PRICIPAL COMMISSIONER OF vs. M/S.I SOFT R & D LTD.,

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TCA/272/2017HC Madras29 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 questions of law raised in the appeals had already been answered in favour of the assessee in the assessee's own case in T.C.A.No.1248 of 2008, dated 08.10.2018. The Court followed its previous decision in that case, which in turn relied on the Hon'ble Supreme Court's decision in CIT vs. HCL Technologies Ltd. (2018) 404 ITR 0719. Therefore, the appeals filed by the Revenue were dismissed. The substantial questions of law were answered in favour of the assessee and against the Revenue. No costs were awarded.

What were the facts?

The appeals were filed by the Revenue against the common order of the Income-tax Appellate Tribunal (ITAT) for assessment years 2008-09, 2009-10, and 2010-11. The assessee is M/s. I Soft R & D Ltd. The dispute concerns the computation of deduction under Section 10A of the Income Tax Act, 1961. Specifically, the Revenue challenged the ITAT's decision to exclude telecommunication charges and expenses incurred in foreign currency from the total turnover for this calculation. The ITAT had ruled in favour of the assessee on this issue.

What were the issues?

1. Whether, on the facts and circumstances of the case, the ITAT was correct in holding that telecommunication charges and expenses incurred in foreign currency should be excluded from Total Turnover while computing the deduction under Section 10A of the Income Tax Act, when the section does not provide for such exclusion? (Question of law) 2. Whether, on the facts and circumstances of the case, the order of the Tribunal directing to exclude telecommunication charges and expenses incurred in foreign currency from the total turnover is perverse and against all accounting principles, when these items being expenses are never part of turnover? (Question of mixed law and fact) Assessee's contentions: The assessee argued that telecommunication charges and expenses incurred in foreign currency should be excluded from total turnover for Section 10A computation. The assessee relied on the decision of the Hon'ble Supreme Court in CIT vs. HCL Technologies Ltd. (2018) 404 ITR 0719. Revenue's contentions: The Revenue contended that Section 10A does not provide for the exclusion of such charges from total turnover and that the ITAT's order was perverse and against accounting principles as expenses are not part of turnover.

Which sections of the Income-tax Act were involved?

Section 10A,Section 260A

AI-generated summary — verify with the full judgment below

T.C.A.Nos.272 to 274 of 2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.08.2019 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.272 to 274 of 2017 Principal Commissioner of Income Tax 2, No.121, Mahatma Gandhi Road, Chennai-600 034. .. Appellant/Appellant in all Appeals -vs- M/s.I Soft R & D Ltd., No.19, Hafiz Court, Dr.MGR Salai, Nungambakkam, Chennai-600 034. PAN: AAA CI 7884 D .. Respondent/Respondent in all Appeals Appeals under Section 260A of the Income-tax Act, 1961, against the common order dated 06.07.2016 on the file of the Income- tax Appellate Tribunal 'A' Bench, Chennai in I.T.A.Nos.832, 833 & 834/Mds/2016 for the assessment years 2008-09, 2009-10 and 2010- 11 respectively. For Appellant : Mr.Karthik Ranganathan, (In all Appeals) Senior Standing Counsel For Respondent : Ms.Sree Lakshmi Valli (In all Appeals) ****** 1/4 http://www.judis.nic.in T.C.A.Nos.272 to 274 of 2017 COMMON JUDGMENT (Delivered by T.S.Sivagnanam, J.) These appeals filed by the appellant/Revenue under Section 260A of the Income-tax Act, 1961, are directed against the common order dated 06.07.2016, passed by the Income Tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.Nos.832, 833 & 834/Mds/2016 for the assessment years 2008-09, 2009-10 and 2010-11 respectively. 2.The Revenue has raised the following substantial questions of law for consideration:- “(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT is correct in holding that telecommunication charges and expenses incurred in foreign currency to be excluded from Total Turnover while computing the deduction u/s 10A of the Income Tax Act, when the section does not provide for such exclusion? (ii) Whether on the facts and circumstances of the case, the order of the Tribunal directing to exclude telecommunication charges and expenses incurred in foreign currency from the total turnover is perverse and against all accounting principles, when these items being expenses are never part of turnover?” 2/4 http://www.judis.nic.in T.C.A.Nos.272 to 274 of 2017 3.Heard Mr.Karthik Ranganathan, learned Senior Standing Counsel for the appellant/Revenue; and Ms.Sree Lakshmi Valli, learned counsel for the respondent/assessee. 4.It is not disputed by the Revenue, rather agreed by the Revenue that the substantial questions of law raised in these appeals have been answered in favour of the assessee in the assessee's own case in T.C.A.No.1248 of 2008, dated 08.10.2018 (M/s.ISOFT R&D Pvt. Ltd., vs. Assistant Commissioner of Income Tax, Chennai) wherein, we considered identical issue and answered the same in favour of the assessee, following the decision of the Hon'ble Supreme Court CIT vs. HCL Technologies Ltd., (2018) 404 ITR 0719. 5.Following the above decision, these tax case appeals are dismissed and the substantial questions of law are answered in favour of the assessee and against the Revenue. No costs.

(T.S.S., J.) (V.B.S., J.) 29.08.2019 Index : Yes/No Speaking/Non-Speaking Order 3/4 http://www.judis.nic.in T.C.A.Nos.272 to 274 of 2017 abr T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. (abr) To 1.The Deputy Commissioner of Income Tax, Company Circle II(3), Chennai. 2.The Commissioner of Income Tax (Appeals)-6, 121, Mahatma Gandhi Road, Nungambakkam, Chennai. 3.The Income-tax Appellate Tribunal 'A' Bench, Chennai. T.C.A.Nos.272 to 274 of 2017 29.08.2019 4/4 http://www.judis.nic.in

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