The Commissioner Of Income Tax, Chennai v. M/S. Inautix Technologies India Pvt Ltd., 10[Th] Floor, Tidel Park

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM : THE HON'BLE MR. JUSTICE R. MAHADEVANAND THE HON'BLE MR. JUSTICE MOHAMMED SHAFFIQ The Commissioner of Income Tax, Chennai.... Appellant in all Tax Case AppealsVersus M/s. iNautix Technologies India Pvt Ltd.,10[th] Floor, Tidel Park, 4, Canal Bank Road, Taramani, Chennai – 600 113. ... Respondent in all Tax Case Appeals Appeals preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, “B” Bench, dated 09.08.2011 in I.TA.No.1054/Mds/2006,I.TA.No.2177/Mds/2010 & I.TA.No.2178/Mds/2010 against the orderof the Commissioner of Income Tax (Appeals)-III, 121, MahatmaGandhi Road, Chennai-600 034, dated 24.09.2010, ITA No.641/06-07/A.III, PAN.AAAC16177K for the Assessment Year 2004-05 andagainst the order of the Commissioner of Income Tax (Appeals)-III, 121, Mahatma Gandhi Road, Chennai-600 034, dated22.09.2010, ITA No.619/09-10/A.III, PAN.AAAC16177K for theAssessment Year 2006-07 and against the order of theCommissioner of Income Tax (Appeals)-III, 121, Mahatma GandhiRoad, Chennai-600 034, dated 22.09.2010, ITA No.69/08-09/A.III,PAN.AAAC16177K for the Assessment Year 2005-06 and against theorder of the Commissioner of Income Tax (Appeals)-XII, 121,Mahatma Gandhi Road, Nungambakkam, Chennai-600 034, dated31.01.2007, ITA No.147/06-07 GI.No./PAN.AAAC16177K for theAssessment Year 2003-04 and against the order of the AssistantCommissioner of Income Tax, Company Circle-II(3), V-Floor, NewBlock, 121, M.G.Road, Chennai-600 034, dated 23.11.2006G.I.No./PAN.IX6-012/AAAC16177K for the Assessment Year 2004-05status-company, Method of Accounting-Mercantile and against theorder of the Assistant Commissioner of Income Tax, Company https://hcservices.ecourts.gov.in/hcservices/ Circle-II(3), 121, N.H.Road, Chennai-34 dated 28.02.2006G.I.No./PA No.IX6-012/AAAC16177K for the Assessment Year 2003-04Status-Company, Method of Accounting-Mercantile, Nature ofBusiness Activities – Software Development, and against theorder of the Commissioner of Income Tax (Appeals)-III, 121,Mahatma Gandhi Road, Chennai-600 034, dated 17.01.2006 ITANo.188/2005-06/A.III,G.I.No./PANo.AAAC16177KfortheAssessment year 2002-03 and against the order of the AssistantCommissioner of Income Tax, Company Circle-II(3), 121, N.H.Road,Chennai-34, dated 28.03.2005 G.I.No./PA.No. IX6-012/AAAC16177Kfor the Assessment Year 2002-03 Status-Company whetherResident/Resident Method of Accounting-Mercantile, Nature ofBusiness Activities- Software Development. For Respondent: Mr.N.V.Balaji, in all cases COMMON JUDGMENT (Judgment was delivered by R.MAHADEVAN, J.) These tax case appeals have been filed by the appellant /Revenue, challenging the orders dated 09.08.2011 passed by theIncome Tax Appellate Tribunal, 'B' Bench, Madras, inI.TA.No.1054/Mds/2006,I.TA.No.2177/Mds/2010&I.TA.No.2178/Mds/2010, relating to the respective assessmentyears 2002-03, 2004-05 & 2005-06. 2.By order dated 03.12.2014, this court admitted theaforesaid tax case appeals on the following substantialquestions of law: TCA.No.715 of 2014“1. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the inclusion of foreignexchange fluctuation gain in the eligible profit forthe purpose of computation of deduction under Section10A is to be allowed even though the exchangefluctuation is only a subsequent event after thecompletion of the transaction and cannot partake thecharacter of sale proceeds? https://hcservices.ecourts.gov.in/hcservices/ 2.By order dated 03.12.2014, this court admitted theaforesaid tax case appeals on the following substantialquestions of law: TCA.No.715 of 2014“1. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the inclusion of foreignexchange fluctuation gain in the eligible profit forthe purpose of computation of deduction under Section10A is to be allowed even though the exchangefluctuation is only a subsequent event after thecompletion of the transaction and cannot partake thecharacter of sale proceeds? https://hcservices.ecourts.gov.in/hcservices/ 2. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in dismissing the departmental appeal regardingthat inclusion of refunds from the Central Sales taxin eligible profit for the purpose of deduction underSection 10A even though the same is not operationalincome and has to be excluded? 3. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the loss from the provision ofworks station is to be treated as business loss asagainst the loss from other sources?” TCA Nos.721 & 722 of 2014 “1. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the expenditure incurred inforeign currency is to be excluded from the exportturnover and also from the total turnover? 2. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the expenditure incurred inforeign currency for the technical services renderedoutside India for the assessment years 2003-04, 2004-05, 2005-06 and 2006-07 is to be allowed? 3. Whether on the facts and in the circumstancesof the case, the Income Tax Appellate Tribunal wasright in holding that the expenditure incurred inforeign currency from export turnover and totalturnover is to be excluded while computing deductionunder Section 10A? 3.When these matters were taken up for consideration, thelearned counsel for the appellant / Revenue brought to the noticeof this court the Circular No.17/2019 dated 08.08.2019 issued bythe Central Board Direct Taxes, wherein, it is stipulated thatappeal shall not be filed/pursued by the Department before theHigh Court in cases where the tax effect does not exceedRs.1,00,00,000/- (Rupees One Crore). It is also submitted thatthe tax effect in these appeals is less than the threshold limit. 4.In the light of the aforesaid submissions made by thelearned counsel for the appellant / Revenue, the presentappeals, wherein, the tax effect is said to be less than the https://hcservices.ecourts.gov.in/hcservices/ monetary limit imposed, are dismissed as withdrawn, keeping openthe substantial questions of law for determination inappropriate cases. No costs. Consequently, connectedmiscellaneous petitions are closed. Sd/- Assistant Registrar(CCC) //True Copy// av Sub Assistant Registrar To 1. The Income Tax Appellate Tribunal, Madras, “B” Bench. 2. The Commissioner of Income Tax, Chennai. 3. The Assistant Commissioner of Income Tax, Company Circle-II(3), 121, N.H.Road, Chennai – 34. +1cc to M/s.N.V.Balaji, Advocate, S.R.No.66251 AD(CO)SU(29/12/2021) T.C.A.Nos.715, 721 & 722 of 2014andMP.Nos. 1 to 1 of 2014