Date Of Judgment 30-08-2018, Ita v. M/S.sasken Network Engineering Limited

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.107/2018 BETWEEN : 1.PR. COMMISSIONEROF INCOME TAX-6|BMIC COMPLEX|KORAMANGALA|BENGALURU| 2.THR DEPUTY COMMISSIONBROF INCOME TAX, CIRCLE 6(1)(1)BENGALURU. _ APPKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. SASKEN NETWORK|BNGINBEBERING LIMITENO.139/295AMARJYOTHI LAYOUTRING ROAD, DOMLUR|BENGALURU -560 O71PAN: AAICS 4405 Q .. RESPONDENTRERRE THIS INCOME TAX APPBAL IS FILED UNDER SBKCTION260-A OF INCOME TAX ACT 1961,ARISING OUT OF ORDERDATED: 24.08.2017 PASSED IN ITA NO. 1894/BANG/2016,|FOR THE ASSESSMENT YEAR: 2011-2012, PRAYING THIS Date of Judgment 30-08-2018, ITA No.107/2018 Pr. Commissioner of Income Tax-6 & Another Vs. M/s.Sasken Network Engineering Limited HON'BLE COURT TO: DECIDE THE FOREGOING QUESTION|OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY|BBR FORMULATED BY THE HON'BLE COURT AS DBEMBED FIT(B) SET ASIDE THE APPELLATE ORDER DATED: 24.08.2017|PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘'C'BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. ITA NO.1894/BANG/2016 FOR ASSESSMENT YEAR: 2011-2012, ASSOUGHT FOR IN THIS APPBAL AND TO GRANT SUCH OTHER|RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE| THIS APPEAL COMING ON FORORDERS, 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|oil the Income Tax Appellate Tribunal, Bangalore Bench ‘C, Bangalore,?:IT|TPIANo.1894/Bang/2016dated24.08.2017, relating to the Assessment Year2011-12. ?)The substantial question of law framed by theRevenue in the Memorandum of Appeal is as under: “Whether,OTLthefactsand.In|the circumstances of the case, the Tribunal is correct in|excluding items from the total turnover which are|excluded from the Export Turnover while computing|the deduction under Section 10A in view of the factthat the term “Total Turnover is not defined in the| Date of Judgment 30-08-2018, ITA No.107/2018 Pr. Commissioner of Income Tax-6 & Another Vs. M/s.Sasken Network Engineering Limited 3/5 Section 1OA of the Act and the said interpretation|was relying on definition of total turnover as|envisaged under Section SOHHC of the Act? ~ 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 of|HCL TechnologiesLtd. (supra),is 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 computingrelief 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 excluded 4/5 from ‘export turnover’ must also be excluded from‘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 4/5 from ‘export turnover’ must also be excluded from‘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,|itwouldgiveTISEtoinadvertent,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 exportbusiness, 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.107/2018 Pr. Commissioner of Income Tax-6 & Another Vs. M/s.Sasken Network Engineering Limited 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