Date Of Judgment 28-06-2018, Ita v. M/S. Aol Online India Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 28 DAY OF JUNE 2018 PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS..JUSTICK S.SUJATHA I.T.A. No.434/2017 BETWEEN : 1.THE PR. COMMISSIONER OF INCOME-TAX, CIT (A)#[‘T]FLOOR, BMTC BUILDING ~80 FEET ROAD, KORAMANGALA~BBENGALURU — 560 095#[‘T]FLOOR, BMTC BUILDING ~80 FEET ROAD, KORAMANGALA~BBENGALURU — 560 095 2.THR DBEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 11(1) PRESENT ADDRESSCIRCLE - 1(1) (1), 2 FLOOR, ©BMTC BUILDING, |3S8O0O- FEET ROAD, KORAMANGABRNGALURU — 560 095CIRCLE - 11(1) PRESENT ADDRESSCIRCLE - 1(1) (1), 2 FLOOR, ©BMTC BUILDING, |3S8O0O- FEET ROAD, KORAMANGABRNGALURU — 560 095 _. APPBLLANTS| (BY SRI.ARAVIND K V, ADV.) AND M/s. AOL ONLINE INDIA PVT. LTD.,(FORMERLY AMERICA ONLINE INDIA PVT. LTD.,) BUILDING1A RMZH KCOSPACH, OUTER RING ROAD,BELLANDUR VILLAGE, —BBENGALURU — 560 O37PAN NO.AABCN 2578G_. RESPONDENT (SRI.B.S.BALACHANDRAN, ADV.) Date of Judgment 28-06-2018, ITA No.434/2017 The Pr. Commissioner of Income Tax, CIT (A) & another Vs. M/s. AOL Online India Pvt. Ltd. 2/6 THIS INCOME TAX APPKAL [IS UNDER SKHKC.260-A INCOMETAXACT1961,ARISING.OUTOF.ORDER.DATED:25/01/2017 PASSED IN IT(TP)A NO.1670/BANG/2013,FOR THE ASSESSMENT YEAR 2005-2006. PRAYING TO: 1.FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATEDABOVE. 2. ALLOW THR APPEAL AND SBT ASIDE THE ORDERS|PASSEDBY|THEINCOMETAXAPPBRLLATBTRIBUNAL,|BBENGALURUINIT(TP)ANO.|1670/BANG/2013|DATED:25/01/2017CONFIRMINGTHEORDEROF|THEAPPBERELLATK COMMISSIONBR AND CONFIRM THR ORDPASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1(1)(1), BENGALURU. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,|Dr. VINEET KOTHARI, J©, DELIVERED THE FOLLOWING: JU DGMENT Mr.ARAVIND.K.V. ,|Adv. for Appellants — Revenue.Mr. B.S.BALACHANDRAN,Adv. for Respondents —|Assessee. | 1. The Appellants-Revenue have filed this appeal u/s.260Aof the Income Tax Act, 1961, raisingpurportedly certain substantial questions of law arisingfrom the order of theITAT, Bangalore Bench ‘A’,Bangalore, dated26.08.2016passed inIT(TP)ANo.1670/ Bang/2013(The Deputy Commissioner ofIncome Tax Circle-11({1) us. M/s AOL Online India Pvt.Ltd.}{fOrA.Y.2005-06. Date of Judgment 28-06-2018, ITA No.434/2017 The Pr. Commissioner of Income Tax, CIT (A) & another Vs. M/s. AOL Online India Pvt. Ltd. 3/6 2. The proposed substantial question of lawframed.1n theMemorandumoT|appealby theAppellants-Revenue|1S.quotedbelowforreadyreference:-. aWhetherOTLthe|facts|andin|thecircumstances of the case, the Tribunal erred|in holding that the assign authority is not|right in re-computing l1OA deduction byrelying upon the decision of this Hon’ble Court|in case of CIT V/s Tata Elaxi even when the|assessing authority has rightly included the|according to parameters set out in section|IOA and the decision relied upon by the|Tribunal has not reached finality”? 3.|Learned counsel for the Appellants-Revenue|Mr.K.V.Aravind submits that he does not press the >substantial question of law, as the issue regardingdeduction of expenditure incurred for.‘Export Turn Over’is also required to be deducted from|‘Total TurnOver’for the purpose of computing the deduction| Date of Judgment 28-06-2018, ITA No.434/2017 The Pr. Commissioner of Income Tax, CIT (A) & another Vs. M/s. AOL Online India Pvt. Ltd. 4/6 u/s.10Aof the Act, the controversy is no longer |res integraand is covered by the decision of the Division Bench of this Court in the case of.M/s.Tata Elxsi Ltd., vs. Asst.Commisstoner of Income Tax,decided on20.10.2015since reported in.(2015) 127 DTR 0327(Kar), which has been affirmed by the Hon’ble SupremeCourt in the case otfCommissioner of Income-tax,Central - III vs. HCL Technologies Ltd., [2018] 93Taxmann.com 33(SC). 4. The relevant portion of the judgment of theHon'blesupremeCourtin.theCaSE€oT|HCL|Technologies Ltd. (supra),is quoted below for readyreference:-. Date of Judgment 28-06-2018, ITA No.434/2017 The Pr. Commissioner of Income Tax, CIT (A) & another Vs. M/s. AOL Online India Pvt. Ltd. 4/6 u/s.10Aof the Act, the controversy is no longer |res integraand is covered by the decision of the Division Bench of this Court in the case of.M/s.Tata Elxsi Ltd., vs. Asst.Commisstoner of Income Tax,decided on20.10.2015since reported in.(2015) 127 DTR 0327(Kar), which has been affirmed by the Hon’ble SupremeCourt in the case otfCommissioner of Income-tax,Central - III vs. HCL Technologies Ltd., [2018] 93Taxmann.com 33(SC). 4. 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, akin|this 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 was whether|the Tribunal was correct in holding that while|computing relief under Section 10A of the IT Act, the amount of communication expenses should beexcluded from the total turnover tf the same arereduced from the export turnoverP While givingthe answer to the issue, the High Court, inter-alia,held that when a particular word is not definedby the legislature and an ordinary meaning 1s tobe attributed to it, the said ordinary meaning is tobe in conformity with the context in which it isused. Hence, what is excluded from ‘exportturnover’ must also be excluded from ‘totalturnover’, since one of the components of ‘totalturnover’1Sexportturnover.Anyotherinterpretation would run counter to the legislativeintent and would be impermissible. | 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 illogical result whichwould cause grave injustice to the Respondentwhich could have never been the intention of thelegislature. 6/6 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”. Oo. Having heard the learned counsels for theparties, 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 is9:";:""(9accordinglyNO|costs. Sd/-.JU DGE Sd/-.JU DGE