TaxTMI 
TaxTMI 
2016 (10) TMI 255
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....stions of law raised before the Hon'ble High Court of Karnataka are as under:- "a. Whether the telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign exchange should not be excluded from the export turnover for the purpose of computing deduction under Section 10B of the Income Tax Act, 1961? b. If the said expenses are to be excluded from the export turnover, then the same should also be excluded from the total turnover for the purpose of computing deduction under Section 10B of the Income Tax Act, 1961?" 2. In the main appeal, the assessee has also raised ground No.1 in its grounds of appeal that the CIT(Appeals) is not justified in holding the exclusion of an amount of Rs. 9.53,10,234 being the sale of hardware components, from the export turnover for the purpose of computing the deduction under Section 10A of the Act. The ld. counsel for the assessee has contended that though this ground was raised before the Tribunal, but the Tribunal did not adjudicate this ground and has considered the alternative contentions of the assessee that if it is excluded from the....
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.... to the write-up submitted before the AO which has been extracted at pages 4 to 6 in the assessment order. The ld. counsel for the assessee further contended that since the hardware is inextricably linked with the software which may not function without the hardware, the sale of hardware is a part of export turnover. In support of his contentions, the ld. counsel for the assessee has placed reliance upon the following judgments:- (i) Hindustan Shipyard Ltd. v. State of Andhra Pradesh, 119 STC 533 (ii) Wipro Ltd. v. CIT, [2015] 62 taxmann.com 26 (Karnataka) (iii) Galatea Ltd. v. DCIT (IT), [2016] 67 taxmann.com 190 (Mumbai-Trib.) (iv) Tata Elxsi Ltd. v, ACIT, ITA No.398, 1074 & 1410/Bang/2012, order dated 20.03.2015. (v) Sultan Brothers (P) Ltd. v. CIT (1964) 51 ITR 353 (SC) (vi) Goodricke Group Ltd. v. CIT, 2011-TIOL-262-HC-KOL-IT (vii) CIT v. Gem Plus Jewellery India Ltd. [2010] 194 Taxman 192 (Bom) 4. The ld. DR, besides placing reliance upon the order of the AO and the CIT(Appeals), has contended that the assessee does not manufacture or produce hardware and the meaning of software cannot be stretched to hardwa....
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....re. But from a careful perusal of the Purchase Order appearing at page 1 of the assessee's compilation, we find that the assessee was not required to sell one composite software. Even in the Purchase Order, the software and the hardware were mentioned separately along with their respective cost. Similarly, software and hardware were sold separately through different invoices appearing at pages 5 to 8 of the compilation of the assessee filed on 24.05.2016. From the invoices, it is evident that the software was sold on 25.3.2005 for a value of USD 272,000 and the hardware was sold on 19.9.2005 by separate invoice. For the sake of reference, we extract the Purchase Order as well as Invoice issued by the assessee:- 7. From the above details, it is abundantly clear that the assessee has got the order of hardware and software separately for different costs and was also sold by raising invoices on different dates. It is also evident that the buyer had placed separate order for the software and hardware. The software known as Ranger Fraud Management System includes fraud detection, subscriber pre-check, pre-paid and credit management modules and its cost was specified at USD 272,000. A ....
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....use the said monitor was sold as a part of the composite value of the computers and the assessee is claiming benefit under Section 80IB in respect of the total consideration. As set out earlier the assessee is carrying on the manufacturing of computers and sale of computers. He has satisfied all the requirements stipulated in sub-section (2) of Section 80IB and he is eligible for the said exemption. The monitors which he has purchased from outside is used as a spare part in the manufacture of computer and it is sold to the customers as such. In other words, those monitors which are used in the computers are not the traded commodities. Therefore, it is a part of the computer and the total consideration of the computer includes the value of this monitor. The profit derived from the said computer includes the sale of the monitor which is a part of the said computer which falls within the first degree. In view of the aforesaid judgments the profit derived from the said sale of monitor as a part of the computer is also eligible for benefit under Section 80IB. However, it is made clear the assessee is not entitled to the benefit of Section 80IB in respect of monitors which are purchased ....
