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 HONOURABLE MR.JUSTICE T.S.SIVAGNANAMandTHE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.714, 716 to 720 and 723 of 2014 The Commissioner of Income tax,Chennai...Appellant in all Appeals -vs- M/s.INautix Technologies India Pvt. Ltd.,10[th] Floor, Tidel Park,4, Canal Bank Road,Taramani, Chennai-600 113...Respondent in all Appeals APPEALS under Section 260A of the Income Tax Act, 1961against the common order dated 09.08.2011, made inI.T.A.Nos.541/Mds/2006, 1439/Mds/2007, 1630/Mds/2007, 2091,2092, 2093 & 2179/Mds/2010 on the file of the Income TaxAppellate Tribunal 'B' Bench, Chennai for the assessment years2002-03, 2003-04, 2003-04, 2004-05, 2005-06, 2006-07 and 2006-07respectively against the order dated 24/09/2010 made inITA.No.641/06-07/A.III on the file of the Commissioner of IncomeTax Appeals(III), Chennai 600 034 for the Assessment year 2004-05againsttheorderdated22/09/2010madeinITA.No.619/09-10/A.III on the file of the Commissioner of IncomeTax(A)-III Chennai -34, for the Assessment year 2006-07 againstthe order dated 31/12/2009 made in PAN.No. on the fileof the Assistant Commissioner of Income Tax, Company CircleII(3), Chennai -34 for the Assessment year 2006-07 against theorder dated 26/08/2008 made in IX6-012/AAACI6177K on the file ofthe Assistant Commissioner of Income Tax, Company Circle II(3),Chennai 34 for the Assessment Year 2005-06 against the orderdated 31/01/2007 made in ITA.No.147/06-07 on the file of theCommissioner of Income Tax(Appeals)-XII, Chennai -34 for theAssessment year 2003-04 against the order dated 23/11/2006 madein IX6-012/AAACI6177K on the file of the Assistant Commissionerof Income Tax Company Circle II(3), Chennai-34 for theassessment year 2004-05 against the order dated 28/02/2006 madein IX6-012/AAACI6177K, on the file of the Assistant Commissionerof Income Tax Company Circle II(3) Chennai -34 for the Assessment year 2003-04 against the order dated 17/01/2006 madein ITA.No.188/2005-06/A.III, on the file of the Commissioner ofIncome Tax (Appeals)-III, Chennai -34 for the Assessment year2002-03 against the order dated 28/03/2005 made inGIR/PAN.No. IX6-012/ on the file of the AssistantCommissioner of Income Tax, Company Circle II(3), Chennai -34for the Assessment year 2002-03. For Appellant:Mr.Karthik Ranganathan, SSC(In all Appeals)assisted by Mr.S.Rajesh,Standing Counsel For Respondent:Mr.N.V.Balaji(In all Appeals) COMMON JUDGMENT(Delivered by T.S.Sivagnanam, J.) These appeals filed by the Revenue under Section 260A of theIncome-tax Act, 1961 are directed against the common order dated09.08.2011, made in I.T.A.Nos.541/Mds/2006, 1439/Mds/2007,1630/Mds/2007, 2091, 2092, 2093 & 2179/Mds/2010 on the file ofthe Income Tax Appellate Tribunal 'B' Bench, Chennai for theassessment years 2002-03, 2003-04, 2003-04, 2004-05, 2005-06,2006-07 and 2006-07 respectively. 2.The appeals were admitted on 03.12.2014, on the followingsubstantial questions of law:-“T.C.A.No.714 of 2014:- (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover? (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment years 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? (iii) Whether on the facts and in the circumstances of the case, the Income TaxAppellate Tribunal was right in holding thatforeign exchange fluctuation gain was to be (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover? (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment years 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? (iii) Whether on the facts and in the circumstances of the case, the Income TaxAppellate Tribunal was right in holding thatforeign exchange fluctuation gain was to be excluded from the eligible profits for the purposeof computation of deduction under Section 10A?(iv) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that therefunds from CST is to be included as profit ofthe undertaking for the purpose of computingdeduction under Section 10A? (v) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theloss from the provision of works station is to betreated as business loss as against the loss fromother sources? (vi) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency fromexport turnover and total turnover is to beexcluded while computing deduction under Section10A?