Date Of Judgment 30-08-2018, Ita v. M/S.safran Engineering Services India 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.913/2017 BETWEEN : 1.PRINCIPAL COMMISSIONER ©OF INCOME TAX-6|BMTC COMPLEX.KORAMANGALA|BBRENGALUROF INCOME TAX-6|BMTC COMPLEX.KORAMANGALA|BBRENGALUR 2.THR DEPUTY COMMISSIONBROF INCOME TAX, CIRCLE 12(3)BMTC COMPLEX, KORAMANGALA|BENGALURU.OF INCOME TAX, CIRCLE 12(3)BMTC COMPLEX, KORAMANGALA|BENGALURU. _APPBKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. SAFRAN ENGINEERINGSERVICES INDIA PVT LID.,.(FORMERLY SAFRAN|AEROSPACE INDIA PVT LTD)CSRIE NO.32 GRAPEGARDEN 17 H MAIN ROAD,BENGALURU-560095. ~.. RESPONDENT (BY SRI ANKUR PAI, ADV.) RREE Date of Judgment 30-08-2018, ITA No.913/2017 Principal Commissioner of Income Tax-6 & Another Vs. M/s.Safran Engineering Services India Pvt. Ltd., THIS INCOME TAX APPBAL IS FILED UNDER SBKCTION200-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED 16.06.2017 PASSED IN IT|TPIJA No.185/BANG/2014,FOR THE ASSESSMENT YEAR: 2009-2010, PRAYING TO:DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCHOTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY|THE HON'BLE COURT AS DEEMED FIT. (a) SET ASIDE THE|APPBLLATK ORDER DATBD: 16.06.2017 PASSEKD BY THEINCOME TAX APPELLATE TRIBUNAL, 'A'’ BENCH, BANGALORE,IN APPEAL PROCEEDINGS NO. IT/TP|A No.185/BANG/2014KHOR THE ASSHKSSMENT YKEAR JOOS-2010 AS SOUGHT FOR THIS APPEAL; 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.Mr. Ankur Pai,Adv. for Respondent — Assessee. 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 ‘A’, Bangalore,B=IT(TPIANo.185/Bang/2014dated 16.06.2017, relating to the Assessment Year2009-10. ?)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 Income Appellate Tribunal is justified in|directing the Assessing Officer to exclude the| Date of Judgment 30-08-2018, ITA No.913/2017 Principal Commissioner of Income Tax-6 & Another Vs. M/s.Safran Engineering Services India Pvt. Ltd., 3/5 expenditure both from the export turnover an the|total turnover when there is no provision in Section|10 (A) of the IT Act requiring the said expenses to be|reduced from the total turnover also?”| 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. Tata Elxst 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 of|communication expenses should be excluded from)the total turnover if the same are reduced from the|export turnover? 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| Date of Judgment 30-08-2018, ITA No.913/2017 Principal Commissioner of Income Tax-6 & Another Vs. M/s.Safran Engineering Services India Pvt. Ltd., 4/5 Date of Judgment 30-08-2018, ITA No.913/2017 Principal Commissioner of Income Tax-6 & Another Vs. M/s.Safran Engineering Services India Pvt. Ltd., 4/5 context in which it is used. Hence, what ts excludedfrom ‘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,telecommunicationandInsuranceattributable 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”, Date of Judgment 30-08-2018, ITA No.913/2017 Principal Commissioner of Income Tax-6 & Another Vs. M/s.Safran Engineering Services India Pvt. Ltd., 5/5 5]Having heard the learned counsels appearing for the parties, we are therefore of the opinion that no|substantial question of law arises in the present case. TheAppeal filed by the Appellants-Revenue is liable to be)dismissed and it is dismissed accordingly. No costs. SS Sd/-|JUDGE Sd/-|JUDGE