Date Of Judgment 14-08-2018 I.t.a v. M/S. Indegene Life Systems Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 14[th]DAY OF AUGUST 2018| PRESENT THE HON'BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA| I.T.A.No.847/2017 BETWEEN: 1.THE PR. COMMISSIONER OF INCOME-TAX.5[‘T]FLOOR, BMTC BUILDING5[‘T]FLOOR, BMTC BUILDING 80 FEET ROAD, KORMANGALA| BENGALURU-560 OOD. 2.THE ASST. COMMISSIONER OF INCOME-TAX.CIRCLE-3(1)(1), 2 KFLOOR|BMTC BUILDING, 80 FEET ROADCIRCLE-3(1)(1), 2 KFLOOR|BMTC BUILDING, 80 FEET ROAD KORMANGALA, BENGALURU-o60 O95. .. APPBLLANT (By Mr. ARAVIND K.V. ADV.) AND: M/S. INDEGENE LIFE SYSTEMS PVT. LTD.,)[‘T]FLOOR, PINE VALLEYHMBASSY GOLF LINK BUSINESS PARKOFF INTBRMBEDIATE RING ROADBBRENGALURU-560 07PAN: AAACT 4552N.| . RESPONDENT (By Mr. CHYTHANYA K.K. ADV.). THIS I.T.A. IS FILED UNDER SBCTION 2VJO0-A OF THER ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS.OF LAW. ALLOW THE APPEAL AND SET ASIDE THE ORDERS| Date of Judgment 14-08-2018 I.T.A.No.847/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Indegene Life Systems Pvt. Ltd., 2/6 PASSED)BYTHEINCOME-TAX.APPBRLLATBTRIBUNAL, BANGALORE IN ITA No.711/BANG/2016 DATED 31-03-2017,CONFIRMING THR ORDER OF THE APPELLATE COMMISSIONER|ANT)CONFIRMTHEORDERPASSED|BY|THEASST..COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BENGALURU.& KTC. THIS LT.A. COMING ON FOR ADMISSION THIS DAY,S. SUJATHAJT DRBLIVERBD THE FOLLOWING : JUDGMENT Mr. Aravind K.V.Adv. for Appellants-Revenue |Mr. Chythanya K.K.Adv. for Respondent -Assessee 1. The Appellants-Revenue have filed this appeal u/s.260Aof the Income Tax Act, 1961, raising)purportedly certain substantial questions of law arisingfrom the order of theITAT, Bangalore Bench ‘A’,Bangalore>.dated91.03.2017passedin.ITANo.711/Bang/2016(The Asst.Commissioner of Income|Tax vs. M/s.Indegene Life Systems Put. Ltd.,)forA.Y.2010-11. 2. The proposed substantial questions of lawframed.1n theMemorandumoT|appealby the 3/6 Appellants-RevenueaTe€quotedbelowfor.ready reference: - “1.Whether the Tribunal was correct inholding that the expenses reduced from the exportturnover has to be reduced from the total turnoveralso since no provision under section 10Aprovides for exclusion of such expenses from thetotal turnover? D2 Whether the Tribunal twas correct inolding uphthe decisionofthe|appellateCommissioner in not allowing set-off of losses ofearlier years before deduction under section 10Aof the ActP” 3. Learned counsel for the Appellants-Revenue Mr.K.V.Aravind submits that in so far as the Tirst'substantial question of law is concerned, the same iscovered by the decision of the Hon’ble Apex Court in thecase oftCommissioner of Income-tax, Central — III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com33(SC). Date of Judgment 14-08-2018 I.T.A.No.847/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Indegene Life Systems Pvt. Ltd., 4/6 The relevant portion of the judgment of theHon'blesupremeCourtin.theCaSE€oT|HCL|Technologies Ltd. (supra),is quoted below for readyreference:-. “17. The similar nature of controversy, akinthis case, arose before the Karnataka High CourtinCIT v. Tata Elxsi Ltd[2012] 204 Taxman321/17/taxman.com 100/349 ITR 98.The.issue before the Karnataka High Court waswhether the Tribunal was correct in holding thatwhile computing relief under Section 10A of the ITAct, the amount of communication expensesShould be excluded from the total turnover if thesame are reduced from the export turnover?|While gwing the answer to the issue, the HighCourt, inter-alia, held that when a particular word|is not defined by the legislature and an ordinarymeaning is to be attributed to it, the said ordinarymeaning is to be in conformity with the context in|which it is used. Hence, what is excluded from|‘export turnover’ must also be excludedfrom ‘totalturnover’, since one of the components of ‘total|turnover’1Sexportturnover.Anyotherinterpretation would run counter to the legislativeintent and would be impermissible. | Date of Judgment 14-08-2018 I.T.A.No.847/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Indegene Life Systems Pvt. Ltd., 5/6 1S. XXXXXX 19, In the instant case, if the deductions onfreight,telecommunicationand|insuranceattributable to the delivery of computer softwareunder Section 10A of the IT Act are allowed onlyin Export Turnover but not from the TotalTurnover then, it would give rise to inadvertent,unlawful, meaningless and wulogical result whichwould cause grave injustice to the Respondentwhich could have never been the intention of thelegislature. 20. Even in common parlance, when theobject of the formula ts to arrive at the profit fromexport business, expenses excluded from exportturnover have to be excluded from total turnoveralso. Otherwise, any other interpretation makesthe formula unworkable and absurd. Hence, weare satisfied that such deduction shall be allowedfrom the total turnover in same proportion aswell”. Regarding Substantial Question No.2: 4. Learned counsel for the appellants-RevenueMr.K.V.Aravind|has.submitted that|theHon'bleSupreme Court has settled the controversy in the case Date of Judgment 14-08-2018 I.T.A.No.847/2017 The Pr. Commissioner of Income-tax & Anr. Vs. M/s. Indegene Life Systems Pvt. Ltd., 6/6 oT|Commissioner of Income-tax V/s. Yokogawa India Ltd., (2017) 77 taxmann.com 41 (SC)1 and therefore the said controversy is covered by the decision of theHon'ble Supreme Court. Oo. Having heard the learned counsels for the parties, we are therefore of the opinion that nosubstantial question of law arises in the present case. |The appeal filed by the Appellants-Revenue is liable tobe dismissed and it is.,$;,$$/.accordinglyNO|costs. Srl. Sd/-. JUDGE Sd/-| JUDGE