Income Tax v. Tata Elxsi Ltd.: [2012] 349 Itr 98 (Karnataka

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7 DAY OF MARCH, 2018 PRESENT HON'BLE MR. JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE AND HON'BLE MR.JUSTICE S.SUNIL DUTT YADAV INCOME TAX APPEAL NO.528 OF 2017 BETWEEN: 1. THE COMMISSIONER OF INCOME-TAX, LTU, JSS TOWERS, BSK III STAGE, BENGALURU-560 085. 2. THE DEPUTY COMMISSIONER OF INCOME -TAX, LTU, CIRCLE-1, JSS TOWERS, BSK III STAGE, BENGALURU-560 085. (BY SRI DILIP.M. ADVOCATE, FOR K.V. ARAVIND, ADVOCATE) AND:M/s. INTEL TECHNOLOGY INDIA PVT. LTD., NO.23-56P, OUTER RING ROAD, DEVARABEESANAHALLI, VARTHUR HOBLI, BENGALURU-560 103. … APPELLANTS … RESPONDENT ( BY SRI SANDEEP HUILGOL, ADVOCATE) ITA.No.528 OF 2017 THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 22.02.2017, PASSED IN ITA NO.45/BANG/2016 FOR THE ASSESSMENT YEAR 2007-2008 PRAYING: (1) TO FORMULATE SUBSTANTIAL QUESTIONS OF LAW (2) TO ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN I.T.A. NO.45/BANG/2016 DATED 22.02.2017, CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND ETC. THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, THE CHIEF JUSTICE DELIVERED THE FOLLOWING: JUDGMENT The learned counsel Mr. Sandeep Huilgol undertakes to file power for the respondent. The Revenue seeks to maintain this appeal under Section 260-A of the Income Tax Act, 1961 [‘the Act’] against the order dated 22.02.2017 as passed by the Income Tax Appellate Tribunal, Bengaluru, [‘the Tribunal’] in ITA. No.45/Bang/2016 (relating to the Assessment Year 2007-2008). Shorn of unnecessary details, the relevant background aspects of the matter are that the respondent-assessee, said to be engaged in the business of software development and sales and support services to Intel group worldwide, in its ITA.No.528 OF 2017 return of income, claimed deductions under Section 10-A of the Act. The Assessing Officer, though allowed exclusion of certain expenses from the export turnover, in terms of clause (iv) of Explanation 2 to Section 10-A of the Act, but did not accept the other submissions of the assessee that these expenses were to be excluded from the total turnover also. However, in appeal, the appellate authority accepted the submissions of the assessee, inter alia, with reference to the decision of this Court in the case of COMMISSIONER OF INCOME TAX v. TATA ELXSI LTD.: [2012] 349 ITR 98 (Karnataka). Aggrieved, the Revenue preferred an appeal before the Tribunal with the submissions that the Department had not accepted the decision of this Court in the case of Tata Elxsi Ltd. (supra) and had preferred a Special Leave Petition before the Hon’ble Supreme Court. However, during the course of submissions, it was pointed out before the Tribunal that the Special Leave Petition filed by the Department had since been dismissed by the Hon’ble Supreme Court. The Tribunal, therefore, proceeded to dismiss the appeal with a short order, the relevant part whereof reads as under: ITA.No.528 OF 2017 “2. During the course of hearing our attention was invited to the fact that the CIT (A) has adjudicated the issue in the light of the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. (349 ITR 98 (Karn.) The SLP filed by the department against the judgment of Hon’ble jurisdictional High Court has been dismissed by the Hon’ble Supreme Court. Therefore, the finding of CIT(A) is in consistence with the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. (supra). Thus, we do not find any infirmity in the order of CIT(A). We accordingly reject the ground raised by the revenue. 3. In result, the appeal by the revenue is dismissed.’’ Seeking to assail the order so passed by the Tribunal, ITA.No.528 OF 2017 “2. During the course of hearing our attention was invited to the fact that the CIT (A) has adjudicated the issue in the light of the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. (349 ITR 98 (Karn.) The SLP filed by the department against the judgment of Hon’ble jurisdictional High Court has been dismissed by the Hon’ble Supreme Court. Therefore, the finding of CIT(A) is in consistence with the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd. (supra). Thus, we do not find any infirmity in the order of CIT(A). We accordingly reject the ground raised by the revenue. 3. In result, the appeal by the revenue is dismissed.’’ Seeking to assail the order so passed by the Tribunal, it is sought to be argued on behalf of the Revenue that the Tribunal was not right in allowing the expenses, that had been reduced from export turnover, to be also reduced from the total turnover, since nothing in Section 10-A of the Act provides for such an exclusion. Having heard the learned counsel for the appellants and having examined the law applicable, we are satisfied that no substantial question of law is involved and this appeal does not merit admission. The method of computing the exemption under Section 10-A of the Act and precisely, the question as to ITA.No.528 OF 2017 whether the expenses excluded from the export turnover are also to be excluded from the total turnover for the purpose of Section10-A of the Act, has been dealt with by this Court in the case of Tata Elxsi Ltd. (supra); and this Court has answered the question against the Revenue, while holding, inter alia, as under: “… In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term ‘total turnover’ in Section 10-A, there is nothing in the said Section to mandate that, what is excluded from the numerator that isexport turnover would nevertheless form part ofthe denominator. Though when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to the same, the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is used. When the statute prescribes a formula and in the said formula, ‘export turnover’ is defined, and when the ‘total turnover’ includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding the meaning of the total turnover, when the total turnover includes export turnover. If what is excluded in computing theexport turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretationwould run counter to the legislative intent and impermissible. If that were the intention of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover . . .” (underlining supplied) The principles aforesaid directly apply to the present case too, and therefore, we are unable to find any infirmity in the order impugned. The appeal, therefore, stands dismissed. Sd/- CHIEF JUSTICE Sd/- JUDGE BKV/vgh*