In The Case Oftm/S Canara Bank v. Assistant

IN THE HIGH COURT OF KARNATAKA AT BANGALORE Dated this the 17[th]day of June 2014. PRESENT THE HON’BLE MR. JUSTICE N KUMAR ANTI THE HON’BLE MR JUSTICE B MANOHAR ITA No. 560 of 2008 !"# ITA No. 562 of 2008 ITA No. 560 of JOOS BBRITIWE Ll.The Commissioner ot Income Tax. C.R. Building Queens Road| Bangalore iaThe Assistant Commissioner of Income Tax Circle 11(3) C.R. Building Queens Road| Bangalore.. Appellant (By Sri K.V. Aravind, Advocate) p AND: M/s. [Gate Global Solutions Ltd.,No.1, Jakkasandra Main RoadOff: Sarjapur RoadKoramangalaBangalore — 560 034 ...Respondent (By Sri T. Suryanarayana, forM/s. King & Patridge, Advocates) This ITA filed U/s. 260A of I.T. Act, 1961 arising out of|order dated 30-11-2007 passed in ITA No.392/Bang/2007|for the Assessment 2003-04, praying to (i) formulate the|substantial questions of law stated therein; (ii) allow the|appeal and set aside the order passed by the ITAT Bangalorein ITA No.3892/BANG/2007, dated 30-11-2007, confirmingthe order of the Appellate Commissioner and confirm the|order passed by the Assistant Commissioner of Income Tax,Circle-11(3), Bangalore. ITA No. 562 of JOOS BBRITIWE Ll.The Commissioner ot Income Tax.C.R. BuildingC.R. Building Queens Road. Bangalore iaThe Assistant Commissioner ot Income Tax|Circle 11(3)C.R. BuildingCircle 11(3)C.R. Building . Queens Road|Bangalore .. Appellant (By Sri K.V. Aravind, Advocate) AND: M/s. [Gate Global Solutions Ltd.,No.1, Jakkasandra Main RoadOff: Sarjapur RoadKoramangalaBangalore — 560 034...Respondent (By Sri T. Suryanarayana, for M/s. King & Patridge, Advocates) This ITA filed U/s. 260A of I.T. Act, 1961 arising out of|order dated 30-11-2007 passed in ITA No.391/Bang/2007|for the Assessment 2002-03, praying to (i) formulate the|substantial questions of law stated therein; (ii) allow the|appeal and set aside the order passed by the ITAT Bangalorein ITA No.3891/BANG/2007, dated 30-11-2007, confirmingthe order of the Appellate Commissioner and confirm the|order passed by the Assistant Commissioner of Income Tax,Circle-11(3), Bangalore. TheseITAScomingOT)for.hearingthisN. KUMAR J.,delivered the following: day, JU DGMENT Both these appeals are preferred by the Revenue|challenging the order passed by the Tribunal. Thesubstantial questions of law raised are as under: “ 1.)Whether the Appellate Authorities were|correctin|holding thatthat(OSUTIof|Rs.3,41,70,000/-WASreducedfromexportturnover as per clause (6) to Explanation (2) ofsection 1OA of the Act and consequently the sameShould be reduced from the “total turnover” byapplying the common parlance theory and thedefinitions as stated in Section SOHHC and othersections of the Act when computing deductionunder Section 1OA of the Act? D2 Whether the Appellate Authorities were|correct in holding that foreign remittance obtainedbeyond the stipulated time as well as_ theextended time of six months as contemplatedunder Section 10A of the Act for the purpose ofFEMA should be aqllowed under the Income Tax 5 provisionswhenallowingdeductionundersection 1OA of the Act.” 2.At the time of hearing the learned Counsel for|the Revenue raised one more substantial question of law as|additional substantial question of law. It reads as under: “Whether the tribunal was correct inholding that the Assessing Officer was notjustified in estimating the expenditure at5% of the income without any guidelines,when section 14A of the Act. provides fordisallowing the expenditure on exemptincome.” 3.In so far as first substantial question of law isconcerned, in the case of the assessee itself, for the earlier.years, when the Tribunal had granted relief to the assessee,in appeal by the Revenue, the order was set aside and the|matter was remanded back to the Tribunal for fresh|consideration. It is in ITA 235/07 decided on 24[th]september, 2013. Following the said judgment, the finding 2.At the time of hearing the learned Counsel for|the Revenue raised one more substantial question of law as|additional substantial question of law. It reads as under: “Whether the tribunal was correct inholding that the Assessing Officer was notjustified in estimating the expenditure at5% of the income without any guidelines,when section 14A of the Act. provides fordisallowing the expenditure on exemptincome.” 3.In so far as first substantial question of law isconcerned, in the case of the assessee itself, for the earlier.years, when the Tribunal had granted relief to the assessee,in appeal by the Revenue, the order was set aside and the|matter was remanded back to the Tribunal for fresh|consideration. It is in ITA 235/07 decided on 24[th]september, 2013. Following the said judgment, the finding recorded by the Tribunal which has given rise to the first|substantial question of law is hereby set aside and thematter is remanded back to the Tribunal for § fresconsideration in accordance with law and in terms of theaforesaid order. Liberty is reserved to the assessee to urgesuch additional grounds or place additional evidence insupport of its contention. 4In so far as second substantial question of law isconcerned, the learned Counsel for the Revenue fairlysubmitted that it does not arise for consideration andtherefore it is not pressed. | 5In so far as third substantial question of law isconcerned, this Court had an occasion to consider the same in the case oftM/S CANARA BANK VS. ASSISTANT COMMISSIONER OF INCOME TAX41n.ITA No.1397/06andconnected matters,decided on 12.11.20139wherein, onthe date of the assessment as there was no guidelines, it was held that there cannot be any disallowance on notionalbasis. That judgment covers these cases as well. Thereforethe third substantial question of law is answered in favour ofthe assessee and against the Revenue. ksp/- Sd/-JUDGESd/-JUDGE