while computing the deduction under Section 10A of the I.T. Act as the decision of the High Court is binding, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of the explanation to 3 IT(T.P)A No.1234/Bang/2014 section 10A provides that such expenses are to be reduced only from the export turnover.

3. The CIT (Appeals) erred in not appreciating the fact that the jurisdictional High Court’s decision in the case of Tata Elxsi Limited 349 ITR 98 has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court.

4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT (Appeals) be reversed and that of the Assessing Officer be restored.

5. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal.”

4. The Grounds at S.Nos. 1, 4 and 5 are general in nature and therefore no adjudication is called for thereon.

5. Grounds at S.Nos. 2 and 3 – Deduction u/s.10A of the Act. 5.1 In these grounds, Revenue assails the impugned order of the learned CIT (Appeals) in directing the Assessing Officer to exclude telecommunication charges and freight charges incurred in foreign currency from both export turnover as well as from total turnover for the purposes of computation of the deduction under Section 10A of the Act by relying on the decision of the Hon'ble High Court of Karnataka in the case of CIT V Tata Elxsi Ltd. (2012) 349 ITR 98 (Kar). 5.2 Per contra, the learned Authorised Representative of the assessee supported the impugned order of the learned CIT (Appeals) on this issue. 5.3 We have heard both the learned Authorised Representative for the assessee and the learned Departmental Representative in the matter. We find that the issue before us is covered in favour of the assessee by the decision of the Hon'ble High Court of 4 IT(T.P)A No.1234/Bang/2014 Karnataka in the case of Tata Elxsi Ltd. (supra). Respectfully following binding decision rendered by the Hon'ble High Court of Karnataka in the case of Tata Elxsi Ltd. (supra), we are of the view that action of the learned CIT (Appeals), directing the Assessing Officer that telecommunication charges and freight 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. Consequently, Revenue’s grounds at S.Nos.2 and 3 are dismissed.