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TMI Blog2018 (7) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Income Tax (Appeals)-20, Mumbai [hereinafter referred to as the "CIT(A)"] relevant to the assessment year2010-11. 3. The revenue has raised the following grounds: - "1. "In the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of the claim u/s. IOA of the Act in respect of profits arising primarily from the activities/services of independent freelancers without, appreciating chat such activities/services were neither carried out at the eligible Unit nor does it qualify as profit derived from on site services for the development of software. 2. "In the facts and circumstances of the case and in law, the Ld, CIT(A) failed to appreciate that the onus to demonstrate the eligibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,34,42,816/- u/s 10A of the I.T. Act on the profit of IT enabled service activities carried out in its STPI unit. The assessee in its profit and loss account reported total of Rs. 14,34,87,754/- which comprises Direct Income of Editing and Translation service of Rs. 14,24,21,110/- and other income of Rs. 10,66,644/-. The other income represents interest income to the tune of Rs. 10,59,024/- and discount of Rs. 7,618/-. The expenditure in the P&L Account was claimed to the tune of Rs. 7,79,30,162/-. Accordingly, the assessee computed profit before tax at Rs. 6,55,57,591/-. The expenditure of Rs. 7,79,30,162/- debited to the P&L Account consists of expenses claimed under various cited which is being mentioned below.: - Direct Rs.4,24,67, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account 7,79,30,162 D Profits derived out of activities performed by freelancers (AxB)/C 3,44,80,052 6. Accordingly, the deduction u/s 10A of the Act of Rs. 3,44,80,052/- was disallowed and the claim of the assessee u/s 10A of the Act was restricted to the extent of Rs. 2,89,62,765/-. The total income of the assessee was assessed to the tune of Rs. 3,55,39,080/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeals before us. ISSUE NOS. 1 & 2:- 7. Issue nos. 1 & 2 are inter-connected, therefore, are being taken up together for adjudication. Under these issues the contention of the revenue is that the profit derived by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has concluded that if a pun of the work has been done by outside parties, then the profit has not been derived by the appellant from the undertaking L J and is not eligible for deduction under section 10A. It is not in dispute that the entire profit of the unit is earned only out of the export made during the year. It is noted that Section IDA does not bar the outsourcing of the work. In this regard it is noted that Hon'ble ITAT Mumbai, in the case of 1TQ vs M/s Gebbs Infotech Ltd. ITA No. 337/Mum/2007 dated 10" October 2010, has observed that for claim of deduction under Section JOB what is to be seen is whether the appellant a 100% export unit and profits and gains were derived from exports. It is not the requirement of the Section t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above said finding, we noticed that the CIT(A) has allowed the claim of the assessee on the basis of the decision of the Hon'ble ITAT Mumbai Bench in the case ofITO Vs. M/s. Gebbs Infotech Ltd. ITA. No. 337/M/2007 dated 10.10.10. The factual situation is not in dispute in which the assessee hired the services of freelancers on internet for the work of Transcription, Summarization, Translation, Editing, Proofreading, Data entry which is much related to the business of the assessee. The assessee out- sourced job works activity from freelancers for its main object of business activities. The object of the assessee company covered the job work services of the out-source company freelancers to its object. At the cost of repetition, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Delhi High Court), ITA. No. 1068 of 2008 c/w ITA. No. 108/2010 CIT Vs. Evershine Infotech Pvt. Ltd. (Karnataka High Court) (2015) 62 taxmann.com 165 CIT Vs. Mphasis Software & Service India (P.) Ltd. (Karnataka High Court). In view of the said circumstances, we are of the view that CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we confirmed the order of the CIT(A) and decide all the issues in favour of the assessee against the revenue. ITA No. 752/M/2016;- 9. The matter of controversy in the above mentioned appeals are same. Therefore, finding in the ITA. No. 219/M/2016 is quite applicable to these cases in Mutatis Mutandis. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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