Deepak R. Shah, A.M. - (1.) THE ITA Nos. 881 and 882/Bang/2003 have been filed by the revenue and ITA Nos. 895 and 896/Bang/2003 have been filed by the appellant. Since both the appeals arise from the common orders passed by the Commissioner (Appeal)-V, Bangalore, for assessment year 1998-99 and for assessment year 1999-2000, dated 21-3-2003, all these appeals have been heard together. During the course of hearing of the appeal, the appellant filed paper books for assessment years 1998-99 and 1999-2000. THE appellant- company also filed additional grounds and other computations and calculation statements to buttress its contentions in the appeal.
(2.) Firstly, we shall deal with the appeals filed by the appellant- company in ITA Nos. 895 and 896/Bang/2003 for assessment years 1998-99 and 1999-2000. 2.1 Before we proceed with the issues, preliminary objections were raised by the counsel for the department, Sri E.R. Indrakumar, the relevant portion is extracted hereunder : "Memo filed by the respondent (Revenue) In relation to the aforesaid appeal, the appellant has filed the paper book with the following certificate. This is to certify that the above documents are the copies of the originals made available to the authorities below during the proceedings and only the relevant portion relating to the appeal before the Tribunal is enclosed. In this context, it is submitted that the following letters and papers, as detailed herein, have not been filed by the appellant at the time of assessment. Wipro Ltd.Assessment year 1998-99 List of documents not filed at the time of assessment (given at Annexure III to the paper book) (Reply dated 21-3-2001) judgement_7584_tlit0_20050.htm On the basis of the aforesaid memo filed, Sri E.R. Indrakumar, learned special counsel for the revenue, mentioned that the impugned document should not be relied on in deciding the appeals. 2.2 Sri K.R. Pradeep, chartered accountant, appearing for the, appellant, strongly resisted the objections filed by the department. He argued that the, documents mentioned in Sl. Nos. 1 to 5 were filed before the assessing officer along with its letter dated 6-3-2001, which is found in the paper book at pp. 160 and 161, consequently, the objection is contrary to facts on record. Further, it was pointed out that these documents were specifically mentioned in para 4.2 at p. 2 of the assessment order. All copies of licenses were supplied and numbered as Vol. 6 found mentioned in the assessment order and further details, submitted have also been mentioned in para. 5.2 at p. 3 of the assessment order. He also brought to our attention the order of the Commissioner (Appeal), particularly the para 3 at pp. 2 and 3 of his order which is extracted hereunder : "3. Ground Nos. 1 to 3 are general grounds directed at the entire assessment order. Ground Nos. 4 to 8 relate to computation of profits under section 10A. The assessee claimed profits of Rs. 1,02,32,78,192 as exempt under section 10A. The assessing officer recomputed the profits under section 10A at Rs. 87,94,39,076 by holding, certain receipts as not profits and gains derived from the individual undertaking eligible under section 10A and by allocating certain corporate expenses to the section 10A units. The assessee is engaged in export of software. The assessee has 3 main sub-divisions : (a) Wipro, Systems (7 STP units situated at Bangalore (5) and Hyderabad (2)) (b) Global R & D (3 STP units at Bangalore) (c) E-Commerce (part of STP, Lavelle Road, Bangalore, coming under Wipro, Systems) S Stated by the aSSeSSing officer, the aSSeSSee had filed detailed profit and loSS account StatementS for each of the Sub-diviSion and in turn for each of the STP unit and conSolidated the total claim of exemption under Section 10A. The total Software exportS aggregated to RS. 3,91,44,28,081. ThiS turnover included miScellaneouS income of RS. 1,47,22,733. The total expenditure accounted iS RS. 289.23 croreS. The aSSeSSing officer called for and examined the detailS of group-wiSe, diviSion-wiSe and SubdiviSion-wiSe P&L accountS and expenditure detailS. He alSo called for Softex formS filed with STPI authoritieS and examined the Same. The aSSeSSing officer obtained particularS of SaleS break-up, country-wiSe aS well aS cuStomer-wiSe. He haS alSo verified the detailS of other income and expenditure." From the above recordS of the authoritieS below and particular Specific mention made by aSSeSSing officer and CommiSSioner (Appeal) in their orderS, it waS not open for revenue, to contend that the documentS, were not available to authoritieS below. Sri Pradeep argued that all theSe documentS are to be relied on in deciding the appealS. 