Date Of Judgment:31-08-2018 I.t.a v. M/S.cgi Information Systems And Management Consultants Pvt. Ltd

IN THE HIGH COURT OF KARNATAKA, BENGALURU. DATED THIS THE 31 DAY OF AUGUST 2018 PRESENT THE HON'BLE Dr. JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA| I.T.A.No.93/2018 BETWEEN: 1.THE PR. COMMISSIONER OF INCOMB TAX5[‘T]FLOOR, BMTC BUILDING80 FEET ROAD,KORMANGALABENGALURU-560 OOD.5[‘T]FLOOR, BMTC BUILDING80 FEET ROAD,KORMANGALABENGALURU-560 OOD. 2.THR DEPUTY COMMISSIONER OF INCOME TAXCIRCLE-11(2),PRESENT ADDRESS.CIRCLE - 2(1)(1), 2 FLOOR.BMTC BUILDING, 80 FEET ROADKORMANGALABBENGALURU-560 095.CIRCLE-11(2),PRESENT ADDRESS.CIRCLE - 2(1)(1), 2 FLOOR.BMTC BUILDING, 80 FEET ROADKORMANGALABBENGALURU-560 095. .. APPBLLANT (By Mr. DILIP, ADV., FOR Mr. K.V.ARAVIND, ADV.,) AND: M/s. CGI INFORMATION SYSTEMS ANDMANAGEMENT CONSULTANTS PVT. LTD.,KHLECITRONIC CITY TOWERRS Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 2/6 95/1 &95/2, ELECTRONIC CITY PHASE 1 (WEST) |BBNGALURU -560 100.|PAN: AAACI 1994C. . RESPONDENT THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT|ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS.OF LAW; ALLOW THE APPEAL AND SET ASIDE THE ORDERS|PASSED)BYTHEINCOME-TAX.APPBRLLATBTRIBUNAL, BENGALURU IN ITA No.1446/BANG/2010 DATED 09-08-2017,VIDE ANNBXURE-KB AND CONFIRM THR ORDER OF THR DRPCONFKFIRMINTH EORDERPASSEDBY|TH EDEBPUTYCOMMISSIONER OF INCOME TAX, CIRCLE-2(1)(1), BENGALURU. THIS LT.A. COMING ON FOR ADMISSION THIS DAY, |S. SUJATHAJT DRBLIVERBD THE FOLLOWING : JUDGMENT Mr. Dilip.Adv.>forMr. K.V. AravindAdv. tor AppellantsRevenue The Appellants-Revenue have filed this appeal u/s.260Aof the Income Tax Act, 1961, raisingpurportedly one substantial question of law arising fromthe order of the.ITAT ‘A’ Bench, Bangalore, dated 09.08.2017passed in|IT(TP)A No.1446/Bang/2010for theA.Y.2006-07. Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 3/6 2 |The proposed substantial question of law|framed.1n theMemorandumoT|appealby theAppellants-Revenue|1S.quotedbelowforreadyreference:-. “Whether on the facts and circumstances of thecase, the Tribunal is right in law following ordersof this Hon’ble Court with regard to issuespertaining to computation of income under SectionIOA and reconstruction of business when theorders relied upon by the Tribunal has notreached finality?” 3.|Learned counsel for the Appellants-RevenueMr.Dilip submits that in so far as the atoresaidsubstantial question of law is concerned, the same iscovered by the decision of the Hon’ble Apex Court in thecase oftCommissioner of Income-tax, Central — III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com33(SC). The relevant portion of the judgment of theHon'blesupremeCourtin.theCaSE€oT|HCL| Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 4/6 Technologies Ltd. (supra),is quoted below for readyreference: - 3.|Learned counsel for the Appellants-RevenueMr.Dilip submits that in so far as the atoresaidsubstantial question of law is concerned, the same iscovered by the decision of the Hon’ble Apex Court in thecase oftCommissioner of Income-tax, Central — III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com33(SC). The relevant portion of the judgment of theHon'blesupremeCourtin.theCaSE€oT|HCL| Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 4/6 Technologies Ltd. (supra),is quoted below for readyreference: - “17. The similar nature of controversy, akinthis case, arose before the Karnataka High CourtinCIT v. Tata Elxsi Ltd[2012] 204 Taxman321/17/taxman.com 100/349 ITR 98.The|issue before the Karnataka High Court waswhether the Tribunal was correct in holding thatwhile computing relief under Section 10A of the ITAct, the amount of communication expensesShould be excluded from the total turnover if thesame are reduced from the export turnover?|While gwing the answer to the issue, the HighCourt, inter-alia, held that when a particular word|is not defined by the legislature and an ordinarymeaning is to be attributed to it, the said ordinarymeaning is to be in conformity with the context in|which it is used. Hence, what is excluded from‘export turnover’ must also be excludedfrom ‘totalturnover’, since one of the components of ‘totalturnover’1S|exportTurnover,Anyother|interpretation would run counter to the legislativeintent and would be impermissible. LSE, XXXXXX Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 5/6 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 onlyin 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 the|object 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”. 4Having heard the learned counsel for theAppellants-Revenue, we are therefore of the opinion thatno substantial question of law arises in the presentcase. The appeal filed by the Appellants-Revenue is) Date of Judgment:31-08-2018 I.T.A.No.93/2018 The Pr. Commissioner of Income-tax & Anr. Vs. M/s.CGI Information Systems and Management Consultants Pvt. Ltd., 6/6 liable to be dismissed and it is.(";(""3.accordingly No costs. Copy of this order be sent to the Respondent- Assessee forthwith. TL Sd/-. JUDGESd/-.JUDGE| JUDGE|