TMI Blog2015 (3) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 194J? - CIT(A) delted disallowance - Held that:- Revenue failed to bring on record any material evidence or place before us any judicial decision that controverts the finding of the learned CIT(A) on this issue. In this view of the matter, we concur with the view of the learned CIT(A) in following the aforesaid judicial pronouncements CIT V Bharti Cellular Ltd. [2008 (10) TMI 321 - DELHI HIGH COURT], Skycell Communication Ltd. V CIT [2001 (2) TMI 57 - MADRAS High Court], Expeditors International (India) (P) Ltd. V CIT [ 2008 (8) TMI 399 - ITAT DELHI-F] and Pacific Internet (India) (P) Ltd. V ITO [2008 (12) TMI 429 - ITAT MUMBAI] that endorse the view that the payment of ₹ 337,080 towards subscription of broadband facility are not in the nature of technical services and therefore TDS need not be made thereon as per the provisions of section 194J of the Act. - Decided against revenue. Repair charges disallowed - CIT(A) allowed claim - Held that:- In an appreciation of the facts on record we concur with the observations of the learned CIT(A) that the view of the Assessing Officer, that the expenditure incurred on repairs and maintenance and shifting of assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to exclude the reimbursement of expenditure incurred in foreign currency towards foreign travel and insurance expenses both from the export turnover as well as from total turnover for the purpose of computation of deduction under Section 10A, without appreciating the fact that the statute allows exclusion of such expenditure only from export turnover by way of specific definition of export turnover as envisaged by sub-clause (4) of Explanation 2 below sub-section (8) of section 10A and the total turnover has not been defined in this section. 3. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in holding that the broadband services are not in the nature of technical services and TDS need not be made under Section 194J of the IT Act are applicable. Further, the decisions relied upon by the CIT (Appeals) are not pronounced by the jurisdictional courts and the matter is yet to reach finality. 4. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in holding that the repairs charges ofRs.17,43,738 is allowable expenditure without appreciating the fact that the expenditure has been incurred towards gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to exclude the above expenditure amounting to ₹ 2,12,78,154 from both export turnover as well as total turnover and recompute the deduction under Section 10A of the Act accordingly. 5.3.2 We have heard both sides and perused and carefully considered the material on record and the judicial decision cited. On perusal thereof we find that the issue before us for adjudication i.e. if expenditure incurred in foreign currency on foreign travelling, insurance and provision of technical services abroad is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction under section 10A of the Act, is covered in favour of the assessee by the decision of the Hon ble Karnataka High Court in the case of Tata Elxsi Ltd. (supra). In this order, the Hon ble Court held - The Bombay High Court had an occasion to consider the earning of the word total turnover in the context of section 10A, in the case of CIT Vs. Gem Plus Jewellery India Ltd. (2011) [330 ITR P. 175 (Bom)] (2010-TIOL-456-HC-MUM-IT). Interpreting sub-section (4) of section 10A, it is held as under : Under sub-section (4) the proportion between the export t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges. The submission which has been urged on behalf of the revenue is that while freight and insurance charges are liable to be excluded in computing export turnover, a similar exclusion has not been provided in regard to total turnover. The submission of the revenue, however, misses the point that the expression total turnover has not been defined at all by Parliament for the purposes of s.10A. However, the expression export turnover has been defined. The definition of export turnover excludes freight and insurance. Since export turnover has been defined by Parliament and there is a specific exclusion of freight and insurance, the expression export turnover cannot have a different meaning when it forms a constituent part of the total turnover for the purposes of the application of the formula. Undoubtedly, it was open to Parliament to make a provision which has been enunciated earlier must prevail as a matter of correct statutory interpretation. Any other interpretation would lead to an absurdity. If the contention of the Revenue were to be accepted, the same expression viz. export turnover would have a different connotation in the application of the same formula. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. The export turnover would be a component or part of a denominator, the other component being the domestic turnover. In other words, to the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover cannot be different. Therefore, though there is no definition of the term total turnover in section 10A, there is nothing in the said section to mandate that, what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. Though when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned CIT(A) in holding that subscription for broadband services are not in the nature of fees for technical services ( FTS ) and therefore there is no requirement for TDS to be made under Section 194J of the Act. The learned Departmental Representative was heard in support of the grounds raised. The learned Departmental Representative also submitted that the judicial pronouncements relied on by the learned CIT(A) while allowing the assessee's appeal on this issue were not rendered by jurisdictional Courts and Tribunals and that the matter had not attained finality. 6.2 Per contra, the learned Authorised Representative supported the finding of the learned CIT(A), on this issue, that payment towards subscription for broadband facility is not in the nature of technical services and therefore TDS is not required to be made as per the provisions of section 194J of the Act. The learned Authorised Representative submitted that the judicial decisions followed by the learned CIT(A) support this view and therefore Revenue s appeal on this issue ought to be dismissed. 6.3.1 The facts of the matter, as emerge from the record are that the Assessing Officer observed that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 496 (Mad), Expeditors International (India) (P) Ltd. V CIT (2008) 118 TTJ (Delhi) 652 and Pacific Internet (India) (P) Ltd. V ITO (2009) 27 SOT 524 (Mum) support this view. 6.3.2 On perusal of the grounds raised and after having heard the learned Departmental Representative, we find that Revenue, except for raising this ground challenging the order of the learned CIT(A) in following judicial pronouncements that are not of jurisdictional courts and tribunals (supra), has failed to bring on record any material evidence or place before us any judicial decision that controverts the finding of the learned CIT(A) on this issue. In this view of the matter, we concur with the view of the learned CIT(A) in following the aforesaid judicial pronouncements (supra) that endorse the view that the payment of Rs.,337,080 towards subscription of broadband facility are not in the nature of technical services and therefore TDS need not be made thereon as per the provisions of section 194J of the Act. Consequently, Ground No.3 raised by revenue is dismissed. 7. Ground No.4 - Repair charges : ₹ 17,43,738. 7.1 In this Ground, Revenue assails the order of the learned CIT(A) in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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