Ita/351/2022 Of Ntt Data Global Delivery Services Pvt Ltd v. Assistant Commissioner Of Income Tax

Digitally signedby MALA K NLocation:HIGH COURTOF KARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18 DAY OF OCTOBER, 2022 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T G SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 351 OF 2022 C/WINCOME TAX APPEAL NO. 1 OF 2022 IN ITA NO. 351 OF 2022 BETWEEN: NTT DATA GLOBAL DELIVERY SERVICES PVT LTD (FORMERLY KNOWN AS KEANE INTERNATIONAL (INDIA) PVT.LTD.) OLD ADDRESS, NO.17 SOUTH END ROAD, BASAVANAGUDI, BANGALORE-560004. COMPANY REGISTERED UNDER COMPANIES ACT OF 1956, CURRENT ADRESS SECOND FLOOR, BLOCK 2 D7, PLOT NO.123, EPIP PHASE II, WHITEFIELD MAIN ROAD, BENGALURU, KARNATAKA-560066. REPRESENTED BY DIRECTOR, MR. RAVIKUMAR S MUTTUGADUR, S/O M SOMASHEKHARAPPA, AGED 55 YEARS, 5/41, 1 MAIN, 1 STAGE, KHB COLONY, BASAVESHWAR NAGAR, BANGALORE, KARNATAKA, 560079. …APPELLANT (BY SRI. NAGESWAR RAO, ADVOCATE) AND: ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 11(5), 14/3, RASTROTHANA BHAVAN, BANGALORE, 5 FLOOR, NRUPATUNGA ROAD, BANGALORE 560001. …RESPONDENT (BY SRI. K.V. ARAVIND, STANDING COUNCEL) This ITA filed under Sec.260-A of Income Tax Act 1961, arising out of order dated 06/04/2016 passed in IT(TP)A No.1487/Bang/2013, for the Assessment Year 2005-2006, praying to admit the instant appeal to answer the substantial questions of law set out in para 27 above and etc,. IN ITA NO.1 OF 2022 BETWEEN: NTT DATA GLOBAL DELIVERY SERVICES LTD. (FORMERLY KNOWN AS KEANE INTERNATIONAL (INDIA) PVT.LTD.) OLD ADDRESS, NO.17 SOUTH END ROAD, BASAVANAGUDI, BANGALORE-560004. CURRENT ADDRESS SECOND FLOOR, BLOCK 2 D7, PLOT NO.123, EPIP PHASE II, WHITEFIELD MAIN ROAD, BENGALURU, KARNATAKA-560066. REPRESENTED BY DIRECTOR, MR. SRINIVAS BHIMARAJU, S/O LATE B. HARAGOPALA RAO, AGED 54 YEARS, R/AT NO.502 GOMED BLOCK, SRISAIRAM MANOR APT, NEAR PRAGATI NAGAR, YOSUFGUDA-HYDERABAD, TELENGANA-500045. …APPELLANT (BY SRI NAGESWAR RAO, ADVOCATE) AND: ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 11(5) BANGALORE. …RESPONDENT (BY SRI. K.V. ARAVIND, STANDING COUNCEL) This ITA is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 06/04/2016 passed in IT(TP)A No.1487/Bang/2013, for the Assessment Year 2005-2006, praying to admit the instant appeal to answer the substantial questions of law set out in para 27 above and etc,. These appeals coming on for admission this day, P.S.DINESH KUMAR J., delivered the following: J U D G M E N T These two appeals by the assessee are directed against the orders of ITAT[1] dated April 6, 2016 (Annexure- A) and July 16, 2021 (Annexure-M) in IT(TP)A No.1487/Bang/2013 for the Assessment Year:2005-06. 2. After hearing learned Advocate for the assessee and the learned Standing Counsel for the Revenue, in our opinion, following two questions arise for consideration: (i) Whether Tribunal erred on facts and in law in not granting deduction under Section 10A of the Income Tax Act, 1961, in relation to consideration received towards recruitment fees? (ii) Whether Tribunal erred in not allowing deduction claimed under Section 10A of the Act ignoring binding precedent in appellant's own case for assessment year 2007-08? 1 Income Tax Appellate Tribunal J U D G M E N T These two appeals by the assessee are directed against the orders of ITAT[1] dated April 6, 2016 (Annexure- A) and July 16, 2021 (Annexure-M) in IT(TP)A No.1487/Bang/2013 for the Assessment Year:2005-06. 2. After hearing learned Advocate for the assessee and the learned Standing Counsel for the Revenue, in our opinion, following two questions arise for consideration: (i) Whether Tribunal erred on facts and in law in not granting deduction under Section 10A of the Income Tax Act, 1961, in relation to consideration received towards recruitment fees? (ii) Whether Tribunal erred in not allowing deduction claimed under Section 10A of the Act ignoring binding precedent in appellant's own case for assessment year 2007-08? 1 Income Tax Appellate Tribunal 3. Briefly stated the facts of the case are, the assessee is a Company involved in the business of Software Development. Among other things, the Company also maintains a data base of the IT professionals and supplies man power to different Companies. Assessee claimed benefits under Section 10A of the Income Tax Act, 1961 ('Act' for short) in respect of the income earned under the head "supplying man power". For the assessment year 2007-08, assessee was given the benefit under Section 10A of the Act by the ITAT. These two appeals are in respect of assessment year 2005-06. During this year, the Assessing Officer vide order dated December 31, 2008 disallowed the assessee's claim. On appeal, the ITAT confirmed the assessment order and dismissed the appeal. Assessee filed a miscellaneous application before ITAT to consider ground No.16 relating to the benefit under Section 10A of the Act. By its order dated September 23, 2016, the ITAT recalled the order and directed the Registry to re-list the matter to consider grounds No.10, 11, 16 and 17. However, after hearing, vide order dated March 3, 2017, the ITAT held that ground No.16 is general in nature and does not require any adjudication and accordingly, dismissed the same. Assessee filed another miscellaneous petition again seeking adjudication on ground No.16. The said miscellaneous petition was also dismissed vide order dated November 7, 2017. Feeling aggrieved, the assessee approached this court in I.T.A.No.526/2017. By order dated November 19, 2020, this court remitted the matter to the ITAT to adjudicate ground No.16 in accordance with law. After the remand, by the impugned order, the ITAT dismissed ground No.16. Hence, these appeals. 