TMI Blog2017 (10) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of law on the issue concerning a Section 10A deduction in the appeal of the Revenue against AIPL for AY 2009-10. We direct the Assessing Officer to allow the deduction claimed under section 10A of the Act by the assessee Addition u/s 14A - Held that:- Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. Thus additions deleted. Assessing interest on income tax refund as income from other sources - Held that:- In the instant case the fact that the interest was withdrawn in the year under consideration itself or in the subsequent year, is not clear from the order of the authorities below. It is also not clear what is the amount which has been withdrawn subsequently. The relevant ITNS-150 has not been produced before us. In the facts and circumstances of the case, we feel it appropriate to restore the issue to the file of the Assessing Officer for adjudication after appreciation of the facts and in the light of the decision cited by the Ld. counsel of the assessee. The assessee shall be afforded adequate opportunity of being heard. The ground of appeal is accordingly allowed for statistical purpose. - ITA No. 1835/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction u/s 92B of the Act. ( iii) Expenditure of ₹ 67,38,69,124/- incurred by the assesse on payment of incentives to subscribers is in the nature of AMP. ( iv) AE is directly benefited by any expenditure incurred by assesse on AMP ( v) Legal ownership of the marketing intangible would get transferred to the AE without any consideration on termination of the Distribution Agreement; ( vi) That the appellant is not a full-fledged independent distributor. 3.3 That on facts and in law the AO/TPO/DRP erred in not appreciating that benchmarking on the basis of expenses incurred by an assessee is not recognizable as per the provisions of Chapter X. 4. Without prejudice, on facts and in law the DRP erred in conducting a fresh search for identifying comparable companies for the purpose of benchmarking AMP expenses. 4.1 That on facts and in law the comparable set adopted by the AO/DRP/TPO for the purpose of benchmarking AMP transactions is not proper and akin to the FAR of the appellant. 4.2 That on facts and in law the TPO/DRP erred in not using comparable companies used by them in proceedings relating to earlier assessment years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablish with evidence that it has rendered data processing services which are eligible for claim of deduction u/s 10A of the Act. 10. That on facts and in law the AO/DRP erred in making/upholding a disallowance of ₹ 7,10,677/- u/s section 14A of the Act r.w. provisions of Rule 8D. 10.1 That on facts and in law the AO/DRP erred in not appreciating that no tax- free income was earned by the appellant in the year under consideration and hence section 14A was not applicable. 10.2 That on facts and in law in absence of a valid satisfaction as per section 14A(2) being recorded by the AO the DRP erred in sustaining the action of AO to make disallowance as per section 14A r.w Rule 8D. 11. That on facts and in law the AO/DRP erred in subjecting to tax interest on Income Tax refund of ₹ 16,20,444 pertaining to AY 2007-08 (u/s 244A of the Act) as Income From Other Sources . 12. That on facts and in law the AO/DRP erred in charging/upholding levy of interest u/s 234B 234D of the Act. 13. That on facts and in law, the assumption of jurisdiction by the AO/TPO to determine Arm s Length Price is bad in law and void ab-initio. That the appellant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee s territory in their agreed ratio as per the agreement. The territory of assessee includes Indian subcontinent. The assessee company established its subsidiaries in Indian subcontinent with offices in Dhaka, Colombo and Kathmandu. 2.3 For the year under consideration, the assessee filed its return of income electronically declaring income of ₹ 34,10,82,523/- on 30/09/2010. In the return of income, the assessee claimed deduction u/s 10A of the Act, amounting to ₹ 37,23,15,615/-. The case was selected for scrutiny and notice under section 143(2) of the Act was issued and complied with. The Assessing Officer observed that in the year under consideration, the assessee has entered into international transaction with the AEs as under: International Transactions Name of Associated Enterprises Value (INR) Provision of IT enabled services Amadeus IT Group S.A 216,09,25,127.00 Amadeus Marketing (UK) Ltd. 11,13,900.00 Amadeus Asia Ltd 19,17,160.00 Amadeus Saud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been reimbursed with appropriate markup on such additional marketing expenses. In his order, the learned TPO computed the said more than normal marketing expenses (i.e. bright line) by comparing the advertisement, marketing and promotion expenses (AMP) as