IN THE INCOME TAX APPELLATE TRIBUNAL,
BANGALORE BENCH ‘B’ BANGALORE
ITA No.248 & 249/Bang/2007
(Asst. Year 2002-03 & 2003- 04)
M/s I-GATE GLOBAL SOLUTIONS LTD
158-162(P) & 165(P)-170(P) , EPIP,
Phase-II, Whitefiled, Bangalore-560006
Vs
THE ASST. COMMISSIONER OF INCOME TAX,
CIRCLE-11(3) , BANGALORE
Though there is no definition of the term ‘total turnover’ in section 10A, there is also nothing in the said section to mandate that what is excluded from the numerator (export turnover) would nevertheless form part of the denominator. One would have to apply consistent standards in understanding and applying a term, particularly when, such term, viz. export turnover has an independent function and at the same time a part of a larger term viz., total turnover.Thus, if some expenses, for any reason are excluded in arriving at the ‘export turnover’ the same should be reduced form ‘total turnover’ also.
ORDER
The assessee has filed the appeals against the order of learned Commissioner of Income-tax (Appeals) – I, Bangalore dated 19th Dec, 2006 and 6th Jan, 07. Some of the grounds of appeal for both the asst. years are the same, therefore, these appeals are being decided by a single consolidated order.
2. One of the common ground of appeal raised is that the learned CIT(A) has erred in concluding 80% of the up-linking charges are to be reduced from export turnover in arriving at the amount of deduction eligible under section 10A.
3. The learned CIT(A) during the course of appellate proceedings referred to the definition of export turnover as given in clause – IV of explanation 2 below section 10A(8). From the consideration received, freight, telecommunication charges or insurance attributable to delivery of software have to be reduced. The learned CIT(A) noticed that no expenditure was reduced from the export turnover. Hence, it was indicated to the learned AR that income has to be enhanced. Expenditure on delivery of software has not been reduced from the export turnover. Before the learned CIT(A), the assessee made the following submissions in respect of the above issue.
“Link lines are obtained using a WAN (Wide area Network). The WAN provides video, data and voice connectivity services across a large geographical area from iGATE locations in India. A wide area network (WAV) or leased line link includes communication lines and equipment up to and including the router at a particular and user site, excluding local area networks (LANs). Our links are connected between offices as well as to our overseas Collocation Centres. AT&T provides a Rack Space specifically for iGate. iGate will use this rack space through the telecom infrastructure/ telecom lines and put the network equipments in that rack and finally connect to the end customer.
These link lines are required to receive inputs i.e (raw data and information) from the customer who is based outside and to transmit the software outside India which is based on the inputs received from the customer.
Hence at any time link lines are always used for two transfers :
1. Transfer in i.e receiving raw data and information from the customer.
2. Transfer out i.e transmission of software to the customer site.