4. In I.T.A.No.351/2022, assessee has challenged the order dated April 6, 2016 and in I.T.A.No.1/2022, has the order dated July 16, 2021 passed by the ITAT. 5. Sri.Nageshwar Rao, learned Advocate for the assessee adverting to order dated November 12, 2020 submitted that the issue with regard to benefit under Section 10A of the Act has been concluded in assessee's own case for the year 2007-08 in I.T.A.No.544/2013 filed by the Revenue, challenging the order dated June 21, 2013 passed in ITA No.1182/BANG/2011 by the ITAT granting relief to the assessee. 6. Adverting to para-9 of the said order, Sri.Nageshwar Rao submitted that the notification dated September 26, 2000 has been issued by the Central Board of Direct Taxes (CBDT) with an object to outsourcing service industry in India as it generates employment resulting in earning Foreign Exchange. 7. He next pointed out that while passing the order on Miscellaneous Petition dated July 16, 2021 (Annexure-M), the ITAT has recorded a finding that assessee had placed reliance on the order passed by the Tribunal for the assessment year 2007-08 on an identical issue, but yet dismissed the miscellaneous petition on the ground that assessee had not sought for recall of the decision on ground Nos.14 and 15, which specifically dealt with the issue on merits. He further submitted that the dismissal of miscellaneous petition is in the teeth of order of this court finally deciding the matter in I.T.A.No.544/2013. Accordingly, he prayed for allowing these appeals. 7. He next pointed out that while passing the order on Miscellaneous Petition dated July 16, 2021 (Annexure-M), the ITAT has recorded a finding that assessee had placed reliance on the order passed by the Tribunal for the assessment year 2007-08 on an identical issue, but yet dismissed the miscellaneous petition on the ground that assessee had not sought for recall of the decision on ground Nos.14 and 15, which specifically dealt with the issue on merits. He further submitted that the dismissal of miscellaneous petition is in the teeth of order of this court finally deciding the matter in I.T.A.No.544/2013. Accordingly, he prayed for allowing these appeals. 8. Sri.Dilip, learned Standing Counsel for the Revenue submitted that the relevant material was not available before the Assessment Officer, such as, the agreements with respective Companies to whom the man power was supplied. Therefore, the Assessing Officer was right in not granting the relief. 9. We have carefully considered the rival contentions and perused the assessment orders for the Assessment Year 2007-08 and also the assessment order for Assessment Year 2005-06, which is the subject matter of these two appeals. 10. The orders are more or less similar, but relief has not been granted for the assessment year 2005-06. 11. This court in I.T.A.No.544/2013 has dealt with the issue in question and recorded in paragraphs-7 to 9 of the order that the CBDT has issued a notification with regard to outsourcing service industry in India as it generates employment resulting in earning Foreign Exchange. It is also recorded that assessee is involved in providing human resource services and therefore, its case is squarely covered by notification dated September 26, 2000 and entitled for the benefit of deduction under Section 10A of the Act. 12. We may record that this Court in I.T.A.No.526/2017 had remitted the matter to ITAT with a specific direction to adjudicate ground No.16. Nonetheless, though the ITAT has recorded in the impugned order dated July 16, 2021 that assessee had indeed placed reliance on ITAT's order in Assessment Year 2007-08 'on an identical issue', dismissed the appeal. The matter was remitted by this court for consideration of ground No.16. In our view, the impugned order is not only unsustainable but also prima facie in violation of order passed by this court. 13. Having perused the assessment order of the Assessment Year 2005-06, which is the subject matter of these appeals, we are of the considered view that the issue is no more res integra and these appeals merit consideration because this court has granted relief in identical circumstances for the Assessment Year 2007-08. 14. In view of the above, following order: (a) Appeals are allowed. Orders passed by the ITAT dated April 6, 2016 and July 16, 2021 in IT(TP)A No.1487/Bang/2013 for the Assessment Year:2005-06 so far as it relates to deduction under Section 10A of the Act, is set aside. (b) The questions of law are answered in favour of the assessee and against the Revenue. No costs. Sd/- JUDGE Sd/- JUDGE KNM/-