Date Of Judgment 30-08-2018, Ita v. M/S Target Corporation 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.943/2017 BETWEEN : 1.PR. COMMISSIONEROF INCOME TAX-/|C.R. BUILDINGS,QUEENS ROAD, ©BANGALORE — 560 OO1. 2.DBPUTY COMMISSIONEROF INCOME TAX, CIRCLE 4(1)(1)BANGALORE._ APPKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. TARGET CORPORATIONINDIA PVT LTD.,HMBASSY BUSSINBSS PARKsEZ UNIT, OUTER RING ROAD,BANGALORE-560045.|PAN : AABCAS990ONA ~.. RESPONDENT (BY SRI ANKUR PAI, ADV.) RERRE 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|A No.1562/BANG/20142,FOR THE ASSESSMENT YEAR: 2007-2008, PRAYING TO:DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCHOTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY| 2/5 THE HON'BLE COURT AS DEEMED FIT. (a) SET ASIDE THE|APPBLLATK ORDER DATBD: 09.06.2017 PASSKD BY THEINCOMETAX|APPBRLLATETRIBUNAL,"B'BENCH,BANGALORE,IN.APPEALPROCEKEEHEDINO.IT|TPIJANo.1962/BANG/2012 FOR THE ASSESSMENT YEAR 2007-2008 AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCHOTHER 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—- RevenueMr.Ankur Pal, Adv. for Respondent-Assessee| This Appeal is filed by the Revenue purportedly|raising substantial questions of law arising from the Order|oi the Income Tax Appellate Tribunal, Bangalore Bench ‘B,,Bangalore,B?IT|TPIANo.1562/Bang/2012dated09.06.2017, relating to the Assessment Year.2007-08. ?)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 cases of CIT v/s Tata)Elaxy even when the said decision has not reached| 3/5 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 the)Hon’ble Supreme Court in the case ofCommissioner ofIncome-tax, Central -— III vs. HCL Technologies Ltd.,[2018] 93 Taxmann.com 33(SC). 4 The relevant portion of the judgment of theHon’ble Supreme Court in the case ofHCL 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 100/549 ITR 9&8. 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 of|communication expenses should be excluded from)the total turnover if the same are reduced from the|export turnoverr 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)‘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 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,|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.943/2017 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. TheAppeal filed by the Appellants-Revenue is liable to be)dismissed and it is dismissed accordingly. No costs. SS| Sd/-|JUDGE Sd/-|JUDGE