(vii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theyielding of revenue forms part of export turnoverwhile computing deduction under Section 10A? and (viii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in exclusion of itemsfrom the export turnover which is contrary toclause (iii) to explanation of Section 10B whiledealing with Rs.123.41 lakhs from the exportturnover? T.C.A.No.716 of 2014:- (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover? and (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment year 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? T.C.A.No.717 of 2014:- (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theloss from the provision of works station is to betreated as business loss as against the loss fromother sources? (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexclusion of expenditure incurred in foreigncurrency from export turnover and total turnoveris to be made for the purpose of claimingdeduction under Section 10A?(iii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in dismissing thedepartmental appeal on unyielding of revenueforming part of export turnover for the purpose ofcomputation of deduction under Section 10A is tobe allowed? and(iv) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that a sumof Rs.123.41 lakhs being receipt not realizedwithin the financial year is also to be includedin the export turnover, as it was not excludedfrom the total turnover and for maintainingparity?T.C.A.No.718 of 2014:- (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover? and (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment year 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed?T.C.A.No.719 of 2014:- (i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that the expenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover? (ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment year 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? and(iii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency fromexport turnover and total turnover is to beexcluded while computing deduction under Section10A?T.C.A.No.720 of 2014:-(i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover?(ii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment year 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? and (iii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency fromexport turnover and total turnover is to beexcluded while computing deduction under Section10A?T.C.A.No.723 of 2014:-(i) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency is to beexcluded from the export turnover and also fromthe total turnover?(ii) Whether on the facts and in thecircumstances of the case, the Income Tax Appellate Tribunal was right in holding that theexpenditure incurred in foreign currency for thetechnical services rendered outside India for theassessment year 2003-04, 2004-05, 2005-06 and2006-07 is to be allowed? and (iii) Whether on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in holding that theexpenditure incurred in foreign currency fromexport turnover and total turnover is to beexcluded while computing deduction under Section10A?” 3.Heard Mr.Karthik Ranganathan, learned Senior StandingCounsel assisted by Mr.S.Rajesh, learned Standing Counsel forthe appellant – and Mr.N.V.Balaji, learned counsel for therespondent. 4. The learned Senior Standing Counsel for the appellantsubmits that the above appeals are not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019,dated 08.08.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 3.Heard Mr.Karthik Ranganathan, learned Senior StandingCounsel assisted by Mr.S.Rajesh, learned Standing Counsel forthe appellant – and Mr.N.V.Balaji, learned counsel for therespondent. 4. The learned Senior Standing Counsel for the appellantsubmits that the above appeals are not pursued by the Revenue onaccount of the low tax effect in terms of Circular No.17/2019,dated 08.08.2019 issued by the Central Board of Direct Taxes. Bythe said Circular, the monetary limit for filing or pursuing anappeal before the High Court has been increased to Rs.1 Crore.It is further submitted that the tax effect in this case is lessthan the threshold limit. 5. In the light of the said submissions, the above tax caseappeals are dismissed on account of the low tax effect. Thesubstantial questions of law framed are left open. In the eventthe tax effect is above the threshold limit fixed in the saidcircular, liberty is granted to the Revenue to make a mention tothis Court to restore the appeals to be heard and decided onmerits. No costs. Sd/-Assistant Registrar/True Copy/Sub Assistant Registrar To 1.The Income Tax Appellate Tribunal 'B' Bench, Chennai.Chennai. 2.The Commissioner of Income Tax Appeals(III), Chennai -34. 3.The Assistant Commissioner of Income Tax Company Circle II(3), Chennai.Company Circle II(3), Chennai. 4.The Commissioner of Income Tax Appeals XII, Chennai -34. +1 cc to M/s.N.V.Balaji, Advocate Sr.No. 72482 AKM/11.02.2021/7P- 6C / T.C.A.Nos.714, 716 to 720 and 723 of 201426.08.2019