a percentage to sales of the assessee with the average AMP% of comparable companies finally selected by him for benchmarking the functions of the assessee. Thereafter, by adding a further markup of 14.88%, the TPO computed the final adjustment on the said brand promotion transactions functions which is summarized as under: S. N. Companies AMP/Sales 1. Accentia Technologies Ltd. 0 2. Cosmic Global Ltd. 0.17 3. Eclerx Services Ltd. 0.2 4. Fortune Infotech ltd. 0.21 5. Igate Global solutions Ltd. 0.28 6. Infosys B P O ltd. 0.12 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer also proposed following addition/disallowances: ( i) Disallowance u/s 10A of ₹ 23,56,47,319/- In the return of income, the assessee claimed deduction u/s 10A of the Act of ₹ 37,23,15,615/-. The said deduction was claimed vis-a-vis data processing/ITeS Activities carried on by the Unit II operated by the assessee. During the course of assessment AO examined following particulars from the segmented profit loss account submitted by the assessee: SI. No. Income Unit-I Unit-ll Total 1 Data processing receipts / Software Export Services 172,23,63,772 27,91,48,215 200,15,11,987 2. IT Support Services 4,08,064 16,45,94,331 16,50,02,395 3. Call Centre receipt 11,13,900 - 11,13,900 4. Other Income 7,89,85,298.11 72,66,491.46 8,62,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is by applying the Bright Line Method. DRP, however, held that the comparable companies selected by the TPO for bench marking the alleged international transaction of brand promotion was not appropriate. DRP directed the TPO to conduct a fresh search. The following companies were finally selected by the TPO as comparable: S. No. Name of the Company AMP/Sales% 1. Accel Frontline Services Ltd. 0.14 2. Indian Railway Catering Tourism Corporation Ltd. 1.3 3. Mukta Arts Ltd. 0.42 4. Nikmo Entertainment Ltd. 4.6 5. Odyssey Corporation Ltd. 0.00 6. Overseas Development Employment Promotion Consultants 0.36 7. Overseas manpower Corporation ltd. 0.68 8. Rangappa Kamat Group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 2.75 34. Datamatrics Financial Services Ltd. 2.71 35. Jeevan Softech Ltd. 1.22 AVG 1.25 The DRP also upheld the use of a mark-up of 14.88% in identifying the arm s length price of the alleged excessive bright lines spent. During DRP proceedings it was claimed by the assessee that out of the total AMP expenditure of ₹ 73,22,79,463/- debited by it in the P L Account, payment of incentives to travel agents was ₹ 67,38,69,124/. It was claimed by the assessee that the payment of incentive was a selling expense and hence it should not form part of the AMP expenditure. In support of the claim assessee relied upon orders passed by ITAT in its own case for AYs 2007-08 2008- 09. This contention was, also rejected by the DRP observing/concluding as under:- The taxpayer has relied upon the decision of Hon ble ITAT wherein such expenditure has not been included in the AMP adjustment. This Panel has verified and ascertained that on this issue department has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer dated 23/02/2015, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 3. The ground No. 1 and 2 of the appeal being general in nature, we are not required to adjudicate specifically and accordingly dismissed as infructuous. 4. In grounds No. 3 and 4, the assessee has challenged adjustment on account of AMP expenses. 4.1 Before us, the learned counsel submitted that issue in dispute is covered in favour of the assessee by the order of the Tribunal for assessment year 2009-10 i.e. immediately preceding year. The Ld. counsel submitted that in the year under consideration, the learned TPO has relied on the same agreement between the assessee and AE, which was relied by the TPO in assessment year 2009-10. He further submitted that order of the Tribunal in assessment year 2009-10 has been further upheld by the Hon ble jurisdictional High Court and therefore issue being covered in favour of the assessee, the ground of the assessee might be allowed. 4.2 On the other hand, the Ld. CIT(DR) referred to page 2 of the TPO s order and submitted that assessee was engaged primarily in providing data processing and related activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and held that in the case of the assessee incurring of alleged abnormal AMP expenses is not an international transaction. 