CIT Vs. INFOSYS TECHNOLOGIES LTD

JUDGEMENT

(1.) THIS appeal is filed by the Revenue being aggrieved by the order dt. 9.9.2005 passed by the Income Tax Appellate Tribunal, Bangalore Bench "B" (hereinafter called as 'Tribunal' for brevity) in ITA No.471/Ban/2003.

(2.) THIS appeal has been filed raising the following substantial questions of law:

(3.) THE material facts necessary for adjudicating the above said substantial questions of law are as follows: The assessee claimed deduction towards subscription for acquisition of Corporate membership as a revenue expenditure. It also made provision for post sale customer service which is a contingent liability as an expenditure. Despite the same having not been incurred towards after sale service in view of the warranty provided by the respondent-assessee. Further, the exchange rate variation gains had been excluded from the total turn over and export turn over for computation of deduction under Sec. 80HHE of the Act. The Assessing Officer held that expenditure incurred towards acquisition of Corporate membership in the Clubs is a capital expenditure and the said finding was set aside in appeal. Similarly, the amount claimed towards after sale service as contingent liability was also disallowed by the Assessing Officer and the same was deleted in appeal before the Commissioner of Income Tax. However, the Assessing Officer held that the exchange rate variation gains had to be excluded from the total turnover and export turnover for computation of deduction under Sec. 80HHE of the Act in view of Explanation (e) to Sec. 80HHE of the Act which contemplates only actual amount of foreign exchange received in India and the said finding was also set aside in appeal. Being aggrieved by the order passed by the appellate authority allowing the appeal filed by the assessee, Revenue preferred appeal in ITA No. 471/Bang/2003 on the file the Tribunal and the Tribunal by order dt. 9.9.2005 dismissed the appeal filed by the Revenue.