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TMI Blog2023 (3) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... unting to Rs.211,80,72,024/-. The assessment was selected for scrutiny and notice under Section 143(2) of the Act was issued on 01.09.2015. The assessment was concluded under Section 143(3) of the Act vide order dated 20.12.2016 by making following additions/disallowances to the total income: - i) By denying the claim of depreciation of Rs.28,67,245/- on goodwill; ii) By denying the claim of allowance towards provision for discounts of Rs.29,00,00,000/- without however considering the enhanced income for deduction under Section 10AA; iii) By excluding insurance charges of Rs.2,53,00,297/- from export turnover in computing under section 10AA of the Act; iv) By excluding telecommunication charges of Rs.7,98,45,983/- from export turnover in computing deduction under Section 10AA of the Act. 3. Aggrieved by the assessment order the assessee filed appeal before the first appellate authority. The CIT(A) vide the impugned order dated 28.09.2022 partly allowed the appeal of the assessee. 4. Aggrieved by the order of the first appellate authority the Revenue has filed the present appeal before the Tribunal and the assessee has filed the CO. We shall take up for adjudication the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as dismissed by ITAT vide order dt. 31.10.2012 in ITA No., 80/Bang/2012 (in Mindtree Consulting Ltd., the earlier name of the appellant). Considering the above, following the decision of the ITAT on this issue in appellant's own case on identical facts, the disallowance made by the AO is deleted and the ground of appeal 3(1) as raised by the appellant is allowed. The grounds of appeal 3(8) and 3(9) become academic and as such the same are not being adjudicated." 8. The Revenue, being aggrieved, has raised this issue before the Tribunal. We have heard the rival contentions and perused the material on record. On identical facts the Bangalore Bench of the Tribunal in assessee's own case for AY 2004-05 (supra) had accepted the claim of the assessee that provisions for discount is an allowable expenditure. The relevant findings of the Bangalore Bench of the Tribunal read as follows: - 5. Coming to the Revenue's appeals, we find that the grounds raised by the Revenue are against the order by the learned CIT (Appeals) in directing the Assessing Officer to delete the disallowance of provision for discount, provision for warranty and to treat the software purchased as Revenue in nature. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent Assessment Years 2005- 06 to 2007-08 and also that the assessee has discharged the said provision fully in the subsequent years. By following the decision of the Hon'ble Supreme Court in the case of BEML Vs. CIT (2000) 245 ITR 428 (SC), the learned CIT (Appeals) granted relief to the assessee. Aggrieved the Revenue is in appeal before us. 8. The learned Departmental Representative while supporting the order of the Assessing Officer, submitted that the assessee is following Mercantile System of Accounting and there is no scientific or systematic method followed by the assessee for making the provision for discount, the same cannot be allowed. He submitted that the assessee has not incurred such expenditure during the year under consideration and therefore the provision created is very much a contingent liability and not allowable under the Act. 9. The learned counsel for the assessee, on the other hand, supported the order of the learned CIT (Appeals) and submitted that the assessee gives discount to the customers based upon the volume of the sale and after reaching a specified target. He submitted that by following the matching principle of Revenue, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal raised by the Revenue. It is ordered accordingly. CO No. 1/Bang//2023 - AY 2014-15 10. The grounds raised by the assessee in the CO read as follows: - "1. The Order of the Learned Commissioner (Appeals) (in so far as same is prejudicial to the Assessee] is not justified in law and on facts and circumstances of the case. 2. As regards exclusion of insurance charges of Rs. 2,53,00,297/-from the export turnover for computing 10AA deduction: 2.1. The Learned Commissioner (Appeals) is not justified in upholding the action of the Learned Assessing Officer in excluding insurance charges of Rs. 2,53,00,297/- from the export turnover while computing deduction under section 10AA of the IT Act when the same does not warrant exclusion from export turnover under Explanation 1 (i) to section 10AA of the IT Act. 2.2. The Commissioner (Appeals) Officer has failed to appreciate that the phrase used in the Explanation l(i) to section 10AA "does not include" and not "to be reduced by". The said phrases have different connotations. The phrase "does not include" deals with the items which by trade practice or contractual terms or accounting treatment are considered as components of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India;" 13. In ground Nos. 2.3 and 2.4 the assessee submits that insurance charges incurred were not attributable to delivery of computer software outside India and no exclusion could have been made from the export turnover of the assessee. From reading of the above Explanation 1(i) to Section 10AA of the Act, we are of the view that the use of term 'attributable' makes it clear that only so much of insurance charges as would relate to delivery of computer software outside India should be excluded. In the instant case the insurance charge is accounted under 'other expenses' in Schedule 3.7 of the P&L Account. The breakup of insurance charge as per the P&L Account are as follows: - Particulars Amount Property Insurance 40,65,484 Liability Insurance 3,50,04,090 Overseas Travel Insurance Direct 5,68,198 Total 3,96,37,772 14. From the above it is evident that the insurance charges incurred by the assessee are not attributable to delivery/export of computer software outside India. The AO and CIT(A) have failed to appreciate that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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