4.4 We have heard the rival submission and perused the relevant material on record. The Ld. CIT(DR) has argued that that assessee being only service provider, the abnormal AMP expenses has benefited the Amadeus brand of AE only and thus apparently it constituted an international transaction between the assessee and the AE. There might be some substance in the arguments of the Ld. CIT(DR), however, the issue in dispute has already been adjudicated by the Tribunal in ITA No. 1804/Del/2009 in immediately preceding assessment year i.e. 2009-10 as under: 8. We have considered the submissions made by the parties and have also perused the material available on record. Undisputedly the main data processing and subsidiary distribution activities of the appellant have been held to be at ALP applying TNMM. Provision of IT enabled services to AE under the agreement has been thoroughly benchmarked by TPO. MAM being TNMM has not been doubted and after an in-depth analysis of comparable companies selected by the appellant and by tinkering with same the Ld TPO has g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, we would like to state that since facts necessary to determination are on record the law laid down by Hon ble Jurisdictional High Court has to be given effect to. It is not even the argument of Ld CIT(DR) that any fresh fact is required for such a determination. Under the circumstances a direction for remand is not called for. Hon ble Jurisdictional High Court in various cases have highlighted the tests to be applied for ascertaining whether there exists a transaction for brand promotion in a particular case. Ld AR has impartially summarized the relevant propositions from these decisions in his note, which we have reproduced above. We find that in the cases of Maruti Suzuki India Ltd. (supra), Whirlpool of India Ltd. (supra), Bausch Lomb Eyecare (India) (P.) Ltd. (supra) Hon'ble High Court on the issue of AMP expenses has deliberated upon extensively on each and every argument raised by the TPO/DRP and has analyzed the same threadbare. We would like to reproduce relevant portion of the judgment of Bausch Lomb Eyecare (India) (P.) Ltd. s case (supra) as under: 53. A reading of the heading of Chapter X [ Computation of income from international transactions having re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstance between such other person and the associated enterprise. 56. Thus, under Section 92B(1) an 'international transaction' means- (a) a transaction between two or more AEs, either or both of whom' are nonresident (b) the transaction is in the nature of purchase, sale or lease of tangible or intangible property or provision of service or lending or borrowing money or any other transaction having a bearing on the profits, incomes or losses of such enterprises, and (c) shall include a mutual agreement or arrangement between two or more AEs for allocation or apportionment or contribution to the any cost or expenses incurred or to be incurred in connection- with the - benefit, service or facility provided or to be provided to one or more of such enterprises. 57. Clauses (b) and (c) above cannot be read disjunctively. Even if resort is had to the residuary part of clause (b) to contend that the AMP spend of BLI is any other transaction having a bearing on its profits, incomes or losses , for a 'transaction' there has to be two parties. Therefore for the purposes of the 'means' part of clause (b) and the 'includes' part, of clause(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning of Regulation 20(4)(b) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. In para 44, it was observed as under: The other limb of the concept requires two or more persons joining together with the shared common objective and purpose of substantial acquisition of shares etc. of a certain target company. There can be no persons acting in concert unless there is a shared common objective or purpose between two or more persons of substantial acquisition of shares etc. of the target company, For, de hors the element of the shared common Objective' or purpose the idea of person acting in concert is as meaningless as criminal conspiracy without any agreement to commit a criminal offence. The idea of persons acting in concert is not about a fortuitous relationship coming into existence by accident or chance. The relationship' can come into being only by design, by meeting of minds between two or more persons leading to the shared common objective or purpose of acquisition of substantial acquisition of shares etc. of the target company. It is another matter that the common objective or purpose m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and conjectures and if accepted as such will lead to sending the tax authorities themselves on a wild-goose chase of what can at best be described as a 'mirage1. First of all, there has to be a clear statutory mandate for such an exercise. The Court is unable to find one. To the question whether there is any 'machinery' provision for determining the existence of an international transaction involving AMP expenses, Mr. Srivastava only referred to Section 92F(ii) which defines ALP to mean a price which is applied or proposed to be applied in a transaction between persons other than AEs in uncontrolled conditions , Since the reference is to 'price' and to 'uncontrolled conditions' it implicitly