Date Of Judgment 30-08-2018, Ita v. M/S. Unisys India Private 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.221/2018 BETWEEN : 1.PR. COMMISSIONER |OF INCOME TAX-/|BMTC COMPLEX.KORAMANGALA|BANGALOREOF INCOME TAX-/|BMTC COMPLEX.KORAMANGALA|BANGALORE 2.THR DEPUTY COMMISSIONBROF INCOME TAX, CIRCLE 12(95)BANGALORE.OF INCOME TAX, CIRCLE 12(95)BANGALORE. _ APPKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. UNISYS INDIA PRIVATELTD.( & Od FLOOR,BLOCK ‘WARP’, SJR I PARK,WHITEFIELD AREA,#13, 14 &15, K.R.PURAM,BANGALORE-560 O66.PAN: AAACU 1502 G.~.. RESPONDENTRRERE THIS INCOME TAX APPEAL IS FILED UNDER SECTION2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED 28.09.2017 PASSED IN IT|TPIJA No.279/BANG/2013,FOR THE ASSESSMENT YEAR: 2007-2008, PRAYING TO: (1)|DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH Date of Judgment 30-08-2018, ITA No.221/2018 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. Unisys India Private Ltd., OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY|THE HON'BLE COURT AS DEEMED FIT. (2) SET ASIDE THE|APPELLATH ORDER DATED: 28.09.2017 PASSED BY THEINCOMETAX|APPELLA IETRIBUNAL,‘CCBENCH,BANGALORE,IN.APPEALPROCHBDINGSNO.IT|TPIANo.279/BANG/2013 FOR THE ASSESSMENT YEAR 2007-2008(3) GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE|INTBREBEST 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|of the Income Tax Appellate Tribunal, Bangalore Bench ‘C’, Bangalore,C?IT|TPIANo.279/Bang/2013dated 28.09.2017, relating to the Assessment Year.2007-08. ?)The substantial question of law framed by theRevenue in the Memorandum of Appeal is as under: “WhetherOTLthe factsandin|the circumstances of the case, the Tribunal was right in|setting aside the disallowance of expenditure|incurred In|foreignCUFTET?Plwhilecomputingdeductions under Section 10-A by relying upon the|decision of this Hon’ble Court in the case of CIT v/s. Date of Judgment 30-08-2018, ITA No.221/2018 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. Unisys India Private Ltd., 3/5 M/s. Tata Elxst when the said matter has notreached finality?”| 3)The issue is covered by the decision of theHon’ble Supreme Court in the case ofCommissioner of Income-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 Technologies Ltd. (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 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.221/2018 Pr. Commissioner of Income Tax-7 & Another Vs. M/s. Unisys India Private 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