Ita/690/2009 Of The Commissioner Of Income Tax v. M/S Daimler Chrysler Research

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THER 1[th]DAY OF FEBRUARY, 20105) PRESENT THR HON' BLE MR. JUSTICK N.KUMAR ANT) THR HON' BLE MR. JUSTICEK B. VEBRAPPA INCOME TAX APPEAL No. 690/2009 BERITIWE 1.The Commissioner of Income Tax, C.R. Building,|Queens Road,Bangalore. a2The Assistant Commissioner of Income-Tax,Circle-11(5),|C.R. Building,|Queens Road,Bangalore.... APPELLANTS (BY SRI K V ARAVIND, ADVOCATE) AND: M/s. Daimler Chrysler Research &Technology India P.Ltd.,No.137, Infantry Road,Bangalore.— RBSPONDENT (BY SRI P. DINESH, ADVOCATE) This ITA is filed under Section J6O0O-A of thIncome Tax Act, 1961 arising out of order dated1.5.2009 passed in ITA No. 1179/Bang/2008 for theassessment year 2003-2004 praying to formulate thesubstantial questions of law stated therein and to allowthe appeal and set aside the orders passed by the ITAT,Bangalore in I.T.A.No.1179/Bang/2008 dated 1.5.2009°confirming the order of the Appellate Commissioner andcontirmthe.order.passedbythe|AssistantCommissioner of Income Tax, Circle-11(5), Bangalure. This Income Tax Appeal coming on for Hearingthis day, B. VEE RAPPA J., delivered the following: JUDGMENT The revenue has preferred this appeal against theorder dated 1.5.2009 passed by the Tribunal inI.T.A.No.1179/Bang/2008 holding that the assessee is.liable to claim deduction under Section 1OA of the!Income Tax Act, 1961 (hereinafter referred to as ‘theAct’). ”.. The brief facts of the case are: That the assessee is carrying on the business in research and development activities in the field of computer software. The assessment is in respect of assessment year 2003-04. The assessee had an incomeof Rs.58,58,448/- from the business. The claimeddeduction of Rs.52,72,603/- under the provisions ofSection 10A oft the Act. 3. The Assessing Authority after considering theentire material on record by its order dated 10.3.20060has held that the total turnover as per the profit andloss account is adopted at Rs.16,05,83,428/- atterdeducting the interest of income of Rs.1,14,492/- fromthe total turn over of Rs.16,06,97,880/- depicted in theprofit and loss account. The deduction under theprovisions of Section 10A of the Act is computed atRs.39,04,388/-. Aggrieved by the said order, theassessee filed an appeal before the Commissioner ofIncome Tax (Appeals) in ITA No.30/AC-11(5)/CIT(A)-1/Q6-07. 4. The Commissioner of Income Tax (Appeals)aiter hearing both the parties, by his order dated27.6.2008 has held that in view of Sub-section 6(i11) ofsection 1OA of the Act, it is seen that the appellant’scontention in this regard is correct in as much as itdoes not include Section 8O0HHE of the Act amongsections such as 80HH, 8OHHC, 8O-I, 80-IA and 8O0O-Ifor denial of deduction. Hence, the appellant succeedsin its claim for deduction under Section S8OHHE of theAct. Accordingly, the Assessing Authority was directedto allow the deduction to which the assessee was|entitled to under Section 8OHHE of the Act. Beingaggrieved by the said order, the revenue filed an appeal- ITA No. 1179/Bang/2008 before the Income TaxAppellate Tribunal, Bangalore Bench ‘B.. o. The Income Tax Appellate Tribunal afterhearing both parties, by its order dated 1[st]May, 2009allowed the appeal in part holding that the assessee is liable to claim deduction under Section 1OA of the Act|following the dictum of this Court in the case ofCommissioner of Income Tax and Another -vs- Tata|Elexst Ltd., reported in [2012] 349 ITR 98 (Karn)1 andtherefore, the Assessing Authority was directed toexclude the aforesaid expenses both on the totalturnover as well as the export turnover, whilecomputing deduction under Section 10A of the Act as.the judgment of the Tribunal is based on the decision ofthis Court, no substantial question of law arises forconsideration on merits for admission of this appeal. o. The Income Tax Appellate Tribunal afterhearing both parties, by its order dated 1[st]May, 2009allowed the appeal in part holding that the assessee is liable to claim deduction under Section 1OA of the Act|following the dictum of this Court in the case ofCommissioner of Income Tax and Another -vs- Tata|Elexst Ltd., reported in [2012] 349 ITR 98 (Karn)1 andtherefore, the Assessing Authority was directed toexclude the aforesaid expenses both on the totalturnover as well as the export turnover, whilecomputing deduction under Section 10A of the Act as.the judgment of the Tribunal is based on the decision ofthis Court, no substantial question of law arises forconsideration on merits for admission of this appeal. 6. However, it is submitted by the learnedCounsel Sri K.V. Aravind appearing for the revenuethat, the revenue has preferred a Special Leave Petitionbefore the Apex Court against the judgment of thisCourt and the same is pending consideration. In theevent of Apex Court answering the substantial questionof law in favour of the revenue, liberty be reserved to the revenue, then the Assessing Authority shall pass appropriate orders in terms of Section 260(1A) of the Act.as per the outcome of appeal before the Hon’bleSupreme Court. The said submission is taken onrecord and liberty is granted. 7. With the above observations, the appeal is dismissed. od/-|Judge sd/-Judge Nsu/-.