Date Of Judgment 30-08-2018, Ita v. M/S.mu Sigma Business Solutions Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATHKD THIS THR 3 DAY OF AUGUST 2018 PRESENT THR HON’BLE DR.JUSTICKHK VINBET KOTHAR ANT THR HON’BLE MRS.JUSTICE S.SUJATHA| I.T.A. No.1048/2017 BETWEEN : 1.PR. COMMISSIONER |OF INCOME TAX-4|BMTC COMPLEX.KORAMANGALA|BANGALORE 2.THR DEPUTY COMMISSIONBROF INCOME TAX, CIRCLE 4(1)(2)BANGALORE. _ APPKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. MU SIGMA BUSINESS |SOLUTIONS PVT. LTD.,KALYANI PLATANI, 4 AND 5D FLOOR, [TPL MAIN ROADSY.NO.6 & 24.KUNDANAHHALI VILLAGEHK.R.PURAMBENGALURU — 560 O66PAN NO..AABCM3293N. _ RBSPONDENT RERRE THIS INCOME TAX APPEAL IS FILED UNDER SECTION2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED:23/06/2017 PASSED IN ITA NO.1764/BANG/2016,| Date of Judgment 30-08-2018, ITA No.1048/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s.Mu Sigma Business Solutions Pvt. Ltd., 2/5 FOR THE ASSESSMENT YBAR 2011-12 WITH A PRAYER TODECIDE THE FOREGOING QUESTION OF LAW AND / OR|SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATEDBY THE HON'BLE COURT AS DEEMED FIT AND SEI ASIDE|THE APPELLATE ORDER DATED: 23/06/2017 PASSED BYTHE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH,|BENGALURU,INAPPBRALPROCHBDINGSINITANO.1764/BANG/2016 FOR ASSESSMENT YEAR 2011-12, ASSOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER|RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS APPEAL COMING ON FOR ADMISSION, THIS| DAY,S. SUJATHA, J., DELIVERED THE FOLLOWING: JU DBGMENT Mr. E.I.Sanmathi,Adv. for Appellants — Revenue. This Appeal is filed by the Revenue purportedly|raising substantial questions of law arising from the Order|of the Income Tax Appellate Tribunal, Bangalore Bench ‘C’, Bangalore,A=IT|TPIANo.1764/Bang/2016dated23.06.2017, relating to the Assessment Year2011-132 ?)The substantial question of law framed by theRevenue in the Memorandum of Appeal is as under: “Whether on the facts and circumstances of thecase, the tribunal is justified in directing theAssessing Officer to exclude the certain expenditure|incurred in foreign currency both from the export|turnover and the total turnover when there is no 3/5 provision in Section 10A which requires the said|expenses to be reduced from the total turnover?” 3)The issue is covered by the decision of theHon’ble Supreme Court in the case ofCommissioner ofIncome-tax, Central -— III vs. HCL Technologies Ltd.,[2018] 93 Taxmann.com 33(SC). 4The relevant portion of the judgment of theHon'ble Supreme Court in the case otfHCL TechnologiesLtd. (supra),1s quoted below for ready reference:-_ “17. The similar nature of controversy, akinthis case, arose before the Karnataka High Court in|CIT vp. Vata Elxsi Lt. {2012} 204 Taxman321/17/taxman.com 100/349 ITR 98. The issuebefore 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 ofcommunication expenses should be excluded from)the total turnover if the same are reduced from the|export turnoverP While giving the answer to the|issue, the High Court, inter-alia, held that when a|particular word is not defined by the legislature and|an ordinary meaning is to be attributed to it, the said|ordinary meaning is to be in conformity with the|context in which tt is used. Hence, what its excludedfrom ‘export turnover’ must also be excluded from) 4/5 ‘total turnover’, since one of the components of ‘total|turnover is export turnover. Any other interpretation|would run counter to the legislative intent and would|be impermissible. — IS. XXXXXX 19. In the instant case, if the deductions onfreight,telecommunicationandinsurance|attributable to the delivery of computer software|under Section 10A of the IT Act are allowed only in|Export Turnover but notfrom the Total Turnover then,|itWould|giveTISEtoinadvertent,unlawful, meaningless and tulogical result which would cause|grave injustice to the Respondent which could have|never been the intention of the legislature. 4/5 ‘total turnover’, since one of the components of ‘total|turnover is export turnover. Any other interpretation|would run counter to the legislative intent and would|be impermissible. — IS. XXXXXX 19. In the instant case, if the deductions onfreight,telecommunicationandinsurance|attributable to the delivery of computer software|under Section 10A of the IT Act are allowed only in|Export Turnover but notfrom the Total Turnover then,|itWould|giveTISEtoinadvertent,unlawful, meaningless and tulogical result which would cause|grave injustice to the Respondent which could have|never been the intention of the legislature. 20. Even in common parlance, when the objectof the formula is to arrive at the profit from export|business, expenses excluded from export turnover|have to be excluded from total turnover also.Otherwise, any other interpretation makes the|formula unworkable and absurd. Hence, we are)Satisfied that such deduction shall be allowed from)the total turnover in same proportion as well”, 5]Having heard the learned counsel appearing for the Appellants-Revenue, we are therefore of the opinion| that no substantial question of law arises in the present) Date of Judgment 30-08-2018, ITA No.1048/2017 Pr. Commissioner of Income Tax-4 & Another Vs. M/s.Mu Sigma Business Solutions Pvt. Ltd., 5/5 case. The Appeal filed by the Appellants-Revenue is liable| to be dismissed and it is dismissed accordingly. No costs. Copy of this Order be sent to the Respondent-Assessee forthwith. SS Sd/-|JUDGE Sd/-|JUDGE