TMI Blog2018 (9) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee’s own case for the A.Y. 2006-07 [2014 (4) TMI 1224 - BOMBAY HIGH COURT] the facts pertaining to the assessee's business of software development, the charges and which are claimed to have incurred, are in relation to the business of software development within India. They could not be said to be costs deductible from export turnover for the purposes of Section IDA of the Act, in such circumstances, we are of the opinion that any wider controversy or larger question does not' require any answer. We can leave that aspect open/for the decision in an appropriate case. In the facts and circumstances of the present case and in relation to the business of assessee before us, it is not necessary to go into the other Contentions raised before us by the revenue. Deduction of tele-communication and satellite link charges from Export turnover for the purpose of computing deduction u/s 10A - Held that:- As decided in assessee's own case [2011 (5) TMI 509 - ITAT, MUMBAI ] since we have held that these expenses have been incurred in the business of software development in India, these could not be considered as expenditure attributable to delivery of computer software outside India. We t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educting foreign currency expenses amounting to ₹ 114,299,979/- from the Export Turnover for the purpose of computing deduction u/s 10A. 16. The Ld. AO/DRP erred deducting Insurance expenses amounting to ₹ 3,452,624 from the exportturnoverfor the purpose of computing deduction u/s 10A. 17. The Ld. AO/DRP erred in deducting telecommunication and satellite link charges amounting to ₹ 25.372,166 from the export turnover for the purpose of computing deduction u/s 10A. 18. Without prejudice to the above three grounds, the Ld. AO/DRP erred by not appreciating the fact that if the above expenses should be excluded from the export turnover then the same should be excluded from the total turnover also. Disallowance on account of write off advances provided to employee 19. The Ld. AO/DRP erred in not allowing a deduction of ₹ 2,720,457 with respect to write off of advances provided to employees in the course of business. Interest u/s 234B and 234C of the Act 20. The Ld. AO erred in levying interest u/s 234B and 234C of the Act. Initiation of penalty u/s 271(1)(c) of the Act 21. The Ld. AO erred in initiating penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side India quot; are not present in the second limb of the definition regarding the expenses incurred in foreign exchange. Therefore, CG India submitted that the second exclusion in respect of expenses incurred in foreign exchange would not be applicable in respect of export turnover from delivery of computer software outside India. Since, the assessee is engaged in development and export of computer software and not in provision of technical services outside India, the second exclusion would not be applicable in CG India facts at all. 31. Ld. Counsel submitted that this issue is covered by the decision of Tribunal in assessee s own case for the assessment year 2009-10wherein it is held it is similar to issue of telecommunication expenses and accordingly, decision of Bombay High Court will be followed. Thus, respectfully following the order of the Hon ble Bombay High Court and the ITAT decision for AY 2009-10 we set aside the orders of the revenue authorities and direct the AO to delete the disallowance and compute the exemption as per law. 5. The said decision has been taken by the Hon ble ITAT in view of the decision of the ITAT in the assessee s own case for the A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation of section 10A. The assessee explained that it was incurred in the business of development and export of computer software. The software development work was carried out in India at its development centers in India and also in some cases on sites. The assessee was not engaged in any technical services outside India. It did not incur any freight expenses. It explained that the telecommunication charges were incurred in the business of software development at the software undertakings of the assessee in India. The alternate argument was that the exercise that the assessee had undertaken was justified in the light of the law laid down by the Tribunal and particularly the Special Bench in the case of Income Tax Officer v/s Sak Soft Ltd, reported in 313 ITR (AT) 353. Reliance was also placed upon a judgment of this Court in the case of Commissioner of Income Tax v/s Gem Plus Jewellery India Ltd, reported in (2011) 330ITR 175 (Bom). The Tribunal may have discussed the alternate contention but what it has expressed on primary contention, according to us, does not raise any substantial question of law. The primary contention was that the expenses which the Assessing Officer desire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue has squarely covered by decision of the Hon ble ITAT in the above mentioned cases, therefore, by honoring the observation made by the Hon ble ITAT in the assessee s own case in ITA. Nos. 7099/M/2012 (IT(TP) A 540/M/2014. We decide this issue in favour of the assessee against the revenue. ISSUE NO.16:- 7. Under this issue the assessee has challenged the confirmation of deduction of Insurance expenses amounting to ₹ 3,452,624/- from the Export turnover for the purpose of computing deduction u/s 10A of the Act. The Ld. Representative of the assessee has also argued that this issue has already been adjudicated by Hon ble Bombay high court in the assessee s own case for the A.Y. 2006-07 in ITA. No.2501 of 2011 dated 30.04.2014, therefore, in the said circumstances, the claim of the assessee is liable to be allowed. Before going further, we deemed it necessary to advert the finding of the Hon ble Bombay High Court which has been given at para no.7 reproduced as under: - 7 Upon perusal of paragraphs 3 and 4 of the order under challenge, we find much substance in the argument of Mr. Jasani. The dispute/was regarding deduction of data line costs from export turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. They could not be said to be costs deductible from export turnover for the purposes of Section IDA of the Act, in such circumstances, we are of the opinion that any wider controversy or larger question does not' require any answer. We can leave that aspect open/for the decision in an appropriate case. In the facts and circumstances of the present case and in relation to the business of assessee before us, it is not necessary to go into the other Contentions raised before us by the revenue. 8. Since this issue has squarely covered by decision of the Hon ble Bombay High Court in the above mentioned case, therefore, by honoring the observation made by the Hon ble Bombay High Court in the assessee s own case in ITA. No.2501 of 2011 dated 30.04.2014. We decide this issue in favour of the assessee against the revenue. ISSUE NO.17:- 9. Under this issue the assessee has challenged the confirmation of deduction of tele-communication and satellite link charges amounting to ₹ 25,372,166/- from Export turnover for the purpose of computing deduction u/s 10A of the Act. The Ld. Representative of the assessee has argued that this issue has already been covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een upheld on the basis of the decision of the ITAT for the A.Y. 2006-07 in ITA. No.7729/M/2010 dated 25.05.2011. The Hon ble ITAT has also decided the issue in favour of the assessee for the A.Y. 2008-09 in ITA. No.799/M/2012 and for the A.Y. 2009-10 in (IT(TP)A 540/M/2014) dated 21.11.2014. Since this issue has squarely covered by decision of the Hon ble ITAT in the assesse s own case mentioned above (supra). Therefore, this issue is being decided in favour of the assessee against the revenue. ISSUE NO.18:- 11. This issue has been taken by the assessee in alternate ground raised before us. Since ground no 14 to 17 have been adjudicated in favour of the assessee, therefore, there is no need to decide this issue being academic in nature. ISSUE NO.19:- 12. Under this issue the assessee has decided the confirmation of the disallowance of ₹ 27,20,457/- with respect to the write off of advances provided to employees in the course of business. It is argued by Ld. Representative of the assessee that the advances were given to employee (who left the organization) and the advances were not recovered, therefore, the same is revenue in nature and hence the expenses are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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