TaxTMI 
TaxTMI 
2015 (3) TMI 850
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....id to Gartner, Australia and Rs. 3,67,032/-paid to Gartner, U.K. (in all 1,20,49,628/-) towards subscription service is an allowable deduction despite the assessee failing to deduct tax at source. u/s. 195 of the Act and contrary to Section40(a)(i) of the Act? (3) Whether the Appellate Authorities were correct in holding that expenditure due to exchange rate variation arising in foreign currency and exchange variation (EEFC) of Rs. 32,61,803/- is not deductible either from export turnover or total turnover when computing deduction u/s.80HHE of the Act? (4) Whether the Appellate Authorities were correct in holding that expenditure towards travel expenses, professional charges, maintenance allowance and other expenses in foreign currency of Rs. 8,46,36,076/- is not deductible either from export turnover or total turnover when computing deduction u/s.80HHE of the Act? (5) Whether the Appellate Authorities were correct in holding that payments of Rs. 10,39,88,322/- paid to M/s AT&T and MCI Telecommunications towards downlinking charges cannot be excluded from export turnover as well as total turnover for the purpose of computation of deduction u/s.10A of the Act? (6) Whether the Ap....
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.... Income Tax Act. Following the said judgment, when there was no liability to deduct the TDS in respect of the aforesaid transaction, the tribunal has rejected the case of the Revenue. It is submitted that against the order dated 12.08.2005, the revenue has preferred a Special Leave Petition to the Apex Court. However as on today when it has been held in the aforesaid proceedings, the assessee was not in default for non-deduction of tax as the said payment cannot be treated as a royalty, the authorities were not justified in disallowing the expenditure. Therefore, no fault to be found with the order passed by the tribunal. As the said question arises for consideration in all the three appeals, we do not find any justification to interfere with the said order passed by the tribunal and in fact, no substantial question of law do arise for consideration. Question No.2: Whether the appellate authorities were correct in holding that a sum of Rs. 1,15,71,400/- paid to M/s Gartner- USA, Rs. 1,11,196/-paid to M/s Gartner- Australia and Rs. 3,67,032/- paid to M/s Gartner -U.K. (in all Rs. 1,20,49,628/-) towards subscription charges is an allowable deduction despite the assessee failing t....
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.... set-aside. However, it is submitted that the assessee has preferred a Special Leave Petition against those orders. Therefore, the assessing authority may pass a consequential order, taking note of the judgment of the Apex Court to be rendered. That would meet the ends of justice. The said substantial question of law is answered in favour of the revenue and against the assessee. Question No.3: Whether the appellate authorities were correct in holding that the expenditure due to exchange rate variation arising in foreign currency and exchange variation EEFC of Rs. 32,61,803/- is not deductable either from export turnover or total turnover without computing deduction under Section 80HHE of the Act? The said question arose for consideration before this Court in the assessee's case reported in 2012 (349) ITR, 606 (Kar) where it has been held as under: "We have heard the learned counsel appearing for the parties and scrutinized the material on record. Both the first appellate authority and the Appellate Tribunal have answered the above said substantial question of law in favour of the assessee and against the Revenue. The said concurrent finding arrived at by the authorities is ....
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....ications towards down linking charges cannot be excluded from export turnover as well as total turnover for the purpose of computation of deduction u/s.10A of the Act? A perusal of the order passed by the assessing officer which is produced as Annexure G at page 61,at page 87 - Annexure 2 which deals with computation of deduction under Section 10A, the assessing officer has deducted a sum of Rs. 10,39,88,322/- towards M/s AT&T and MCI Telecommunication expenses both from export turnover and total turnover and therefore, there is no merit in the said question of law as the assessee has already been granted the benefit. Question No.6: Whether the appellate authorities were correct in holding that when computing total turnover the business profits of the entire business of the assessee need not be taken but only that of 80HHE of the Act units should be taken for the purpose of computation of deduction u/s.80HHE of the Act? This question arose for consideration before this Court in ITA 521/2007 decided on 19.12.2013 in the case of The Commissioner of Income-Tax vs. Sasken Communication Technologies Limited where it has been held that the total turnover of the business referred to u....
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....ect of post sale customer service and has laid down the' principles pertaining to the same. In Rotork Controls India (P.) Ltd's case stated (Supra) the Hon'ble Supreme Court has considered the principles laid down having regard to the facts of the said case and has stated that in each case all the conditions to be satisfied are to be considered. 11. On perusal of the order passed by the Tribunal we find that the above said factors which are required to be satisfied, have not been considered by the Tribunal and the Tribunal has only considered the past experience and the expenses incurred in the previous year, on the basis of which the claim was made. Under the circumstances, the Tribunal being the final authority on the question of fact, is required to consider the claim made by the assessee with reference to the decision in Rotork Controls India (P.) Ltd. 's case stated (supra). 12. Accordingly, we refrain from expressing any opinion on the merits of the case in view of the order of remand proposed to be passed by us. Accordingly, it is unnecessary to answer the substantial question of law and the matter is remitted to the Tribunal by selling aside the finding al....
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.... whether expenditure is revenue or capital in nature have been laid down by the Hon'ble Supreme Court in Empire Jute Co. Ltd.'s case (1980) 124 ITR 1 (SC), which read as under: (i) It is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer. The fact that a certain payment constitutes income or capital receipt in the hands of the recipient is not material in determining whether the payment is revenue or capital disbursement qua the payer. (ii) There may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, none, the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle-laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test.If the advantage consists merely in facilitating the assessee's trading operations or ....
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.... by the assessee is to be treated as a capital gain or a business profit. In the assessee's case reported in (2012) 349 ITR 598 this Court held, such considerations constitute business profit and not capital gain. That was a case where the revenue was contending that it was a business profit and not a capital gain. In the instant case, the revenue was considering it as capital gain and not business profit. In view of the aforesaid judgment, the said consideration amount is to be treated as a business profit and rightly the Tribunal held that the assessee is entitled to deduction under Section 10-A of the Act treating it as a business profit and therefore, the said issue is held in favour of the assessee and against the revenue. It is submitted that the Question No.10 would not arise for consideration and the same is not pressed. 5. The following substantial question of law arise for consideration in ITA NOs. 192 and 194 of 2008: "Whether the Appellate Authorities were correct in holding that expenses in foreign currency should be allowed from expert turn over for the benefit of computation for deduction under Section 10-A of the Act?" The Tribunal in answering this questi....