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....produced it sometime before delivery and the property therein passes only under the contract relating thereto to the other party for a price. 11. We have also carefully examined the other judgments referred to by the assessee, but they are all on different issues. But from careful perusal of those judgments, it has emerged that wherever software and hardware are inextricably connected or linked and the software cannot be used without hardware, sale of hardware would be a part of sale of software. 12. In the instant case, the order for software and hardware are placed separately, though in the same order, for different costs. The sale invoice of software and hardware was also raised separately on different dates. The mode of payment is also different for software and hardware. Moreover, the order was not placed for supply of particular hardware and software only. The order was placed for the supply of software as well as hardware and nothing has been established on record that the said software cannot be used without hardware. In light of these facts, we are of the considered opinion that sale of hardware cannot be a part of software exported by the assessee. Thus, we have no ....
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....re (1st Year) 18,500.00 18,500.00 7 Oracle Database Named User License for a total quantity of 150 for 8 CPU of Hardware 14,233.00 8 113,864.00 8 Annual Maintenance Cost for Oracle (1° Year) 2,850.00 8 22,800.00 GRAND TOTAL FOR INDENT FMS RANGER 591,164.00 The following terms and conditions are applicable for this indent:- (a) Ranger User License mentioned above is based on volume of 15 million CDRs per day. Additional license fee shall be charged at USD3,500 per additional 1 million CDR per day. Page 1 of 4 Iset Head Office Marketing Office Technical Office TM International (Bangladesh) Limited : BRAC Center, 9th Floor, 75 Mohakhal Commercial Area, Dhaka-1212, Tel: 9887149-52 Fax: 880-2-9885463 LANDMARK Building, 12-14 North Gulshan, 1" & 8" Floor Gulshan Circle-2. Dhaka-1212. Tel: 9885467-8 Fax: 88-02-988 5232 988 7113 House-2, Road-9, Block-G. Banani, Dhaka-1213, Tel: 8811999 Fax. 880-2-9884709 Chittagong Office: Faruk Chamber, Floor, 1403 Sk. Mujib Road, Agrabad C/A, Chittagong-4100, Tel: 721411-2 Fax: 031-721413 Document 2Traceback (most recent call last): File "C:\inetpub\vh....
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....desh) Limited : BRAC Center, 9 Floor, 75 Mohakhali Commercial Area. Dhaka-1212. Tel: 9887149-52 Fax: 880-2-9885463 : LANDMARK Building, 12-14 North Gulshan, 1" & 8 Floor Gulshan Circle-2, Dhaka-1212. Tel: 9885467-8 Fax: 88-02-988 5232, 988 7113 House-2, Road-9, Block-G, Banani, Dhaka-1213. Tel: 8811999 Fax: 880-2-9884709 Faruk Chamber, Floor, 1403 Sk Mujib Road, Agrabad C/A, Chittagong-4100, Tel: 721411-2 Fax: 031-721413 Document 4 TM International BANGLADESH mited Particulars Annual Technical Support Annual Product Updates Unit Price (USD) 6% of the applicable license fee at the time of the signing of the contract 6% of the applicable license fee at the time of the signing of the contract The AMC mentioned above excludes cost of travel, accommodation and living expenses at the site. The fees and out of pocket expenses shall be paid/reimbursed within 30 days of the receipt of the invoices by TMIB. SUBEX will also provide on-site Support Services at additional costs towards time, traveling and living expenses, whenever required. SUBEX will supply to TMIB any and all updates released for Ranger from time to time provide....
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....form and shall handle CDR load of 15 million CDR/day TOTAL Amount in Words: USD Two Hundred Seventy Two Thousand Only Payment Terms: Period of Invoice : Please mention the Invoice No. and the Name of the Account on the transfer document. Bankers Reference: Name & Address of the Bank: UTI Bank Ltd, MG Road, Bangalore Account No.: ame of Account: 009010300006231 Subex Systems Limited Contract/Purchase Order No. and Date Your Indent Number: TMIB/RA/FMS/002/03/2005 Dated 20th March, 2005 Currency USD Amount 272,000.00 USD 272,000.00 Bank transfer is to be made to Citibank N. A. Nue Mainzer Strasse 75,60311, Frankfurt SWIFT-citidefx for credit to: 4115661006, UTI Bank Ltd, MUMBAI IBAN No. DE90502109004115661006 for SOBEX SYSTEMS LIMITED AUTHORISED SIGNATORY 27138 Document 6 SUBEX Systems 48.835 EXPORT INVOICE SUBEX SYSTEMS LTD. 372, Koramangala III Block Sarjapur Road Bangalore 560 034 India Tel Fax +91-80-5759 8700 +91-80-2563 4100 E-mail: [email protected] Name of the Supplier Subex Systems Ltd. 372, Koramangala III Block Sarjapura Main Ro....