Commissioner Of Income Tax Chennai v. M/S.savvy Systems (India) Ltd., New

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.11.2006 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA T.C.(A).No.2592 of 2006 Commissioner of Income TaxChennai...Appellant Vs. M/s.Savvy Systems (India) Ltd.,New No.66 (Old NO.148),Greams Road, Chennai...Respondent Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Madras 'B' Benchdated 22.12.2004 in ITA No.1377/Mds/2004 for the assessment year2000-01 against GI No. WSA-258/AAECS3281L/01-02 dated 20.9.2004 onthe file of the Income Tax Officer,. Company Ward VI (1), Chennai-34 and C.No.3033/23/III/2003-04 dated 16.3.04 on the file of theOffice of the Commissioner of Income Tax, Chennai-III, Chennai-34and PAN/GIR NO.WSa258/ order dated 18.2.2003 for theassessment year 2001-02 on the file of the Income Tax Officer,company ward VI (1) chennai. For Appellant:Mrs.Pushya SitaramanSenior Standing Counsel J U D G M E N T (Delivered by P.D.DINAKARAN,J.) The above tax case appeal is directed against the order ofthe Income-tax Appellate Tribunal in ITA No.1377/Mds/2004 dated22.12.2004. 2. The Revenue is the appellant. The assessment yearinvolved is 2000-01. The assessee is in the business of export ofcomputer software. The assessing officer, accepted the returnfiled by the assessee and while computing the deduction undersection 10B, the assessing officer proceeded as if the domestic https://hcservices.ecourts.gov.in/hcservices/ turnover would form part of export turnover and the domesticprofit forms part of the export profit on the ground that thedomestic turnover is less than 25% of the sales. Finding that theassessment order was erroneous and prejudicial to the interest ofthe Revenue, the Commissioner revised the order under Section 263,pursuant to which, an order under Section 154 of the Act came tobe passed reducing the benefit of deduction under Section 10B ofthe Act. Aggrieved by the revision order of the Commissioner, theassessee preferred an appeal before the Income-tax AppellateTribunal and the Tribunal held that where the assessee's domesticsale had not exceeded 25% of the total sales, then for the purposeof the deduction under Section 10B,t he domestic turnover formspart of the export turnover and the domestic profit forms part ofthe export profit and accordingly, held the issue in favour of theassessee. 3. Aggrieved by the same, the Revenue has preferred thisappeal raising the following substantial questions of law: "1. Whether in the facts and circumstances ofthe case, the Tribunal was right in holdingthat for the purpose of the deduction undersection 10B the domestic turnover forms partof the export turnover as per constitutionaliv to expln. 2 to sec. 10B ? 2. Whether in the facts and circumstances ofthe case, the Tribunal was right in relying onthe second proviso to section 10B(1) for thepurpose of deciding the issue relating to theexport turnover ? " 4. In the operative portion of the order of the Tribunal, wefind that the domestic turnover of the sales does not exceed 25%of the total sales and it is not in dispute that the domesticturnover was less than 25% of the total sales, thus, fullysatisfying the requirements as provided in the second proviso tosub-section (1) of section 10B at the relevant period of time,which reads as under: " Provided further that the profits and gains derivedfrom such domestic sales of articles or things orcomputer software as do not exceed twenty-five per centof the total sales shall be deemed to be the profits andgains derived from the export of articles or things orcomputer software." In view of the above, we find no question of law much lesssubstantial question of law that arises for our consideration.Accordingly, the appeal is dismissed. Sd/-Asst. Registrar. " Provided further that the profits and gains derivedfrom such domestic sales of articles or things orcomputer software as do not exceed twenty-five per centof the total sales shall be deemed to be the profits andgains derived from the export of articles or things orcomputer software." In view of the above, we find no question of law much lesssubstantial question of law that arises for our consideration.Accordingly, the appeal is dismissed. Sd/-Asst. Registrar. /true copy/Sub Asst. Registrar.sraTo1.The Assistant Registrar,Income Tax Appellate TribunalIII Floor, Rajaji Bhavan,Besant Nagar,Chennai Bench "B"., Chennai-40.2.The Commissioner of Income-Tax, Chennai.343.The Income-tax Officer, Company Ward-VI(1),Chennai.4. The Commissioner of Income Tax (Chennai III)Chennai.1 cc to M/s. Pushya Sitaraman, Sr. Standing Counsel Sr. 55780 T.C.(A).No.2592 of 2006JE (CO)kk 6/12