COMMISSIONER OF INCOME TAX vs. M/S SQS INDIA BFSI LTD.,

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TCA/115/2018HC Madras28 August 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial question of law framed for consideration had been answered against the Revenue by the Supreme Court in the case of Commissioner of Income Tax, Central-III v. HCL Technologies Ltd. [(2018) 93 taxmann.com 33 (SC)]. In that decision, the Supreme Court held that the definition of 'total turnover' provided in Sections 80HHC and 80HHE of the Act cannot be adopted for the purpose of Section 10A. For Section 10A, the technical meaning of 'total turnover', which does not envisage the reduction of any expenses from the total amount, is to be considered. The Court found no necessity to import the meaning of 'total turnover' from other provisions when the meaning for Section 10A was clear. Consequently, following the Supreme Court's precedent, the High Court dismissed the appeal filed by the Revenue and answered the substantial question of law against the Revenue.

What were the facts?

The Revenue, Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income-tax Act, 1961, against an order dated 30.09.2016 passed by the Income-tax Appellate Tribunal (ITAT), Chennai. The ITAT's order concerned the assessment year 2007-08 and was in relation to M/s. SQS India BFSI Ltd. (formerly Thinksoft Global Services Pvt. Ltd.). The appeal was admitted on 27.03.2018, focusing on a substantial question of law regarding the exclusion of certain items from export turnover and total turnover for calculating eligible profit under Section 10A of the Act.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that foreign exchange gain, expenses incurred towards connectivity charges, and foreign currency expenses were to be excluded from the export turnover as well as total turnover for the purpose of arriving at eligible profit under Section 10A of the Income Tax Act, 1961? Assessee's Contention: The judgment does not record specific arguments made by the assessee. The assessee is M/s. SQS India BFSI Ltd. Revenue's Contention: The Revenue contended that foreign exchange gain, connectivity charges, and foreign currency expenses should not be excluded from export turnover and total turnover when computing deduction under Section 10A. The Revenue's appeal was admitted on the substantial question of law framed above.

Which sections of the Income-tax Act were involved?

Section 260A,Section 10A,Section 80HHC,Section 80HHE

AI-generated summary — verify with the full judgment below

T.C.A.No.115 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 28.08.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.115 of 2018 Commissioner of Income Tax, Chennai. .. Appellant/Appellant -vs- M/s.SQS India BFSI Ltd., (Formerly Thinksoft Global Services Pvt. Ltd.,), 6A, Sixth Floor, Prince Infocity II, No.283/3 & 283/4, Rajiv Gandhi Salai (OMR), Kandanchavadi, Chennai – 600 096. PAN: AABCT 0976G .. Respondent/Respondent Appeal under Section 260A of the Income-tax Act, 1961 against the order dated 30.09.2016 on the file of the Income-tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.No.998/MDS/2016 for the assessment year 2007-08. For Appellant : Mr.T.R.Senthil Kumar Senior Standing Counsel : M/s.K.G.Usharani For Respondent : Mr.R.Venkatanarayanan for M/s.Subburaya Aiyar Padmanbhan ****** 1/4 http://www.judis.nic.in T.C.A.No.115 of 2018 JUDGMENT (Judgment was delivered by T.S.Sivagnanam, J.) This appeal, filed by the appellant/revenue under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), is directed against the order dated 30.09.2016 passed by the Income-tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.No.998/MDS/2016 for the assessment year 2007-08. 2.The above appeal was admitted on 27.03.2018 on the following substantial question of law:- “Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that foreign exchange gain, expenses incurred towards connectivity charges and foreign currency expenses etc., were to be excluded from the export turnover as well as total turnover for the purpose of arriving at eligible profit under Section 10A of the Income Tax, 1961?” 3.It is not disputed by the revenue that the Substantial Question of law framed for consideration has been answered against the revenue by the Hon'ble Supreme Court in the case of Commissioner of Income tax, Central- III, HCL Technologies Ltd. [(2018) 93 taxmann.com 33 (SC)]. In the said decision it was held that Definition of 'total turnover' given under sections 2/4 http://www.judis.nic.in T.C.A.No.115 of 2018 80HHC and 80HHE cannot be adopted for purpose of section 10a as technical meaning of total turnover, which does not envisage reduction of any expenses from total amount is to be taken into consideration for computing deduction under Section 10A; when meaning is clear, there is no necessity of importing meaning of total turnover from other provisions. 4.Following the above said decision, the appeal filed by the revenue is dismissed and the substantial question of law is answered against the revenue. No costs. (T.S.S., J.) (V.B.S., J.) 28.08.2019 Index : Yes/No Speaking/Non-Speaking Order cse 3/4 http://www.judis.nic.in T.C.A.No.115 of 2018

T.S.SIVAGNANAM, J. AND V.BHAVANI SUBBAROYAN, J. cse To The Income-tax Appellate Tribunal 'A' Bench, Chennai. T.C.A.No.115 of 2018 28.08.2019 4/4 http://www.judis.nic.in

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