9911796707
TMI Blog2012 (12) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act, 1961 (in short 'the Act'). Such claims came to Rs.8,33,37,036/- for assessment year 2005-06, Rs. 11,33,79,687/- for assessment year 2006-07 and Rs. 6,05,46,684/- for assessment year 2007-08. The A.O., during the course of assessment proceedings, for respective assessment years, noted that the expenditure claimed by the assessee included expenses incurred in foreign currency. Such expenses came to Rs. 1,36,44,171/- for assessment year 2005- 06, Rs. 1,93,20,683/- for assessment year 2006-07 and Rs. 1,52,31,496/- for assessment year 2007-08. The break-up of the expenses filed by the assessee showed that it was incurred for business promotion, foreign travel, job work charges, salary, commission, internet charges, training expenses, marketing consultancy expenses and other operating expenses. Assessing Officer was of the opinion that such expenditure had to be excluded from 'export turnover' in view of clause (iii) of Explanation 2 to Section 10B of the Act. As per the A.O., the expenses incurred were for rendering technical services by a marketing agent named Ms. Anitha Madhavan based in UK for her marketing services. Other expenses were for carrying out copy editing, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), such amounts could not be excluded from export turnover. He, therefore, directed the Assessing Officer to re-compute the deduction under Section 10B for respective years without excluding expenditure incurred in foreign currency. Though assessee had taken an alternative ground that amounts that were excluded from export turnover were required to be excluded from total turnover also, this was not decided by the CIT(Appeals) since he held in favour of assessee on the primary issue. 4. Now before us, learned D.R., strongly assailing the order of CIT(Appeals), submitted that in assessee's own case for earlier assessment years 2001-02, 2003-04 and 2004-05, this Tribunal in its order dated 8.2.2008 in I.T.A. Nos.1955, 570 & 1956/Mds/2007, had clearly held that services rendered by Ms. Anitha Madhavan was nothing but very much technical in nature. Therefore, according to him, CIT(Appeals) was not justified in directing the Assessing Officer to include the expenses incurred on such technical services in the export turnover. As per the Ld. D.R.,, the issue stood covered against the assessee in Tribunal's order for the earlier years. 5. Per contra, learned A.R. strongly supporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces outside India. According to him, assessee had not provided any technical services outside India nor billed any amount on its clients. Rendering of technical services was not proved by the Revenue. In any case, according to him, if these amounts were excluded from export turnover, it had to be excluded from total turnover in view of the decision of Special Bench in the case of ITO v. Sak Soft Ltd. (2009) 313 ITR (AT) 353. 6. Ad libitum, learned D.R. submitted that the decision of coordinate Bench of this Tribunal in assessee's own case could never be ignored and this Tribunal was bound to follow such decision, when the fact situation remained the same. According to him, there was no dispute that fact situation relating to expenses in foreign currency incurred during the relevant previous year were very similar to such expenses incurred for previous years relevant to assessment years 2001-02, 2003-04 and 2004-05, where this Tribunal had held against assessee. As for the reliance placed on the decision of Zylog Systems Ltd. (supra), learned D.R. submitted that it was clear from para 3 of the order of Special Bench that assessee there was doing onsite development and offshore deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person involved must necessarily possess technical expertise and knowledge of the activity carried on by the assessee. To canvass the customers about the services rendered by the assessee firm, the marketing person first of all should be updated with all technical details relating to the services of the assessee company and only in that event the marketing person would be able to perform the basic job of marketing. In the case of assessee firm, marketing services and technical services go hand in hand and in our opinion and they are like two faces of the same coin. The argument of the assessee that M/s, Aneetha Madhavan is MBA (Marketing) only and hence her only knowledge is limited to marketing is devoid of any merit. The contention of the learned counsel for the assessee that technical service is different from marketing services cannot be considered. Assessee's products can be marketed only with technical assistance. Since the assessee is engaged in epublishing, photo type etc. to meet the need base of the assessee's customers, marketing cannot be done without technical services. Technical service is part and parcel of marketing. Hence we are of the opinion that Learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to which it rendered service in the nature of e-publishing, photo-type setting work were based in USA and Europe. Finding of the Special Bench in the case of Zylog Systems Ltd. (supra) was that assessee could not provide service to self since foreign currency expenditure incurred related to its own staff. Here, on the other hand, admittedly assessee was incurring expenditure on an agent named Ms. AnithaMadhavan and there is a finding given by the co-ordinate Bench of this Tribunal that such services would be considered as technical services. It was not a case where expenditure was incurred in development of software by the employees of the assessee in foreign branch. We are of the opinion that the Special Bench's decision in the case of Zylog Systems Ltd. (supra) will not help the assessee in any manner. On the other hand, the co-ordinate Bench decision in assessee's own case for earlier years will be applicable in all four squares. 10. Second leg of the argument by the learned A.R. that there was no separate billing for these items to its clients. We are afraid we are unable to accept this line of reasoning also. When expenses were attributable to the delivery of articles or ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