brings into play the BLT. In other words, it emphasises that where the price is something other than what would be paid or charged by one entity from another in uncontrolled situations then that would be the ALP. The Court does not see this as a machinery provision particularly in light of the fact that BLT has been expressly negative by the Court in Sony Ericsson. Therefore, the existence of an international transaction will have to be established de-hors the BLT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estic transaction involving two or more related parties, reference may be made to Section 40A(2)(a) under which certain types of expenditure incurred b. way of payment to related parties is not deductible where the AO is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods. In such event, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. The AO in such an instance deploys the 'best judgment' assessment as a device to disallow what he considers to be an excessive expenditure. There is no corresponding 'machinery, provision in Chapter X which enables an AO to determine what should be the fair 'compensation' an Indian entity would be entitled to if it is four: that there is an International transaction in that regard. In practical terms absent a-clear statutory guidance, this may encounter further difficulties The strength of a brand, which could be product specific, may be impacted by numerous other imponderables not limited to the nature of the industry, the geographical peculiarities, economic trends both international and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which 46% revenue is being shared by Amadeus Spain with the appellant and hence it is difficult to visualize that appellant will not be incurring routine advertisement expenses in its entrepreneur capacity. Excluding payment of incentives, which in earlier years have been held, to be pure selling expenses the ratio of AMP/Sales of the appellant is mere 2.29%. Ld AR is also right in relying upon the decision of Hon ble Jurisdictional High Court in case of Sony Mobile Communications (supra) for submitting that events which would transpire on termination of distribution might require a TP adjustment at that stage but the same will be immaterial to presume existence of an agreement, arrangement or understanding in the year under consideration. In this regard Hon ble High Court at para 153 of its reported judgment has been pleased to be hold as under: 153. Economic ownership of a brand is an intangible asset, just as legal ownership. Undifferentiated, economic ownership brand valuation is not done from moment to moment but would be mandated and required if the assessed is deprived, denied or transfers economic ownership. This can happen upon termination of the distribution-cum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '. In other words, there cannot be a presumption that in the present case since WOIL is a subsidiary of Whirlpool USA, all the activities of WOIL are in fact dictated by Whirlpool USA. Merely because Whirlpool USA has a financial interest, it cannot be presumed that AMP expense incurred by the WOIL are at the instance or on behalf of Whirlpool USA. There is merit in the contention of the Assessee that the initial onus is on the Revenue to demonstrate through some tangible material that the two parties acted in concert and further that there was an agreement to enter into an international transaction concerning AMP expenses. 46. As already mentioned, merely because there is an incidental benefit to Whirlpool USA, it cannot be said that the AMP expenses incurred by WOIL was for promoting the brand of Whirlpool USA. As mentioned in Sassoon J. David (supra) the fact that somebody other than the Assessee is also benefited by the expenditure should not come in the way of an expenditure being allowed by way of a deduction under Section 10(2)(xv) of the Act (Indian Income Tax Act, 1922) if it satisfies otherwise the tests laid down by the law 8.4 Considering the material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 5 and 6 of the appeal pertains to an adjustment of ₹ 37,11,076/- on account of notional interest attributable to delayed payments receivable from the AE. 5.1 The Ld. counsel of the assessee submitted that the Tribunal in assessment year 2009-10 has held that no ALP adjustment can be made in respect of delay in realization of sale proceeds. He said that issue in dispute is covered by the order of the Tribunal for assessment year 2009-10 in favour of the assessee and the Revenue has not filed any further appeal before the Hon ble High Court against the said finding of the Tribunal and accordingly requested for deletion of addition in dispute. 5.2 Ld. CIT(DR), on the other hand, relied on the finding of the lower authorities and submitted that any receivable outstanding more than the normal period of the trade, per se is an international transactions and should be benchmarked. 