2.3 We have gone through the paper bookS and objectionS of the revenue. We find that the Annexure 4 commencing from pp. 177 to 180 extracted hereunder : LiSt of induStrial undertakingS in Software Technology ParkS/Electronic Hardware Technology ParkS eligible for exemption under Section 10A judgement_7584_tlit0_20051.htm waS filed by the appellant along with itS letter dated 6-3-2001, addreSSed to Deputy. CommiSSioner of Income Tax-Central Circle-IV. We alSo find from the peruSal of the aSSeSSment order that the Said letter haS been looked into by the aSSeSSing officer and alSo findS a place in the aSSeSSment order and appellate order aS pointed out by Sri Pradeep. In fact, baSed on theSe detailS the aSSeSSing officer had reStricted the claim of the aSSeSSee under Section 10A to RS. 87.94 croreS, whereaS the aSSeSSee'S claim waS RS. 102.30 croreS, a diSallowance of more than RS. 14 croreS waS made after going through the detailS filed by the aSSeSSee. Hence, it iS no gain Saying that theSe documentS were not filed at the time of aSSeSSment. 2.4 We have made an effort to compare the documentS found mentioned in Annexure 4 in pp. 177 to 180. We find that the documentS found in page NoS. 181 to 265 are all licenceS iSSued by STPI along with certain annexureS, etc. Many of theSe are found mentioned in Annexure 4. Further, we alSo find that the aSSeSSing officer haS examined Several documentS which can be broadly deScribed aS copieS of licenceS and other documentS iSSued by STPI, cuStomS and other authoritieS. And moSt of theSe documentS are dated prior to paSSing of aSSeSSment orderS for aSSeSSment yearS 1998-99 and 1999 20 00. Hence, we rely on theSe licenceS, etc. aS haS been done by the aSSeSSing officer and CommiSSioner(AppealS) in framing the aSSeSSment orderS. Only p. 266, aS Submitted by Mr. Pradeep, haS been encloSed by miStake and it waS produced in the aSSeSSment proceedingS for the aSSeSSment year 2001-02 and prayed that the Same be admitted aS additional evidence. We find p. 266 iS of no conSequence for any claim made by the aSSeSSee or the department. Hence, we rely on the paper book Submitted by the appellant excepting p. 266 to decide the iSSueS. Accordingly, we proceed with the appeal on meritS. 3. ISSue of allocation of corporate and group overheadS : The aSSeSSee for aSSeSSment year 1998-99 haS raiSed the following ground : "8. The learned CommiSSioner(AppealS) erred in not iSSuing a direction for the elimination of corporate and group overheadS of RS. 10,06,66,668 allocated to the Software buSineSS in the bookS of account in order to arrive at the profitS exempt under Section 10A of the Act." 3.1 The CommiSSioner(Appeal) haS granted full relief by deleting the addition by the aSSeSSing officer. We are unable to underStand the reaSonS for the ground before uS. The department iS alSo in appeal on thiS iSSue in their groundS of appeal which haS been Separately dealt in ITA NoS. 88nd 882/Bang/2003, the findingS therein apply here alSo. Accordingly, the ground iS diSmiSSed.
(3.) ISSUE of claim of deduction under section 10A of the Income Tax Act: 4.1 Before we proceed to deal with the issues it is necessary to deal with the facts as found from the assessment records, appeal proceedings and during the course of hearing before us. The assessing officer had called for details from the assessee for verifying the eligibility of deduction under section 10A. After going through the copies of documents, replies filed, he has noted the facts in para 5 of the assessment order for the assessment year 1998-99 which is extracted below : "5.1 The assessee-company is engaged in software exports in a big way. For the financial year 1997-98, presently under consideration, the assessee-company claimed business income totally exempt under section 10A at Rs. 1,02,32,78,192. This claim is now examined.;