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TMI Blog2011 (2) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of ITAT, Chennai, Special Bench, in assessee's own case for assessment year 2003-04 in I.T.A.No.1138/Mds/2007, in which one of us [JM] was a party. This Special Bench decision is dated 2.11.2010. The assessee had incurred expenses in foreign currency for the year ending 31.3.2001 at ₹ 13,10,20,724/-. As per the Assessing Officer, in view of the definition of 'export turnover' as given in clause (iii) of Explanation 2 of section 10-B, 'export turnover' does not include freight, telecommunication charges or insurance attributable to the delivery of articles or things or computer software outside India, as expenses, if any, incurred in foreign exchange in providing technical services including computer software, outside India. Therefore, he excluded technical services expenses incurred outside India from the export turnover and accordingly, disallowed a sum of ₹ 4,83,46,037/-. Apart from the above, the assessee has incurred a sum of ₹ 1,64,51,871 equivalent in foreign currency to develop the products which have been capitalized for their enduring benefits and have been amortized over five years. The contention of the assessee is that this expenditure was not inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over who has excluded this amount on the reasoning that the amount represented expenses incurred in foreign exchange in providing technical services outside India. The facts of this issue have already been narrated above. 7. After hearing both sides on this issue, we find that in view of the Special Bench decision (supra)in assessee's own case, wherein it has been held that such amount cannot be excluded from export turnover, this addition cannot survive. Consequently, by following the Special Bench decision(supra) we order to delete the impugned addition. 8. The next issue of this appeal taken vide ground No.V, relates to foreign travel expenses. It was stated before us that despite the fact that the assessee had evidence in this regard, yet could not produce before the Assessing Officer, so it was pleaded that this issue may be remanded back to the Assessing Officer so that evidence can be produced and justice can be done to the assessee. Despite the ld.DR's objection, we find it a fit case for remanding the issue to the file of the Assessing Officer to do substantial justice in the case. Accordingly, we restore this issue to the file of the Assessing Officer with a direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot be allowed by us also. No evidence has been produced before us as well. We, therefore, dismiss this ground. 15. In the result, the appeal of the assessee for assessment year 2002-03 stands dismissed. Assessment year 2004-05 16. For this assessment year, cross appeals have been filed. In the Revenue's appeal being I.T.A.No. 284/Mds/2009, the first issue is regarding disallowance of exchange fluctuation loss, which has been taken against the finding of the ld. CIT(A) by following the decision of ITAT, Chennai, in the case of M/s India Intellisys Technology Pvt. Ltd. in I.T.A.No.835/Mds/2007, order dated 14.9.2007. The ld.DR's argument is that the decision of Hon'ble Madras High Court in the case of Indian Overseas bank is applicable which is against the claim of the assessee whereby the exchange fluctuation loss cannot be allowed. The argument of the ld.AR is that the ratio in the case of Indian Overseas Bank is not applicable as it involves a notional loss by a bank trading in foreign currency. To the contrary, he has relied on the decision of Hon'ble Supreme Court rendered in the case of Sutlej Cotton Mills Ltd vs CIT, 116 ITR 1, which is in favour of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... algamation is in pursuance to a scheme of arrangement u/s 391 to 394 of the Companies Act, 1956 and approved by the Central Government. According to the Assessing Officer, in this case, the taking over of the business of the companies was not in pursuance of any amalgamation or demerger arrangement. He denied this claim of deduction to the assessee. But in appeal, the ld. CIT(A) agreed with the assessee on the premise that the assessee had acquired ongoing business contracts of those companies with their clients for software development alongwith the technical resources including employees, etc. to execute the contract. According to him, no capital asset has been acquired by the assessee-company, therefore, this expenditure is for expansion of the units with an assurance that these three companies would not enter into business in the same line with those clients. So, the ld. CIT(A) has held this expenditure as revenue in nature. According to him, section 35DD will not apply. 21. After hearing both sides, we find that the facts of this issue are incomplete and further investigation of facts regarding application of 35DD or otherwise is required. The Tribunal being the final fact fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. V. For the above grounds and such other grounds as may be submitted before or at the time of the hearing of the appeal, the appellant prays that the Hon'ble ITAT may be pleased to allow the appeal directing the lower authorities to accept the income returned." 24. Ground No.III relates to exclusion of expenditure in foreign currency on onsite development at client's place from export turnover. This issue stands covered by the Special Bench decision in assessee's own cited supra, hence, this ground is decided in favour of the assessee. 25. The other grounds in this appeal do not arise from the appellate order. Therefore, there is no need to decide them on merits. 26. In the result, the appeal of the assessee for assessment year 2004-05 is partly allowed. Assessment year 2005-06 27. For this assessment year cross appeals have been filed. In the appeal I.T.A.No.285/Mds/2009, by the Revenue, only one issue regarding amortization expenses, has been raised. With the reasoning given in assessment year 2004-05, for an identical issue, we set aside this issue to the file of the Assessing Officer with similar direction. 28. In the result, the appeal filed by the Revenue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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