Case Ot!Commissioner Of Income Tax And Another v. Tata

1 IN THR HIGH COURT OF KARNATAKA AT BBNGALURU DATED THIS THE 20[‘TH]DAY OF MARCH, 2018. PRESENT THR HON’BLE MR.JUSTICE B.S.PATIL & THER HON’BLE MR.JUSTICE S.SUNIL DUTT YADAV. I.T.A.No.626/2017 BETWERE 1.THE PR. COMMISSIONER OF INCOME TAX, CIT(A),' FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,|BRENGALURU-560 O95.' FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA,|BRENGALURU-560 O95. 2.THE DEPUTY COMMISSIONER OF INCOEME TAX, CIRCLE-11(1), PRESENT ADDRESS— CIRCLE-1(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, KORMANGALA,|BENGALURU-560 O95.APPELLANTS (By Sri SANMATHI E.I., ADV. FORsri ARAVIND K.V., ADV.) AND M/s AMD INDIA PVT. LTD., PLOT # 102 & 103, EXPORT|PROMOTION INDUSTRIAL PARK,WHITEFIELD,BBENGALURU-560 O66.RESPONDENT. (By Sri SHARATH 8., ADV. FOR |Sri CHYTHANYA K.K., ADV.) THIS ITA IS FILED UNDER SKC.2J60A OF THERE INCOMB TACT 1961, PRAYING TO ALLOW THE APPEAL AND SET ASIDE THE|ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL,|BENGALURU IN IT(TP)A NO.92/BANG/2014 DATED 08/03/2017|CONFIRMING THE ORDER OF THE DRP AND CONFIRM THE|ORDER PASSED BY THER DEPULY COMMISSIONER OF [INCOMTAX, CIRCLE-1(1)(1), BENGALURU, AND ETC.| THIS APPEAL COMING ON FOR ORDERS, THIS DAY,|B.S.PATIL, J.,DELIVERED THE FOLLOWING: JUDGMENT 1.Though this matter is listed for orders, as it is submittedat the bar that issue raised in this appeal is covered by thedecision of a co-ordinate Bench of this Court, which has beenindeed followed by the Tribunal, we have taken up this matterfor final disposal. 2 |We have heard the learned counsel for both parties. 3.|This appeal is filed by the revenue challenging the orderdated 08.03.2017 passed by the Income Tax Appellate Tribunal(ITAT),BengaluruBench,Bengaluru,1NTT(TP)JANo.92/Bang/2014. 4 iBriefly stated, facts involved in the case are thatrespondent — Company is incorporated under the provisions of 3 Companies Act. It is engaged in research, design anddevelopmentot applicationsolutionsfor.semiconductorproducts, marketing and rendering technical support for AMD|products. Returns of income for the assessment year 2009-10.was filed by the respondent — Company declaring income of|e34,609,091/-. The case was taken up for scrutiny. TheAssessing Officer, during the course of assessment noticed that|assessee had reported international transactions hence, he!referred the matter to Transfer Pricing Officer (TPO). The TPO)passed an order under Section 92CA of Income Tax Act on)29.01.2013 and suggested Arm’s Length Price (ALP) adjustment.ot 47,3/,16,897/- . Thereafter, Assessment Officer passed thedrait assessment order on 06.03.2013 after incorporatingtransfer price adjustment apart from adjusting export turnoverby reducing communication expenses and _ foreign currencyexpenditure for the purpose of computing deduction under|section 10A. This was approved by DRP and alter consideringthe objections filed, he directed the Assessing Officer not to.keep a cap on working capital adjustment and also directed notto reduce the foreign travel expenditure and communicationexpenditure from export turnover. Aggrieved by the same, the) revenue preferred ITA(TP)A No.92/Bang/2014 before the)Tribunal raising several contentions. 5.The Tribunal, following the judgment of this Court in the case ot!COMMISSIONER OF INCOME TAX AND ANOTHER VS. TATA ELIXI LIMITED - (2012) 349 ITR 98>has held that expenses that are.reduced from the export turnover are to be necessarily reducedfrom the total turnover while computing deduction undersection 1OA of the Act. Aggrieved by the dismissal of the)appeal, the revenue has come up before this Court. 6.We have perused the judgment rendered by this Court inthe case otCOMMISSIONER OF INCOME TAX AND ANOTHER VS. TATA BELIXI LIMITE(2012) 349 ITR 98A co-ordinate Bench of this|Court has categorically laid down the law on the point atparagraph 17 as under; revenue preferred ITA(TP)A No.92/Bang/2014 before the)Tribunal raising several contentions. 5.The Tribunal, following the judgment of this Court in the case ot!COMMISSIONER OF INCOME TAX AND ANOTHER VS. TATA ELIXI LIMITED - (2012) 349 ITR 98>has held that expenses that are.reduced from the export turnover are to be necessarily reducedfrom the total turnover while computing deduction undersection 1OA of the Act. Aggrieved by the dismissal of the)appeal, the revenue has come up before this Court. 6.We have perused the judgment rendered by this Court inthe case otCOMMISSIONER OF INCOME TAX AND ANOTHER VS. TATA BELIXI LIMITE(2012) 349 ITR 98A co-ordinate Bench of this|Court has categorically laid down the law on the point atparagraph 17 as under; “From the aforesaid judgments, what emergesis that, there should be uniformity in the ingredients|of both the numerator and the denominator of the|formula, since otherwise it would produce anomalies|or absurd results. Section 10A is a _ beneficialsection. It is intended to provide incentives topromote exports. The incentive is to exempt profitsrelatable to exports. In the case of combined business of an assessee, having export businessand domestic business, the Legislature intended tohave a formula to ascertain the profits from exportbusiness by apportioning the total profits of thebusiness on the basis of turnovers. Apportionmentofprofits on the basis of turnover was accepted as amethod of arriving at export profits. In the case ofsection SOHHC, the export profit is to be derivedfrom the total business income of the assessee,whereas in section 1OA, the export profit is to bederived from the total business of the undertaking. |Even in the case of business of an undertaking, itmay include export business and domestic business,in other words, export turnover and domesticturnover. The export turnover would be a componentor part of a denominator, the other component beingthe domestic turnover. In other words, to the extentof export turnover, there would be a commonalitybetween the numerator and the denominator of theformula.In.VIEWOf|thecommonality,|theunderstanding should also be the same. In otherwords, tf the export turnover in the numerator is tobe arrived at after excluding certain expenses, thesame should also be excluded in computing theexport turnover as a component of total turnover inthe denominator. ... 6 T.In the light of above pronouncement and as perenunciation of law made therein, we do not find any merit inthis appeal. Hence, the appeal is dismissed. PKS Sd/-|JUDGE. Sd/-|JUDGE