5.3 We have heard the rival submission and perused the relevant material on record. We find that the Tribunal (supra) in assessment year 2009-10 has adjudicated the issue in dispute as under: 11. We have considered the arguments advanced by the parties and perused the material availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure with interest on account of delay in realization of debts, even if so, is not too common an occurrence and more of exceptions than the rule. The apprehensions of the revenue are purely hypothetical and, therefore, devoid of legally sustainable merits. [Para 16] In view of these discussions, as also bearing in mind entirety of the case, no ALP adjustments can be made, in respect of delay in realization of sale proceeds. Such being conclusion, there is no need to address the specific factual arguments advanced by the assessee in effect thus the grievance of the assessee, is upheld and direct the Assessing Officer to delete the impugned arm's length price adjustment [Para 17] Explanation to section 92B There is, however, one more aspect of the matter for which the impugned ALP adjustment must be deleted. [Para 19] It is noted that everything hinges on application of Explanation to section 92B, vide Finance Act 2012, though with retrospective effect from 1-4- 2002. [Para 20] The amendment so made by the Finance Act, 2012, stated to be with retrospective effect 1-4-2002, inserts an Explanation to section 92B. In plain words, this amendment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um. However, if the 2012 amendment does increase the scope of international transaction under section 92B, there is no way it could be implemented for the period prior to this law coming on the statute, i.e., 28-5-2012. The law is well settled. It does not expect anyone to perform an impossibility. [Para38] It is for this reason that the Explanation to section 92B, though stated to be clarificatory and stated to be effective from 1-4- 2002, has to be necessarily treated as effective from at best the assessment year 2013- 14. In addition to this reason, in the light of Delhi High Court's guidance in the case of DIT v. New Skies Satellite BV [2016] 382 ITR 114/68 taxmann.com 8 also, the amendment in the definition of international transaction under section 92B, to the extent it pertains to the issuance of corporate guarantee being outside the scope of 'international transaction' cannot be said to be retrospective in effect. The fact that it is stated to be retrospective, in the light of the aforesaid guidance of Delhi High Court would not alter the situation, and it can only be treated as prospective in would not alter the situation, and it can effect i.e. with effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer. 6.2 Learned counsel of the assessee submitted before us that issue in dispute is covered in favour of the assessee by the order of the Tribunal (supra) in assessment year 2009-10, which has been further upheld by the Hon ble jurisdictional High Court in ITA 154/2017 dated 22/05/2017. 6.3 Learned CIT(DR), on the other hand, relied on the order of the Assessing Officer and the DRP and submitted that activity of the relevant unit of the assessee is not eligible for deduction under section 10A of the Act. 6.4 We have heard the rival submission and perused the relevant material on record. We find that Tribunal (supra) while adjudicating the issue of deduction under section 10A of the Act, in para-15 of the order, has relied on the coordinate bench decision in assessee s own case for assessment year 1996-97 and 1997-98 and also decision of the Tribunal in the case of M/s Interglobe Technology Contents Private Limited for assessment year 2007-08 to assessment year 2010-11 in ITA Nos. 419/Del/2011, 5830/Del/2011, 1463/Del/2013 and 6144/Del/2013. The relevant finding of the Tribunal is reproduced as under: 15.1 Above conclusions of coordinate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration crucial fact that director of appellate company Shri Ankur Bhatia is a Software Engineer with 16 years of experience. Moreover division wise break up of total employee strength has also partially been reproduced by Ld DRP in its order. Appellant vide submissions dated 29th November 2011 has submitted following details: Division wise break up of total staff strength Operations 518 Accounts / Admin 40 Business Development 103 Marketing and corporate communication 8 Utility Staff 13 Total 747 Name of division No. of software engineers in the division No.of software engineers in the division No. of data processors / other personnel providing services eligible u/s 10A No. Minimum required qualification No. Minimum required qualification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es had exceeded the limits prescribed for it by the Reserve