Ita/169/2013 Of Commissioner Of Income Tax-Iii v. M/S Wipro Limited

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9 DAY OF DECEMBER 27070PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD BETWEEN: ILT.A. NO.169 OF 2013 1.|COMMISSIONER OF INCOME TAX-III C.R. BUILDING, QUEENS ROAD BENGALURU. 2.|DEPUTY COMMISSIONER OF INCOME TAX RANGE-12(5), BENGALURU. (BY SRI. E.I. SANMATHI, ADV.,)- .., APPELLANTS~ AND* M/S. WIPRO LIMITED.DODDAKANNELLISARJAPUR ROADBENGALURU-5600725PAN: AAACWO38 7R. (BY SRI. S. GANESH, SR. COUNSEL FOR| SRI. SANDEEP HUILGOL, ADV., FOR|SRI. R.B. KRISHNA, ADV.,) ~. RESPONDENT THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,|1961L ARISING OUT OF ORDER DATED 16.11.20L2 PASSED IN ITANO.525/BANG/2011 AND 621/BANG/2011, FOR THE ASSESSMENTYEAR 2005-06, PRAYING TO (1) FORMULATE THE SUBSTANTIAL.QUESTION OF LAW STATED THEREIN. (II) SET ASIDE THE. APPELLATE ORDER DATED 16.11.2012 PASSED BY THE ITAT, 'B'BENCHBANGALORE,IN|APPEAL|PROCEEDINGSTTANO.525/BANG/2011 AND 621/BANG/2011. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY,ALOK ARADHE J.,DELIVERED THE FOLLOWING: | JUDGMENT This appeal under Section 260A of the Income TaxAct, 1961 (nereinafter referred to as the Act for short)nas been preferred by the revenue. The subject matterof the appeal pertains to the Assessment year 2005-06.The appeal was admitted by a bench of this Court videorder dated 17.12.2013 on the following substantialquestions of law:| (1) WhetnerOf)thefactsandcircumstances of the case, the tribunal Is right in law in directing the assessing.authority to set off the loss of the units tnSTP from other taxable DUusiness [ncomeeven when the same is not permitted under|provisions of IT Act? (2) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law in allowing the assessee's claim. of depreciation of Rs.17.06,58,039/- on|softwareimportedeVeClthough|theassessing authority had rightly disallowedthe expenditure under section 40(a)(i) of IT|Act as the assessee had failed to comply|with the provisions of section 195 whilemaking payments to the vendors? (3) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law in setting aside the reallocationof expenditure done by assessing authority|relating to expenditure booked by WiproCorporate division to other divisions even|though|theSaidre-allocation|by theassessing authority was in accordance withlaw? (4) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law in setting aside the exclusionsmade by assessing authority relating toother income such as interest income, scrapSales, profit on sale of fixed assets, profit|on account of fluctuation in exchange rate|from the profits of 10A? (5) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law setting aside the exclusion ofcertain amount received after six months.from export even when the assessingauthority had rightly excluded by holding|that the said sum was not remitted to [Indiawithin 6 months from the end of the’previous years in terms of section 10A(3) of[.T. Act?| (6) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law ts setting aside the re-computation of deduction under section 10Aof the IT Act done by assessing authorityeven though the assessing authority had|rightly made the adjustments to the export|turnover and the profits of the business by holding that certain units of the company|Started operations in Bangalore on thestrength of the earlier approvals from theSTP for expansion of business and as suchdo not represent new undertakings but only|extension of original units? (7) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law in setting aside the re-allocationof Corporate Expenses to certain extent to other Wipro division even though theassessing authority was right In holding|that in absence of such allocation expenses,the profits of the units eligible for deductionIn|chapterVIAwouldbe.artificiallyenhanced?| (7) WhetherOf)thefactsandcircumstances of the case, the tribunal Is right in law in setting aside the re-allocationof Corporate Expenses to certain extent to other Wipro division even though theassessing authority was right In holding|that in absence of such allocation expenses,the profits of the units eligible for deductionIn|chapterVIAwouldbe.artificiallyenhanced?| (8) WhetherOf)thefactsandcircumstances of the case, the Tribunal Is right in law In setting aside the additionmade on account of unavailed MODVATcredit to the value of the closing stock even.when the said addition is [In accordance withlaw? (9) WhetherOf)thefactsandcircumstances of the case, the Tribunal Is right in law in setting aside the exclusion ofreimbursement of Communication link and.other sales performance linked incentives|and telecommunication expenses even the|assessingauthorityrightly|excluded| reimbursement of aforesaid expenses from|export turnover and rightly held that the|Said expenses cannot be treated as a|considerationreceivedfor.EXPpoOrOf|computer software or articles or things? (10).Whether on the facts and|circumstances of the case, the Tribunal Is right in law tn setting exclusion of foreigncurrency expenditure from export turnover|even though the same has been done byassessing authority in accordance with law? (11).Whether on the facts and|circumstances of the case, the Tribunal Is right in law tn setting disallowance ofdeduction under section 14A made by|assessing authority even though the same|Is In accordance with law?| (12).Whether the order of the'tribunal can be said as perverse in nature|as the tribunal has relied on Its earlierdecisions which have not reached finality|since appeals preferred by Revenue under|section 260A against those orders are| pending before this Hon'ble High Court in[ITA No.363 of ZOO9 and other connectedmatters and as such tribunal ought to haveawaited decision of this Hon'ble High Court? (13).Whether on the facts and|circumstances of the case, the Tribunal Is right in law in setting aside the allocation ofcorporateexpenses|pertaining»CO computation of deduction under section|80IB done by assessing authority eventhough the same Is in accordance. withprovisions of IT Act? (14)Whether on the facts and|circumstances of the case, the Tribunal Is right in law in setting aside the allocation ofcorporateexpenses|pertainingto.computation of deduction under section|8OIC done by assessing authority even|though the same is in accordance withprovisions of IT Act? 2 |Learned counsel for the revenue submits that.all the remaining issues covered by decisions of this.court InM/S WIPRO LTD. VS. DCIT, 383 ITR 179 (KAR) and|COMMISSIONER OF INCOME-TAX &)ANOTHER VS. TATA ELXSI LTD." 382 ITR 654|(KAR)are pending adjudication at the instance of therevenue before the Supreme Court. In view of aforesaidsubmission needless to state that the Assessing Officer|Shall decide the issues In accordance with the decision|which may be rendered by the Supreme Court. 3.)For the reasons assigned by us _ in thjJuagment passed today in I.T.A.No.464/2017, thisappeal also stands disposed of in the same terms andwitn similar directions. Sd/-JUDGE. SS| Sd/-—JUDGE.