Applabs Technologies Pvt.Ltd., Hyd, ... vs Department Of Income Tax

2. Briefly stated, assessee is engaged in the business of software development. Assessee filed return of income for A.Y 2009-10 on 29.09.2009 admitting income of Rs.36,14,650 under normal provisions after claiming 10A deduction of

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Rs.7,60,24,578 and the income admitted u/s 115JB was Rs.4,60,98,442 against the income admitted of Rs.36,14,650 under normal provisions. The income determined in scrutiny assessment was Rs.49,82,824.

3. Assessee raised the following grounds which was allowed by the CIT (A):

a) The ld AO erred in computation of the exemption u/s 10A and 10AA of the I.T. Act, 1961.

b) The ld AO erred while computing the export turnover while arriving the exempted turnover by reducing the bandwidh and the communication expenses from the export turnover only and ignored to reduce from the total turnover.

4. Aggrieved, the Revenue is in appeal before us.

5. The CIT (A) held that it is fairly settled legal principle that the communication charges should be reduced both from the numerator and denominator (CIT vs. Kantilal Chhotalal (2000) 246 ITR 439 (Mum.). It is pertinent to mention that in assessee's own case for A.Y 2004-05, the Hon'ble ITAT Hyderabad in ITA No.784/Hyd/2008, dated 25.07.2008 held that the communi- cation charges should be reduced both from the numerator and denominator. Therefore, he directed the AO to recompute the 10A deduction accordingly.

6. We find that in the case of ITO vs. M/s. Sak Soft Limited reported in (2009) 20 DTR 514 Special Bench of the Tribunal has held that while computing the deduction u/s 10A or 10B of the

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Act, freight, telecom charges, insurance attributable to delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange for providing technical services outside India are to be excluded from both export turnover and from the total turnover which are numerator or denominator in the formula. The ITAT Hyderabad Bench in case of Patni Telecom (P) Ltd vs. ITO reported in (2009) 120 ITD 105 also held similar view. Respectfully following the aforesaid decisions, we hold that, communication charges once is excluded from the export turnover, for maintaining principle of parity, the same also has to be excluded from total turnover. Therefore, in the aforesaid view of the matter, we uphold the order passed by the CIT (A) and the grounds raised by the Revenue are rejected.

7. In the result, appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 17th June, 2015.

Sd/- Sd/- (B. Ramakotaiah) (Asha Vijayaraghavan) Accountant Member Judicial Member

Hyderabad, dated 17th June, 2015. Vnodan/sps Copy to:

1. Dy. Commissioner of Income Tax, Circle 1(1)Hyderabad

2. M/s. Applabs Technologies Private Limited, Plot No.83 & 84 Road No.2 Banjara Hills, Hyderabad 500034

3. CIT(A) - I Hyderabad

4. CIT-1 Hyderabad

5. The DR, ITAT, Hyderabad

6. Guard File

By Order

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