By Sri. A. Shankar, Sr. Counsel Andsri v. Chandrashekar, Adv., For.sri. M. Lava, Adv

IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 13 DAY OF JULY 20271 PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’/BLE MR. JUSTICE HEMANT CHANDANGOUDAR BETWEEN: ILT.A. NO.564 OF 2017 M/S. SUTURES INDIA {P| LTD.,.REP. BY ITS MANAGING DIRECTORSRI. S. SUBRAMANIAN|NO.472/D, IV PHASE, 13TH CROSSPEENYA INDUSTRIAL AREA|BENGALURU-560008|PAN: . (BY SRI. A. SHANKAR, SR. COUNSEL AND|SRI. V. CHANDRASHEKAR, ADV., FOR.SRI. M. LAVA, ADV.,) ... APPELLAN| AND" THE DEPUTY COMMISSIONER OF INCOME-TAX.CIRCLE-12(3)PRESENTLY CIRCLE-6(1)(2), 2ND FLOOR|BMTC BUILDING, 80 FEET ROADKORAMANGALA, BANGALORE-560095.| .., RESPONDENT (BY SRI. K.V. ARAVIND, ADV.,) THIS I.T.A. IS FILED UNDER SEC. J6O0-A OF INCOME TAXACT 1961, ARISING OUT OF ORDER DATED 15.03.2017 PASSEDIN ITA NO.8/72/BANG/2013 & ITA NO.1397/BANG/2014 FOR THEASSESSMENT YEARS 2009-10 & 2010-11, PRAYING TO: (1) FORMULATE THE SUBSTANTIAL QUESTION OF LAW.STATED ABOVE AND THE ANSWER THE SAME IN FAVOUR OF THE.APPELLAN!. |(ii) ALLOW THE APPEAL AND SET ASIDE THE FINDINGS TO.THE EXTENT WHICH [IS AGAINST THE APPELLANT IN THE COMMONORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL IN.ITANO.872/BANG/2013&|1397/BANG/2014FOR!THE|ASSESSMENTYEARS2009-10&|2OLO-L1LD1TD:15.3.7201RESPECTIVELY. THIS I.7T.A. COMING ON FOR’ HEARING, THIS’ DAY, |ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (hereinafter referred to as the Act for short)has been preferred by the assessee. The subject matter|of the appeal pertains to the Assessment years 2009-10.& 2010-11. The appeal was admitted by a bench of this.Court on the following substantial questions of law:| “(a)Whether the Tribunal wes|justified in law in holding that the exportsmade through third parties are not entitiedfor deduction under section 10B of the Acton the facts and circumstances of the caseand consequently gave a perverse finding? (Db)WhethertheauthoritiesbelowarejustifiedIn|lawIn|not appreciating that the sales made to thirdpartiesaS|wel]other100%ExportOriented Units are deemed exports underEXIM Policy and should also be treated asexport under section 10B of the Act on thefacts and circumstances of the case?| (Cc)Whether, the Tribunal was.justified in law in ignoring the decision ofthe Hon'ble Jurisdictional Karnataka HighCourt in the case of Tata Elxsi Vs. ACITreported in 127 DIR 327 and consequentlypassed a perverse order on the facts andcircumstances of the case? (d)Whethertheauthoritiesbelow are Justified in law in charginginterest under section 7234 C of the Act onthe facts and circumstance of the case?" 2.|Facts leading to filing of this appeal brieflystated are that the assessee is a private limitedcompany and is engaged in the business of manufacture|and sale of surgical products. The assessee had filedreturn of income for the Assessment Year 2009-10. declaring total income of Rs.9,48,36,690/- after claiming|deduction under Section 10B of the Act to the extent of.Rs.9,48,24,379/-. The assessee for the Assessment Year|2010-11 declared total income of Rs.13,55,94,570/-.after claiming deduction under Section 10B of the Act to)the tune of Rs.8,/79,18,006/-. The return was selectedfor scrutiny. The Assessing Officer by orders dated)23.12.2011 and 27.02.2013 passed under Section143(3) of the Act for Assessment Years 2009-10 and.2010-11 respectively completed the assessment anddisallowed the portion of the claim made under Section.10B of the Act to the extent of Rs.5/7,40,/758/- anRs.39,27,202/- for Assessment Years 2009-10 andZOLO-1L1. 3The assessee thereupon filed appeals beforethe Commissioner of Income Tax (Appeals) who by an.order dated 26.03.2013 and 28.08.2014 respectivelyconfirmed the disallowance made under Section 10B of.tne Act. The assessee thereupon filed an appeal before 3The assessee thereupon filed appeals beforethe Commissioner of Income Tax (Appeals) who by an.order dated 26.03.2013 and 28.08.2014 respectivelyconfirmed the disallowance made under Section 10B of.tne Act. The assessee thereupon filed an appeal before the Income Tax Appellate Tribunal (hereinafter referredto as ‘the tribunal’ for short). The tribunal by a common.order dated 15.03.2017 dismissed the appeal filed bythe assessee. In the aforesaid factual background, this|appeal has been filed. 4Learned Senior counsel for the assesseesubmitted that substantial questions of law involved in.this appeal are covered by decision of this court in"PCIT VS. INTERNATIONAL STONES INDIA (P.)|LTD.', 95 TAXMANN.COM 287 (KAR)_ It is further|submitted that similar view was taken by anotherGivision bench In‘METAL CLOSURES (P.) LTD. VS.|DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE12(1), BANGALORE, (2019) 102 TAXMANN.COM71 (KAR).It is also submitted that export made by anassessee even through a third party remains a deemedexport in the nands of the assessee and the assessee iSentitied to deduction under Section 10B of the Act. I[t Isalso urged tnat tne fact that assessee has exported the goods through a third party is not disputed by therevenue. On the other hand, learned counsel for therevenue submitted that the matter deserves to be.remitted to the Assessing Officer to enable him to.examine whether the assessee has complied with theconditions prescribed under Section 10B of the Act. | 5.|We have considered the submissions made§by learned counsel for the parties and have perused therecord. The fact that the assessee has exported thegoods through third party is not disputed. The)substantial questions of law Nos.1 and 2 Nave alreadypeen answered by two division benches of this court in.INTERNATIONAL STONES INDIA (P.) LTD and‘METAL CLOSURES (P.) LTD.For the reasons assignedin the aforesaid decisions, the aforesaid substantialquestions of law are answered in favour of the assesseeand against the revenue. The tridDunal while passing theimpugned order nas not taken note of decision of this.court In |‘TATA ELXSI VS. ACIT, 127 DIR 227and therefore, the substantial question of law No.3 isanswered in the affirmative. In the result, the common order passed by thetribunal dated 15.03.2017 in respect of AssessmentYears 2009-10 and 2010-11 insofar as it pertains to thefindings on substantial question of law Nos.1 and 2 arehereby quashed. In the result, the appeal is allowed. Sd/-JUDGE. SS| Sd/-—JUDGE.