TMI Blog2019 (1) TMI 1732X X X X Extracts X X X X X X X X Extracts X X X X ..... with their business as claimed by the assessee (at 1/5th) - CIT(A) failed to note that the expenditure incurred by the assessee is for the purpose of warding of competition and hence the same is to be disallowed as capital in nature - HELD THAT:- We find that the facts of this issue are incomplete and further investigation of facts regarding application of 35DD or otherwise is required. The Tribunal being the final fact finding body, it becomes imperative that the issue should be churned afresh to cull out the exact facts of an issue. Hence, we restore this issue to the file of the Assessing Officer. The decisions relied on by both the parties on the issue shall be taken into consideration by the Assessing Officer. The Assessing Officer shall decide the issue anew after giving opportunity of hearing to the assessee. The grounds raised by the Revenue are allowed for statistical purposes. - I.T.A Nos. 2297, 2298, 2299 & 2300/Mds/2008, I.T.A Nos. 283, 284 & 285/Mds/2009 - - - Dated:- 28-1-2019 - DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER Assessee by : Shri V.D. Gopal Department by : Shri K.E.B Rengarajan, Jr. Standing Counsel OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be reduced from the export turnover. The ld. CIT(A) has deleted this addition by following the Tribunal orders by the time the decision of Special Bench has also come, which confirms the finding of the ld. CIT(A) that development of product is different from rendering of technical services and therefore, it is not required to be excluded from the export turnover. Consequently, by respectfully following the Special Bench decision(supra)we cannot allow the grounds raised by the Revenue. 4. In the result, the Revenue s appeal in I.T.A.No.283/Mds/2009 for assessment year 2001-02 stands dismissed. 5. In assessee s appeal, I.T.A.No. 2297/Mds/2008, for assessment year 2001-02, the first issue relates to reopening of assessment u/s 147 r.w.s 148. The ld. CIT(A) has discussed this issue in para 4 and 4.2 of his order and has given his finding in para 5.4 of his order. We are in agreement with the ld. CIT(A) as the Assessing Officer has formed the opinion that income to that extent has escaped assessment. Para 5.4 of the ld. CIT(A) s order is extracted as under: I have considered the issue carefully and I am inclined to follow my predecessor on this issue. Further the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. In the assessee s appeal, in I.T.A.No. 2298/Mds/2008, the first issue is regarding reopening of the assessment u/s 147 r.w.s 148 of the Act. We cannot allow this ground in view of the reasoning that the Assessing Officer has formed his opinion on the basis of objective material available with him and therefore, the assessment was validly reopened, after recording valid reasons as per the law. 12. The second issue raised vide Ground No. IV relates to exclusion of ₹ 32,34,01,504/-, being expenses incurred in foreign currency on onsite development which were excluded from export turnover. In this regard, the perusal of the ld. CIT(A) s order which has been appealed against, it is found that the ld. CIT(A) has already given direction to the Assessing Officer to verify this fact and allow the claim if it is in the line of the ground raised before him. It was stated by the ld.AR at the time of hearing that the Assessing Officer has verified and allowed the relief. Therefore, no grievance survives in this regard. Consequently, we dismiss this ground of appeal as cause of action does not survive any longer. 13. The next issue relates to expenditure on foreign travel am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the ld.AR in order and consequently, by following the Hon'ble Supreme Court s decision as well as the other decisions of the Tribunal relied on before us, we confirm the finding of the ld. CIT(A) on this issue and dismiss Ground No.2 of this appeal raised by the Revenue. 18. The next issue raised vide ground No.3 of this appeal of the Revenue relates to expenditure incurred in foreign exchange on onsite development of computer software . This issue stands covered in favour of the assessee by the Special Bench decision referred to above. Hence, we decide this issue in favour of the assessee and dismiss the ground raised by the Revenue. 19. Ground No.4.1 and 4.2 of this appeal read as under: 4.1 The ld. CIT(A) erred in directing the Assessing Officer to allow the expenses claimed by the assessee with regard to taking over of contracts with clients alongwith their business as claimed by the assessee (at 1/5th) 4.2 The ld. CIT(A) failed to note that the expenditure incurred by the assessee is for the purpose of warding of competition and hence the same is to be disallowed as capital in nature. 20. The facts of this issue are that the assessee company h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue anew after giving opportunity of hearing to the assessee. The grounds raised by the Revenue are allowed for statistical purposes. 22. In the result, the appeal of the Revenue for assessment year 2004-05 is partly allowed for statistical purposes. 23. In assessee s appeal in I.T.A.No.2299/Mds/2008, the following grounds have been raised: I. The order of the learned CIT 'Appeals' to the extent it is against the appellant is contrary to law, facts of the case and the materials available on record. II. In the facts and circumstances of the case the learned CIT 'A' should have been pleased to allow the appeal in full directing the assessing officer to accept the income returned. III. a) The learned CIT 'A' erred in confirming the action of the assessing officer in excluding ₹ 2,15,18,654/ - as not forming part of export turnover, who had excluded the above amount erroneously thinking that the amount represented expenses incurred in foreign exchange in providing technical services out side India. b) The learned CIT 'A should have been pleased to hold particularly in view of the various ITAT decisions, that expenses incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the facts and circumstances of the case the learned CIT 'A' should have been pleased to allow the appeal in full directing the assessing officer to accept the income returned. III. a) The learned CIT 'A' erred in confirming the action of the assessing officer in excluding ₹ 8,46,55,916/ - as not forming part of export turnover, who had excluded the above amount erroneously thinking that the amount represented expenses incurred in foreign exchange in providing technical services out side India. b) The learned CIT 'A should have been pleased to hold particularly in view of the various ITAT decisions, that expenses incurred in foreign exchange were incurred for earning profits and gains on the onsite development of computer software including services for development of software outside India at the client's place, within the meaning of explanation 3 to Sec.10B(8) of the Income Tax Act, 1961. c) Assuming without conceding that the sum of ₹ 8,46,55,916/- deserves to be excluded from the export turnover, the CIT 'A' should have also directed the assessmg officer to exclude the above sum from the total turnover, especially whe ..... 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