Pr. Commissioner Of Income Tax Bengaluru-5,Bengaluru v. M/S Ntt Data Global Delivery Services Ltd

$~27 IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 392/2022 PR. COMMISSIONER OF INCOME TAX BENGALURU-5,BENGALURU ..... Appellant Through:Mr.Zoheb Hossain, Sr.StandingCounsel for the Revenue withMr.Vipul Agrawal and Mr.ParthSemwal, Advocates.Counsel for the Revenue withMr.Vipul Agrawal and Mr.ParthSemwal, Advocates. versus M/S NTT DATA GLOBAL DELIVERY SERVICES LTD. ..... Respondent Through:NoneDate of Decision: 12[th]October, 2022 CORAM: HON’BLE MR. JUSTICE MANMOHANHON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA J U D G M E N T MANMOHAN, J: C.M.No.43994/2022 Keeping in view the averments in the application, the delay in re-filing the appeal is condoned. Accordingly, the application stands disposed of. ITA No.392/2022 1.Present Income Tax Appeal has been filed challenging the order dated20[th]December, 2018 passed by the Income Tax Appellate Tribunal(‘ITAT’) in ITA No.5196/Del./2014 for the Assessment Year 2009-10.20[th]December, 2018 passed by the Income Tax Appellate Tribunal(‘ITAT’) in ITA No.5196/Del./2014 for the Assessment Year 2009-10. 2.Learned counsel for the Appellant states that the ITAT has erred inholding that the incidental income of Rs.24,30,64,353/- of the assessee inthe form of interest income is eligible for deduction under Section 10A ofthe Income Tax Act, 1961 (‘the Act’) without appreciating that as per theprovisions of Section 10(A)(1) of the Act, only profits derived from theeligible undertaking will be entitled to deduction under Section 10A of theAct. 3.He submits that the ITAT has erred in following the decision of theKarnataka High Court in Commissioner of Income Tax vs HewlettPackard Global Soft Ltd 299 CTR 118 (Karnataka) (FB) withoutconsidering that the Revenue has challenged the same before the SupremeCourt and the said issue is pending adjudication in Civil Appeal No.9175 of2018. 4.Having heard learned counsel for the Appellant, this Court finds thatthe issue raised in the present appeal is no longer res integra. In PrincipalCommissioner of Income Tax-1 vs. American Express India Pvt. Ltd.,ITA No.749/2016, a Division Bench of this Court has held as under:- 1.The following question of law arises for consideration:“Whether the ITAT erred in law in deleting the addition of₹2.48 crores as Income from Other Sources and holding iteligible for the purpose of calculation of deduction underSections 10A and 10B of the Income Tax Act, 1961?”“Whether the ITAT erred in law in deleting the addition of₹2.48 crores as Income from Other Sources and holding iteligible for the purpose of calculation of deduction underSections 10A and 10B of the Income Tax Act, 1961?” 2. The facts necessary for deciding the case are that the assessee hadmaintained, at the relevant time, i.e. AY 2005-06, a unit eligible forthe benefit of Section 10A of the Income Tax Act, 1961 [hereafter“the 1961 Act”] and claimed `2.48 crores as income from othersources, i.e. interest earned out of fixed deposits. These fixed depositswere derived from export proceeds reported by the assessee to whichit was eligible for benefit under Section 10A of the 1961 Act. The Assessing Officer (AO) ruled that the interest income so reported wasnot entitled to deduction under Section 10A of the 1961 Act. CIT(A)confirmed this view. The ITAT, however, reversed it. The question asto whether incomes such as the one set to be taxed, i.e. interestearned from the fixed deposits which in turn constituted the foreignexport business income, are entitled to deduction under Section 10Awas the subject of the judgment of this Court in Riviera HomeFurnishing v. ACIT 2016 (65) taxmann.com 287 (Del). 3. The Court then had the occasion to consider the prevalent rulingof the Supreme Court on this issue in Liberty India v. CIT 2009 317ITR 281. 4. This Court – in Riviera (supra) held as follows: Assessing Officer (AO) ruled that the interest income so reported wasnot entitled to deduction under Section 10A of the 1961 Act. CIT(A)confirmed this view. The ITAT, however, reversed it. The question asto whether incomes such as the one set to be taxed, i.e. interestearned from the fixed deposits which in turn constituted the foreignexport business income, are entitled to deduction under Section 10Awas the subject of the judgment of this Court in Riviera HomeFurnishing v. ACIT 2016 (65) taxmann.com 287 (Del). 3. The Court then had the occasion to consider the prevalent rulingof the Supreme Court on this issue in Liberty India v. CIT 2009 317ITR 281. 4. This Court – in Riviera (supra) held as follows: “15. In the considered view of the Court, the submissionsmade on behalf of the Revenue proceed on the basicmisconception regarding the true purport of the provisions ofChapter VIA of the Act and on an incorrect understanding ofSection 80A (4) of the Act. The opening words of Section 80A(4) read “Notwithstanding anything to the contrary containedin section 10A or section 10AA or section 10B or section10BA or in any provisions of this Chapter.....”. What is soughtto be underscored, therefore, is that Section 80A, and theother provisions in Chapter VIA, are independent of Sections10A and 10B of the Act. It appears that the object of Section80A (4) was to ensure that a unit which has availed of thebenefit under Section 10B will not be allowed to further claimrelief under Section 80IA or 80IB read with Section 80A (4).The intention does not appear to be to deny relief underSection 10B (1) read with Section 10B (4) or to whittle downthe ambit of those provisions as is sought to be suggested byMr. Manchanda. Also, he is not right in contending that thedecisions of the High Courts referred to above have notnoticed the decision of the Supreme Court in Liberty India.The Karnataka High Court in CIT v. Motorola IndiaElectronics Pvt. Ltd. (supra) makes a reference to the saiddecision. That decision of the Karnataka High Court has beencited with approval by this Court in Hritnik Exports (supra)and Universal Precision Screws (supra). In Hritnik Exports(supra) the Court quoted with approval the observations of the Special Bench of the ITAT in Maral Overseas Ltd. (supra)that “Section 10A/10B of the Act is a complete code providingthe mechanism for computing the „profits of the business‟ eligible for deduction u/s 10B of the Act. Once an incomeforms part of the business of the income of the eligibleundertaking of the assessee, the same cannot be excludedfrom the eligible profits for the purpose of computing deduction u/s 10B of the Act.” 5. In view of the above, with which this Court concurs, thequestion of law has to be and is answered in favour of the assesseeand against the Revenue. The appeal is accordingly dismissed.” (emphasis supplied) 5.In view of the aforesaid mandate of law, this Court is of the view thatno substantial question of law arises for consideration in the present appeal.Accordingly, the same is dismissed. MANMOHAN, J OCTOBER 12, 2022KA MANMEET PRITAM SINGH ARORA, J