2023 (3) TMI 1341

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ng deduction under Section 10AA of the Act amounting 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 Tribun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ical facts for AY 2004-05 the appeal of the appellant was allowed by CIT(A) and the appeal of the Revenue on this issue was 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 de....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....and consistent basis. He further observed that the Assessing Officer himself has allowed such 'provision for discount' in the assessments for subsequent 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 custom....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... In the light of the orders of the Tribunal in assessee's own case for AY 2004-05 and AY 2009-10 which is identical to the facts of the instant case, we reject the grounds of 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 reduce....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....export by the undertaking, being the Unit of articles or things or services received in, or brought into, India by the assessee but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or 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 D....