Commissioner Of Income Tax vs Granda Services Ltd.
2011 Latest Caselaw 2149 Del

*             IN THE HIGH COURT OF DELHI AT NEW DELHI

+                            ITA No.1941 of 2010


%                          DECISION DELIVERED ON: APRIL 21, 2011


       COMMISSIONER OF INCOME TAX                        . . . APPELLANT

                          through :           Mr. Sanjeev Sabharwal, Sr.
                                              Standing Counsel.


                                 VERSUS


       GRANDA SERVICES LTD.                            . . .RESPONDENT

                          through:            Mr. V.K. Sabharwal, Advocate.


CORAM :-
    HON'BLE MR. JUSTICE A.K. SIKRI
    HON'BLE MR. JUSTICE M.L. MEHTA

       1.     Whether Reporters of Local newspapers may be allowed
              to see the Judgment?

       2.     To be referred to the Reporter or not?

       3.     Whether the Judgment should be reported in the Digest?


A.K. SIKRI, J. (ORAL)

1. The respondent/assessee is a limited company engaged in the

business of processing outsourcing unit providing back office

services to its customers. The assessee qualifies for deduction

under Section 10A of the Income Tax Act (hereinafter referred

to as 'the Act'), as it is a newly established undertaking in free

trade zone because of the reason that it is engaged in the

export of computer software using telecommunication

channels. In the income tax return for the Assessment Year

2005-06, the assessee declared 'NIL' income and claimed

deduction under Section 10A of the Act as a whole. The AO,

during the course of scrutiny assessment, found that various

expenditure has been incurred in foreign currency which

included 'speed pay' and 'ASP expenses'. The assessee had

received payments, inter alia, on account of speed pay and ASP

expenses, which were incurred by it and reimbursed to it. The

AO was of the opinion that income in the form of APF fee and

speed pay be termed as income attributable to the business of

assessee, but is not an income 'derived from the export' of

computer software and therefore, was not eligible for deduction

under Section 10A of the Act.

2. Challenging this action on the part of the AO, the assessee

approached the CIT (A). The CIT (A) allowed the appeal of the

assessee.

3. Against the order of the CIT (A), the Revenue preferred the

appeal before the Income Tax Appellate Tribunal (for brevity

'the Tribunal'). The Tribunal took note of the arguments of the

Revenue that the income in the form of convertible exchange

received on account of speed pay and ASP fees was not to be

included for the purpose of computing deduction under Section

10A on the plea that it was not derived from export business.

On the other hand, the assessee contended that these receipts

were derived from export of computer software. The Tribunal

found that the CIT(A) had not decided the nature of the

receipts.

4. In these circumstances, the Tribunal has referred the matter

back to the CIT (A) for deciding the nature of receipts so as to

find out whether the same are derived from export of computer

software and then, decide its eligibility of deduction under

Section 10A of the Act.

5. After going through the order of the CIT (A), the aforesaid

observations of the Tribunal are correct. We do not understand

the grievance of the Revenue against this order. The question

proposed in the appeal is that the Tribunal was not right in

allowing the benefit of deduction under Section 10A of the Act

on 'ASP expense' and 'speed pay'. We fail to understand how

such a question arises, as the Tribunal has not given any

findings on this aspect at all and rather has referred the matter

back to the CIT (A) to decide the same.

6. Finding no merit in this appeal, we dismiss the same.

(A.K. SIKRI) JUDGE

(M.L. MEHTA) JUDGE APRIL 21, 2011 pmc