THE COMMISSIONER OF INCOME TAX, COCHIN vs. M/S.SPRINT TECHNOLOGIES (P) LTD., ALUVA

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON TUESDAY ,THE 18TH DAY OF SEPTEMBER 2018 / 27TH BHADRA, 1940 ITA.No. 119 of 2010 AGAINST THE ORDER/JUDGMENT IN ITA 408/2009 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 13-10-2009 APPELLANT/S: THE COMMISSIONER OF INCOME TAX, COCHIN COCHIN. BY ADV. SRI. P.K.R.MENON (SR) & SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/S: M/S.SPRINT TECHNOLOGIES (P) LTD., ALUVA 11/138, THAIKKATTUKARA, ALUVA. BY ADVS. SRI.T.M.SREEDHARAN (SR.) SRI.V.P.NARAYANAN SRI.V.V.VARGHESE OTHER PRESENT: SRI PKR MENON SR COUNSEL FOR APPELLANT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

ITA 119/2010 2 JUDGMENT Vinod Chandran, J. The appeal by the Revenue raises the following questions of law: Whether the Tribunal was correct in having affirmed the order of the First Appellate Authority deleting the computation of profit made by the Assessing Officer under Section 10A(4) of the Income Tax Act and ought not the Tribunal had held that in computing the total turnover, the entire turnover of the undertaking has to be taken; and whether it be from the software business or from the business of training imparted ? 2. The facts indicate that the assessee had been carring on two divisions, one dealing with software and the other with training. The finding on facts as seen from the appellate order indicates that the two divisions were carried on in separate premises and the accounts of both the divisions were also maintained separately. The profit and loss accounts were prepared separately for each division, though head office expenditure is allocated. The software division of the appellant is a 100% export oriented unit under the STPI

ITA 119/2010 3 Scheme, which has been so certified by the Software Technology Parks of India (STPI). 3. We see from the assessment order that the Assessing Officer had computed the profits from the software division as Rs.3,19,30,196/-. In computing the proportion of the export turnover in respect of the computer software, to the total turnover of the business carried on by the undertaking, the entire turnover of the undertaking itself was taken, ie., adding on the turnover of the division carrying on the business of training. The contention of the assessee is that the denominator should be only the turnover of the specific business of the undertaking. We have already noted from the facts recorded, that the assessee has been treating the separate business as two separate divisions. Going by the provisions also it is the “business of the undertaking” that has to be taken, and not the undertaking as such. Otherwise, there was no reason for employing of the words “business of the undertaking”. In such circumstances, we are of the opinion that the Tribunal was perfectly right in having

ITA 119/2010 4 affirmed the order of the First Appellate Authority, looking at the facts as revealed on appeal. The questions of law are answered in favour of the assessee and against the Revenue. The appeal is dismissed. No costs. Sd/- K.VINOD CHANDRAN JUDGE Sd/- ASHOK MENON JUDGE

ITA 119/2010 5 APPENDIX PETITIONER'S/S EXHIBITS: ANNEXURE A COPY OF ORDER U/S.143(3) DTD.28/10/2003 FOR THE ASSESSMENT YEAR 2002-03. ANNEXURE B COPY OF THE ORDER DATED 02/03/2009 OF THE COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE C COPY OF THE ORDER DTD.13/10/2009 OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITA NO.408/COCH/2009. RESPONDENT(S) EXHIBITS

: NIL /TRUE COPY/ PA TO JUDGE dkr