Date Of Judgment 30-08-2018, Ita v. M/S.toshiba Software (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.971/2017 BETWEEN : 1.PR. COMMISSIONER |OF INCOME TAX-/|BMTC COMPLEX.KORAMANGALA|BANGALOREOF INCOME TAX-/|BMTC COMPLEX.KORAMANGALA|BANGALORE 2.JOINT COMMISSIONER |OF INCOME TAX, (OSD),CIRCLE-12(4),BANGALORE.OF INCOME TAX, (OSD),CIRCLE-12(4),BANGALORE. _ APPKRLLANTS (BY SRI E.LSANMATHI, ADV.) | AND : M/s. TOSHIBA SOFTWARE(INDIA) PVT LTD.,(ERSTWHILE TOSHIBA EMBEDDED SOFTWARE(INDIA) P. LTD.,NO.3A, “ESSAE VISHNAVI SOLITIRE”,3 BLOCK, KORMANGALA, |BENGALURU.PAN: .~.. RESPONDENT (BY SRI ANKUR PAI, ADV.) RRERE THIS INCOME TAX APPBAL IS FILED UNDER SBKCTION2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED 09.06.2017 PASSED IN ITA No.808/BANG/2016, FOR| Date of Judgment 30-08-2018, ITA No.971/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s.Toshiba Software (India) Pvt. Ltd., THE ASSESSMENT YEAR: 2010-2011, PRAYING TO: DECIDETHE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER|QUESTIONS OF LAW AS MAY BE FORMULATED BY THE|HON BLE COURT AS DEEBMED FIT. AND SEI ASIDE THEAPPELLATH ORDER DATED: 09.06.2017 PASSED BY THEINCOMETAX|APPBRLLATETRIBUNAL,'CBENCH,BANGALORE,IN.APPHALPROCHBDINGSNO.ITANo.808/BANG/2016 FOR THE ASSESSMENT YEAR 2010-2011AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH|OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF]JUSTICE. THIS APPEAL COMING ON FOR ADMISSION, THIS|DAY,S. SUATHA, J., DELIVERED THE FOLLOWING: JU DGMENT Mr. E.I.Sanmathi,Adv. for Appellants —RevenueMr. Ankur Pai, Adv. lor 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 ‘C,, Bangalore, inITA No.808/Bang/2016dated09.06.2017>relating to the Assessment Year2010-11. ?)The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under: “Whether on the facts and circumstances of thecase, the Tribunal is justified in directing theassessing officer to exclude the expenditure in|foreign currency and communication charges both| 3/5 from the export turnover and the total turnover when|there is no provision in Section 1O0A which requiresthe said expenses to be reduced from the_ totalturnover?” 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| 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 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”, 5]Having heard the learned counsel appearing for parties, we are therefore of the opinion that no substantial| Date of Judgment 30-08-2018, ITA No.971/2017 Pr. Commissioner of Income Tax-7 & Another Vs. M/s.Toshiba Software (India) Pvt. Ltd., 5/5 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. Sd/-|JUDGESd/-|JUDGESS