Date Of Judgment 31-08-2018, Ita v. M/S.mindtree Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 31[ST|]DAY OF AUGUST 2018. PRESENT THR HON’BLEK DR.JUSTICE VINBBT KOTHARI ANT) THR HON’BLE MRS.JUSTICEK S.SUJATHA I.T.A. No.262/2018 BETWEEN : 1.THE COMMISSIONER |OF INCOME-TAX, LIU."[‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA|BENGALURU-560095..OF INCOME-TAX, LIU."[‘T]FLOOR, BMTC BUILDING,80 FEET ROAD, KORMANGALA|BENGALURU-560095.. «|THERE DEPUTLY COMMISSIONEOF INCOME-TAX, CIRCLE-11]95]PRESENT ADDRESSADDL. /JOINT, LTU," FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560095.OF INCOME-TAX, CIRCLE-11]95]PRESENT ADDRESSADDL. /JOINT, LTU," FLOOR, BMTC BUILDING80 FEET ROAD, KORMANGALA|BBENGALURU-560095. _ APPBLLANTS| (BY SRI DILIP, ADV. FOR SRI K.V.ARAVIND, ADV.) AND ; M/s. MINDTREE LTD.,ISUCCESSOR IN INTEREST TO |MINDTREE WIRELESS PVT. LTD..,)RFORMEBRLY KNOWN AS KYOCERWIRELESS PVT. LTD.,GLOBAL VILLAGE, RVCE POSTMYSORE ROAD, BENGALURU-560059PAN: AACCK 1293L. ~ RESPONDENT Date of Judgment 31-08-2018, ITA No.262/2018 The Commissioner of Income-tax & Another Vs. M/s.Mindtree Ltd., THIS INCOMB TAX APPBAL IS FILED UNDER SECTION|2600-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDERDATED 22.09.2017 PASSED IN IT(TP)A No.1705/BANG/2013,.FOR THE ASSESSMENT YEAR: 2007-2008, PRAYING TO: I.)FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW |_| IALLOW THR APPBAL AND SBT ASIDE THR ORDERS PASSBD BY)THE INCOME-TAX APPELLATE TRIBUNAL, BENGALURU IN|IT(TP)A No.1705/BANG/2013 DATED: 22.09.2017 CONFIRMINGTHEORDEROF.TH EAPPELLATE,COMMISSIONBRANT)CONFIRMTHEORDERPASSEDBY|THE;DHPUTYCOMMISSIONER OF INCOME TAX, LTU, BENGALURU. THIS APPEAL COMING ON FOR ORDERS, THIS DAY,|S. SUJATHA, J©, DELIVERED THE FOLLOWING: JU DBGMEN Ti Mr. Dilip,Adv. for Mr. K.V.Aravind,Adv. for Appellants — Revenue. This Appeal is filed by the Revenue purportedlyraising substantial questions of law arising from theOrder of the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bangalore, inIT[TP|A No.1705S/Bang/2013 dated22.09.2017, relating to the Assessment Year2007-08. Date of Judgment 31-08-2018, ITA No.262/2018 The Commissioner of Income-tax & Another Vs. M/s.Mindtree Ltd., 3/6 a2The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under: “WhetherOTFthe factsandin|thecircumstances of the case, the Tribunal is right inlaw in setting aside the findings of the AssessingAuthority relating to inclusion of foreign travelexpenses, professional expenses and branchoffice expenses incurred in foreign currency fromexport turnovers well as from total turnover forthe purpose of computing deduction under SectionIOA of the Act by following the decision of thisHon'ble High Court in the case of CIT vs. TataElxsi1P” 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'blesupremeCourtin.theCaSE€oT|HCL|Technologies Ltd. (supra),is quoted below for readyreference:-. “WhetherOTFthe factsandin|thecircumstances of the case, the Tribunal is right inlaw in setting aside the findings of the AssessingAuthority relating to inclusion of foreign travelexpenses, professional expenses and branchoffice expenses incurred in foreign currency fromexport turnovers well as from total turnover forthe purpose of computing deduction under SectionIOA of the Act by following the decision of thisHon'ble High Court in the case of CIT vs. TataElxsi1P” 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'blesupremeCourtin.theCaSE€oT|HCL|Technologies Ltd. (supra),is quoted below for readyreference:-. “17. The simular nature of controversy, akin|this case, arose before the Karnataka High CourtinCIT v. Tata Elxsi Ltd. [2012] 204 Taxman|3S21/17/taxman.com 100/349 ITR 98. The issuebefore the Karnataka High Court was whetherthe Tribunal was correct in holding that whilecomputing 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 turnover? While giwing|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 tobe in conformity with the context in which it is|used. Hence, what is excluded from ‘export|turnover’ must also be excluded from ‘totalturnover’, since one of the components of ‘total|turnover’1Sexportturnover.Anyotherinterpretation would run counter to the legislativeintent and would be impermissible. 1S. XXXXXX 19. In the instant case, if the deductions onfreight,telecommunicationand|insuranceattributable to the delivery of computer softwareunder Section 10A of the IT Act are allowed only| Date of Judgment 31-08-2018, ITA No.262/2018 The Commissioner of Income-tax & Another Vs. M/s.Mindtree Ltd., 5/6 in Export Turnover but not from the TotalTurnover then, it would give rise to inadvertent,unlawful, meaningless and illogical result whichwould cause grave injustice to the Respondentwhich could have never been the intention of thelegislature. 20. Even in common parlance, when theobject of the formula ts to arrive at the profit fromexport business, expenses excluded from exportturnover have to be excluded from total turnoveralso. Otherwise, any other interpretation makesthe formula unworkable and absurd. Hence, weare satisfied that such deduction shall be allowedfrom the total turnover in same proportion aswell”. 5.Having heard the learned counsel appearingfor the Appellants-Revenue, we are therefore of theopinion that no substantial question of law arises in thepresent case. The Appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed|accordingly. No costs. 6/6 �/5@�/3�:=>+��4164�?6�+69:�:/�:=6��6+5/9169: �++6++66�3/4:=C>:=�� ���� +!�*������� +!�*�������