Ita/119/2010 Of The Commissioner Of Income Tax, Cochin v. M/S.sprint Technologies (P) Ltd., Aluva

IN THE HIGH COURT OF KERALA AT ERNAKULAMPRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 18TH DAY OF SEPTEMBER 2018 / 27TH BHADRA, 1940 ITA.No. 119 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 408/2009 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 13-10-2009 APPELLANT/S: THE COMMISSIONER OF INCOME TAX, COCHINCOCHIN. BY ADV. SRI. P.K.R.MENON (SR) &SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.SPRINT TECHNOLOGIES (P) LTD., ALUVA11/138, THAIKKATTUKARA, ALUVA. BY ADVS.SRI.T.M.SREEDHARAN (SR.)SRI.V.P.NARAYANANSRI.V.V.VARGHESE OTHER PRESENT: SRI PKR MENON SR COUNSEL FOR APPELLANT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: JUDGMENT Vinod Chandran, J. The appeal by the Revenue raises the following questions of law: Whether the Tribunal was correct in havingaffirmed the order of the First AppellateAuthority deleting the computation of profitmade by the Assessing Officer under Section10A(4) of the Income Tax Act and ought notthe Tribunal had held that in computing thetotal turnover, the entire turnover of theundertaking has to be taken; and whether itbe from the software business or from thebusiness of training imparted ? 2.The facts indicate that the assessee had been carring on two divisions, one dealing with software andthe other with training. The finding on facts as seenfrom the appellate order indicates that the two divisions were carried on in separate premises and theaccounts of both the divisions were also maintainedseparately. The profit and loss accounts were preparedseparately for each division, though head officeexpenditure is allocated. The software division of theappellant is a 100% export oriented unit under the STPI Scheme, which has been so certified by the SoftwareTechnology Parks of India (STPI). 3.We see from the assessment order that theAssessing Officer had computed the profits from thesoftware division as Rs.3,19,30,196/-. In computingthe proportion of the export turnover in respect of thecomputer software, to the total turnover of thebusiness carried on by the undertaking, the entireturnover of the undertaking itself was taken, ie.,adding on the turnover of the division carrying on thebusiness of training. The contention of the assesseeis that the denominator should be only the turnover ofthe specific business of the undertaking. We havealready noted from the facts recorded, that theassessee has been treating the separate business as twoseparate divisions. Going by the provisions also it isthe “business of the undertaking” that has to be taken,and not the undertaking as such. Otherwise, there wasno reason for employing of the words “business of theundertaking”. In such circumstances, we are of theopinion that the Tribunal was perfectly right in having affirmed the order of the First Appellate Authority,looking at the facts as revealed on appeal. Thequestions of law are answered in favour of the assesseeand against the Revenue. The appeal is dismissed. Nocosts. Sd/- K.VINOD CHANDRANJUDGE Sd/-ASHOK MENONJUDGE APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE ACOPY OF ORDER U/S.143(3) DTD.28/10/2003 FOR THE ASSESSMENT YEAR 2002-03. ANNEXURE BCOPY OF THE ORDER DATED 02/03/2009 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE CCOPY OF THE ORDER DTD.13/10/2009 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA NO.408/COCH/2009. RESPONDENT(S) EXHIBITS: NIL /TRUE COPY/ dkr PA TO JUDGE