Bank of India. As long as the Indian Officers were conducting the operations within the restricted area and so long as those activities were not considered by the Reserve Bank of India, which is the concerned authority as amounting to anything other than carrying on of liaison work no inference adverse to the assessee can be drawn or is possible to draw. To repeat what all that was done by the assessee fell within the parameters of supplying of information which is preparatory to and auxiliary to the formation of the final contracts. Appellant has clarified above that like earlier years in the year under consideration also the sole activity carried on by it was that of providing the travel agents an access to the Amadeus CRS System by rendering ITeS data processing services. Facts on record also show that the appellant has not carried on any distribution functions though the agreement provided for same DRP s action in the present case is motivated by the distribution part of agreement which was not actually carried on by the appellant. Since fee to be paid to appellant as per Annexure A of the agreement was de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the FAR analysis of the DAPE, minus the payments attributable in respect of such activities. In simple words, whatever are the revenues generated on account of functional analysis of the DAPE are to be taken into account as hypothetical income of the said DAPE, and deduction is to be provided in respect of all the expenses incurred by the GE to earn such revenues, including, of course, the remuneration paid to the DA. The second taxable unit in this transaction is the DA itself, but this taxability is in respect of the remuneration of the DA. The provisions of the tax treaty are silent on this issue, and rightly so, because the taxability of the DA is quite distinct of the taxability of the enterprise of the contracting state which is in respect of PE of such an enterprise. At the cost of repetition, it is not the DA who constitutes PE of the GE, but it is by the virtue of a DA that the GE is deemed to have a PE, a DAPE though, in the other contracting state. We are of the considered view that in addition of the taxability of the DA in respect of remuneration earned by him, which is in accordance with the domestic law and which has nothing to do with the taxability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same the income of the appellant for assessment years 1997-98 and 1998-99 will be 'Nil'. 15.4 Before concluding we would like to mention over here that identical issue had also came up for the consideration of the Tribunal in case of M/s Interglobe Technology Quotient Private Limited for AYs 2007-08 to 2010-11 in ITA Nos. 419/Del/2011, 5830/Del/2011, 1463/Del/2013 and 6144/Del/2013. Vide order dated 26th July 2016 division bench of this Tribunal allowed the claim for deduction u/s 10A of the Act by M/s Interglobe Quotient, which is a competitor of the appellant. Both the assessees have similar business model and are rendering data processing activity. Factual allegations levied by the authorities below are also same. In the said order, after following Tribunal s decision of appellant for AY 1996-97 (supra), the Tribunal has opined as under: We find that the learned CIT(Appeals) while dealing with the issue has basically followed the decision of the IT AT in the case of Amadeus India (supra). He has elaborately discussed the terms of distribution agreement between the assessee and Galileo and has compared the activities of the assessee with that of Amadeus Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to it in any particular assessment year, held the IT AT. The IT AT in that case also noted some material facts that assessee company submits their monthly returns for export to the competent authority which has accepted the same in discharge of export obligation. The ITAT noted further that the export of software as per the statutory requirement are also declared on exporters declaration form SOFTES (specimen of SOFTES Form has been filed). The competent authority Le., Department of Electronics authorized official also certified that the software described in the SOFTES form was actually transmitted and the export value declared by the exporter has been found to be in order and accepted by the authorized officer. Similar are the functions of the assessee in the present case before us and similar types of certificates have been issued to the assessee about the transmission of software and the export value declared by the exporter has been found to be in order and accepted by the authorized officer. We are thus of the view that the Learned CIT(Appeals) was justified in equating the facts of the present case with that of the Amadeus India, also in the same line of business and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adeus or Galileo. These