Date Of Judgment 30-08-2018, Ita v. M/S Target Corporation India Pvt. Ltd., 2/5

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.942/2017 BETWEEN : 1.|PR. COMMISSIONER OF INCOME TAX-7C.R. BUILDINGS,C.R. BUILDINGS, QUEENS ROAD,BANGALORE 560 OO1..BANGALORE 560 OO1.. 2.DEPUTY COMMISSIONEROF INCOME TAX,CIRCLE-12(4), BANGALORE. APPELLANTS (BY SRI.SANMATHI E.I., ADV.) AND : M/S TARGET CORPORATION|INDIA PVT. LTDHMBASSY BUSINESSPARK, SEZ UNIT, OUTER RING ROAD,BANGALORE 560045.PAN:AABCA8990ONRBSPONDENT (BY SRILANKUR PAI, ADV.) REEK THIS INCOME TAX APPBAL IS FILED UNDER SBKCTION260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER|DATED: 09.06.2017 PASSED IN IT/TP|JA NO. 1561/B/20142 Date of Judgment 30-08-2018, ITA No.942/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s Target Corporation India Pvt. Ltd., 2/5 FOR THE ASSESSMENT YEAR: 2007-2008, PRAYING THISHON BLE COURT TO:DECIDE THE FOREGOING QUESTION OF|LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE|RKHORMULATED BY THE HON'BLE COURT AS DEEMED FIT ANSET ASIDE THE APPELLATE ORDER DATED: 09.06.2017PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘'B'BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. IT/TPIA|NO. 1961/BANG/2012 FOR ASSESSMENT YEAR: 2007-2008,AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH|OTHER RELIEF AS DEEMED FIT, INT HE INTEREST OF]JUSTICE. THIS APPEAL COMING ON FORORDERS>THIS DAY,»s. SUJATHA, ., DELIVERED THE FOLLOWING JU DGMENT Mr. Sanmathi E.I.,Adv. for Appellants —RevenueMr.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 ‘B’, Bangalore,B=IT(TPIANo.1561/B/2012dated09.06.2017, relating to the Assessment Year2007-08. ?)The substantial question of law framed by theRevenue in the Memorandum of Appeal is as under: “WhetherOTLthefactsandin|thecircumstances of the case, that the Tribunal ts right|in law in including the expenditure incurred in| foreign currency by relying upon the decision of this|Hon'ble High Court in the case of CIT vs. Tata Elaxy|even when the said decision has not reached finality|and no such way of re-computation as directed by|the tribunal is provided under the provisions of IT Act|and when the Revenue has preferred appeal before|this Hon’ble Court against its original order? ~ 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),1s quoted below for ready reference:-_ “17. The similar nature of controversy, akinthis case, arose before the Karnataka High Court in|CIT v. Tata Elxsit 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 turnoverPr While giving the answer to the|issue, the High Court, inter-alia, held that when a| 4/5 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)‘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. — TSB. XXXXXX 4/5 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)‘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. — TSB. 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,|itWould|giveTISEtoinadvertent,unlawful, meaningless and illogical result which would causegrave 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_ theformula unworkable and absurd. Hence, we aresatisfied that such deduction shall be allowed from|the total turnover in same proportion as well”, Date of Judgment 30-08-2018, ITA No.942/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s Target Corporation 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. The)Appeal filed by the Appellants-Revenue is liable to be)dismissed and it is dismissed accordingly. No costs. SS Sd/-|JUDGE Sd/-|JUDGE