The Commissioner Of Income Tax-8 v. M/S. Crisil Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.6956 OF 2010 The Commissioner of Income Tax-8..Appellantversus M/s. Crisil Limited ..Respondent -------- Mr. Arvind Pinto for the Appellant.Mr. Sanjiv Shah for the Respondent. ............. CORAM : J.P. DEVADHAR & M.S.SANKLECHA, JJ. DATE : 18[th] December, 2012 P.C.:1 1This appeal under Section 260A of the Income Tax Act, 1961 (the Act) by the Revenue challenges the order dated 25.06.2010 passed by the Income Tax Appellate Tribunal (the Tribunal) relating to the Assessment Year 2004-05. 2Being aggrieved, the revenue has formulated the questions of law for consideration of this court. a)Whether, on the facts and circumstances of the case, and in law, the Tribunal is justified in quashing the order passed under Section 263 of the Income Tax Act, 1961? b)Whether on the facts and circumstances of the case, and in law, the Tribunal was justified in holding that the assessment made by the Assessing Officer was not erroneous and prejudicial to the interest of the revenue, in so far as, expenditure incurred in foreign exchange on travel, professional fees and other matters were not considered for exclusion from export turnover for the purpose of computing exemption u/s. 10A of the IT Act, even though, such exclusion is specifically provided in the said section itself? c)Whether on the facts and circumstances of the case, and in law, the ITAT was justified in holding that the assessment made by the A.O. was not erroneous and prejudicial to the interest of revenue, in so far as, reimbursement of expenditure in foreignexchangeontravel, professional fees and others, was not included in the total turnover, even though, the said amounts were admittedly realised by the assessee?d)Whether on the facts and circumstances of the case, and in law, the ITAT was justified in quashing the order u/s. 263 of the IT Act, 1961 passed by the Commissioner on 30.03.2009, even though the assessee-company was unable to furnish evidence to show that only a part of the expenses pertained to the various 10A units? 3The respondent-assessee is engaged in the business of rendering rating, advisory, research and information services. The respondent-assessee has a unit registered under the Software Technology Park engaged in data collection services for Standard and Poor's rating services and transmitting it to them. For the Assessment Year 2004-05, the respondent-assessee while filing its return of income claimed exemption of Rs.1.43 crores under the Act. The Assessing Officer after examining the agreement executed between the Standard & Poor's Rating services and the respondent-assessee concluded in his assessment order dated 28.12.2006 that the respondent-assessee was entitled to the deduction under Section 10A of the Act. However, the deduction under Section 10A of the Act was restricted to only Rs.1.42 crores as against Rs.1.43 crores claimed in the return of income. 4In exercise of its powers under Section 263 of the Act, the Commissioner of Income Tax by 4In exercise of its powers under Section 263 of the Act, the Commissioner of Income Tax by a notice dated 06.03.2009 called upon respondent-assessee to show cause why the Assessment Order dated 28.12.2006 should not be set aside/modified as foreign exchange expenses relating to travel, professional fees and other matters should have been excluded from the export turnover. Thereafter by order dated 30.03.2009, the Commissioner of Income Tax held that Assessment order dated 28.12.2006 was erroneous and prejudicial to the interest of the revenue. In as much as, according to him, expenses incurred in foreign exchange were not inquired into by the Assessing Officer so as determine export turnover under Section 10A of the Act. In the circumstances, the Commissioner of Income Tax by order dated 30.03.2009 set aside the assessment order dated 28.12.2006 and remanded the issue to the Assessing Officer to rework the export turnover and total turnover for computing deduction under Section 10A of the Act. 5Being aggrieved, the respondent-assessee filed an appeal to the Tribunal. The Tribunal held that the Commissioner of Income Tax has assumed jurisdiction on the ground that the Assessing Officer did not make further inquiries with regard to the nature of expenses incurred in foreign exchange for the purpose of determining the deduction under Section 10A of the Act. This according to the Tribunal would only be necessary when the fact stated in the return or in the documents submitted would provoke a doubt which would require a further inquiry. Further, there is no dispute that the foreign exchange expenses has been reimbursed on actual basis without any element of profit. In any event, the Tribunal held that the entire dispute is covered in favour of the respondent-assessee on the basis of the decision of Coordinate Bench of Tribunal in the matter of Siemens Information Systems Ltd v. Addl. CIT reported in 2010 TIOL page 241 on identical facts. Thus, the appeal of the respondent-assessee was allowed. 6We find that before jurisdiction under Section 263 of the Act can be exercised, the Commissioner of Income Tax must be satisfied that the order of the Assessing Officer is prejudicial to the interest of revenue and also erroneous. In this particular case, the order of the Commissioner of Income Tax holds that the order is erroneous as further inquiries were not made. However, no further inquiries were warranted as there was no occasion for the Assessing Officer to doubt the particulars to examine the same further. Besides, it is undisputed position that the nature of service are such that the services are being provided in India and thereafter merely transmitted to Standard and Poor. Therefore, the foreign exchange expenses relating to travel, professional fees and other matters are not incurred in providing technical services outside India. Further the expenses in foreign exchange have been reimbursed and therefore were not originally included in export turnover by the respondent-assessee so as to rework the same. 7 Consequently, no fault can be found in the order of the Tribunal dated 25.06.2010. In view of the above, the questions raised for the consideration of this court are not substantial questions of law. In view of the above the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P.DEVADHAR, J.)