groups had evolved and were maintaining a computer reservation system (CRS), the requisite software and a huge database comprising a variety of information relating to several airlines and other travel services provides, for providing international travel related facilities. The core computer system/server were established at overseas locations at US, Germany or Spain as the case may be. The travel agent, with a computer, merely accesses or utilizes travel information drawn from the data base of the computers. The travel agent also adds to, and alters the data available on the computer when he books a ticket (or other travel facilities like cab services, accommodation at hotels/resorts etc.) for a customer by feeding in the data regarding the customer such as airlines, hotel, local travel fare, tickets, the several intermediary and eventual destination; and the nature of services to be provided etc. This data enters the composite data based stream and becomes available to other operators via computers operating on Amadeus or Galileo system, all over the world, whenever a fulfilling transactions occurs at the travel agents end. The assessee s role like the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. DCIT (supra) deciding the issue of holding of any permanent establishment of Galileo International Inc. in India to examine its income to be taxable in India. This decision of the IT AT has been upheld by the Hon ble High Court. 7.8 The Hon ble Delhi High Court in the case of CIT vs. M.L. Outsourcing Services (P) Ltd. (supra) in the para No. 9 of the decision has been pleased to make observation on the CBDT Notification No. S0890(E) dated 26.09.2000 in relation to deduction under sec. 10A, reproduced as under: 9. A perusal of the said notification would indicate that the Board has included several distinct types of services under the expression, product or services in the fifteen clauses. The Board, in the notification has understood that product or services, to be included within clause (b) of Explanation 2 to Section 10A, need not be computer software as understood in the common parlance of even customized electronic data, as generally understood. Any product or service of similar nature would include in its ambit, product and services which were enabled by, i.e. would rely upon, or are driven by information technology. This becomes clear when we refer to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly allowed in favour of the assessee. 7. In ground Nos. 10 and 10.1, the assessee has challenged disallowance of ₹ 7,10,677/- under section 14A of the Act read with rule 8D of the Income Tax Rules. 7.1 Before us, the Ld. counsel of the assessee submitted that in the year under consideration no tax-free income was earned by the assessee and hence disallowance under section 14A was not applicable in view of the decision of the Hon ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT reported in 378 ITR 33(Del). 7.2 The Ld. CIT(DR) though relied on the finding of the lower authorities, he could not controvert the fact that there was no tax-free income earned during the year. 7.3 We have heard the rival submission and perused the relevant material on record including the decision of the Hon ble Delhi High Court in the case of Cheminvest Ltd (supra). The finding of the Hon ble High Court is reproduced as under: 23. In the context of the facts enumerated hereinbefore the Court answers the question framed by holding that the expression 'does not form part of the total income' in Section 14A of the envisages that there should be an actual rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to consider the issue-in-dispute in the light of the decision cited by the assessee. 8.4 We have heard the rival submission and perused the relevant material on record. In the instant case the fact that the interest was withdrawn in the year under consideration itself or in the subsequent year, is not clear from the order of the authorities below. It is also not clear what is the amount which has been withdrawn subsequently. The relevant ITNS-150 has not been produced before us. In the facts and circumstances of the case, we feel it appropriate to restore the issue to the file of the Assessing Officer for adjudication after appreciation of the facts and in the light of the decision cited by the Ld. counsel of the assessee. The assessee shall be afforded adequate opportunity of being heard. The ground of appeal is accordingly allowed for statistical purpose. 9. The ground No. 12 being consequential in nature, we are not required to adjudicate upon. 10. The ground No. 13, being general in nature we are not required to adjudicate upon. 11. In the result, appeal of the assessee is allowed partly for statistical purposes. The decision is pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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