Commissioner Of Income Tax,Chennai v. M/S.beach Minerals Company Pvt

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR. JUSTICE M.M.SUNDRESHandTHE HONOURABLE MR. JUSTICE N.ANAND VENKATESH T.C.(A). No.149 of 2010 Commissioner of Income Tax,Chennai... Appellant vs. M/s.Beach Minerals Company Pvt.,No.32/2 BMC House, Halls Road,Egmore, Chennai - 8... Respondent Appeal filed under Section 260A of the Income Tax Act, 1961against the order of the Income Tax Appellate Tribunal "C"Bench, Chennai dated 07.09.2009 passed in I.T.A.No.1828/Mds/2008has been filed against the order of the Commissioner of IncomeTax(Appeals)III Chennai 34 in I.T.A.No.520/2007-2008/A III forthe assessment year 2005-2006 dated 20.06.2008 ,I.T.A. No.520/2007-2008/AIII has been filed against the order of theAssistant Commissioner of Income Tax, Company, Circle I(z)Chennai in PAN/GIR.No. dated 26.12.2007 for theassessment year 2005-2006. The Revenue is on appeal by raising the followingsubstantial question of law in respect of the assessment year2005-2006: "Whether on the facts and in the circumstances ofthe case, the Tribunal was right in holding that theexpenditure incurred on freight charges, terminalhandling charges and shipment expenses which are to beexcluded from the export turnover should be excluded https://hcservices.ecourts.gov.in/hcservices/ from the total turnover also while calculating therelief under Section 10B?" 2.Heard the learned counsel appearing for the appellant andthe learned counsel appearing for the respondent. 3.The assessee is a company and it filed its return ofincome after claiming deduction under Section 10B of the IncomeTax Act. The assessee had incurred freight charges, terminalhandling charges and shipment expenses during the assessmentyear. The Assessing Officer, by reducing the expenditure fromthe export turnover, held that the adjustments cannot be made inthe total turn over. Aggrieved by the same, the assessee filedan appeal before CIT (Appeals) and the same was allowed. Againstwhich, the Revenue filed an appeal before the Income TaxAppellate Tribunal and the Tribunal also allowed the appeal infavour of the assessee. Aggrieved against the same, the presentappeal is preferred by the Revenue by raising the above statedquestion of law. 4.When the matter is taken up for hearing, learned counselappearing for the respondent submits that the issue is coveredby the decision of the Honourable Supreme Court in Commissionerof Income Tax Vs. HCL Technologies Ltd., ((2018) 93 taxmann.com33 (SC)) in favour of the assessee and against the Revenue,wherein it is held as under: 19.In the instant case, if the deductions onfreight, telecommunication and insurance attributableto the delivery of computer software under Section 10Aof the IT Act are allowed only in Export Turnover butnot from the Total Turnover then, it would give rise toinadvertent, unlawful, meaningless and illogical resultwhich would cause grave injustice to the respondentwhich could have never been the intention of thelegislature. 20.Even in common parlance, when the object of theformula is to arrive at the profit from exportbusiness, expenses excluded from export turnover haveto be excluded from total turnover also. otherwise, anyother interpretation make the formula unworkable andabsurd. Hence, we are satisfied that such deductionshall be allowed from the total turnover in sameproportion as well. 21.On the issue of expenses on technical servicesprovided outside, we have to follow the same principleof interpretation as followed in the case of expensesof freight, telecommunication etc., otherwise theformula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange forproviding the technical services outside shall beallowed to exclude from the total turnover. 21.On the issue of expenses on technical servicesprovided outside, we have to follow the same principleof interpretation as followed in the case of expensesof freight, telecommunication etc., otherwise theformula of calculation would be futile. Hence, in the same way, expenses incurred in foreign exchange forproviding the technical services outside shall beallowed to exclude from the total turnover. 22.In view of above discussion, we are of theconsidered view that these instant appeals are devoidof merits and deserve to be dismissed. Accordingly, allthe connected matters and interlocutory applications,if any, are disposed of with no order as to costs." 4.In such view of the matter, this Tax Case Appeal isdismissed. No costs.-s/d- Assistant Registrar(CCC) True Copy Sub-Assistant RegistrarmmiTo1. The Income Tax Appellate Tribunal, "C" Bench, Chennai.2. The Commissioner of Income Tax (Appeals )III Chennai.3. The Assistant Commissioner of Income Tax Company Circle I(z) Chennai.+1 CC to Mr.T. Ravikumar, Advocate sr 43856.+1 CC to Mr. Sree Balaji, Advocate sr 44445. RJI(CO)SP(23/07/2018)