A.JAYALAKSHMI vs. THE INCOME TAX OFFICER

1 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 08.07.2019 CORAM : THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.435 to 437, 439 & 442 of 2019 Smt.A.Jayalakshmi

...Appellant -vs- The Income Tax Officer, Ward-III (1) Tiruchirappalli-620018

...Respondent Tax Case Appeals under Section 260-A of the Income Tax Act, 1961, are directed against the common order passed by the Income Tax Appellate Tribunal, Madras “C” Bench, Chennai in I.T.A Nos.644 to 648/Mds/2006, dated 20.07.2011 for the assessment years 2002-03 to 2006-07. For appellant : Mr.A.S.Sriraman For Respondent : Mr.M.Swaminathan Sr.S.C for Mrs.V.Pushpa http://www.judis.nic.in 2 ****** JUDGEMENT [Judgement of the Court was made by T.S.Sivagnanam, J.] These Tax Case Appeals by the assessee, filed under Section 260-A of the Income Tax Act, 1961, ('the Act' for brevity) are directed against the common order passed by the Income Tax Appellate Tribunal, Madras “C” Bench, Chennai in I.T.A Nos.644 to 648/Mds/2006, dated 20.07.2011 for the assessment years 2002-03 to 2006-07. 2.The above Tax Case Appeal has been filed raising the following substantial questions of law:- "Whether the Appellate Tribunal is correct in Law in sustaining the disallowance of claim of deduction u/s 80 IA (4)(ii) of the Act relating to the profit generated from the operation of private telephone exchange in the computation of taxable total income?” 3. We have heard Mr.A.S.Sriraman, learned counsel for the appellant/assessee and Mr.M.Swaminathan, learned Senior Standing Counsel for the Mrs.V.Pushpa, learned counsel for the respondent/revenue. http://www.judis.nic.in 3 4. The substantial question of law arising in these appeals was considered in the case of Sabdhagiri Telecom Vs. Income Tax Officer, Ward-1(1) Coimbatore reported in [(2019) 101 taxmann.com 245 (Madras)] wherein it was held that the assessee, an authorised franchise of BSNL, operating telephone exchange and providing basic telecommunication services to its customers in pursuance of agreement entered into with BSNL was entitled to deduction under 80-IA(4)(ii). In the said decision, the decision of Gujarat High Court at Ahmedabad in the case of CIT Vs. Himanshu V. Shah in T.C.A.No.1098 of 2005 etc., was quoted with approval. 5. The appeal filed by the Revenue as against the decision in the case of Himanshu V. Shah was dismissed by the Gujarat High Court at Ahmedabad in the aforementioned decision, in fact, in the case of very same assessee namely Himanshu V. Shah, for the subsequent assessment year, the matter came before the Tribunal and in the course of argument the revenue placed reliance on the decision of the present assessee before us in ITO Vs. A.Jayalaxmi reported in [(2012) 19 taxmann.com 41/50 SOT 57], stating that the Tribunal has taken a decision against the assessee. Therefore, the Tribunal constituted a larger Bench and referred the matter for consideration, which reference was answered in favour of the assessee in the http://www.judis.nic.in 4 decision in the case of Assistant Commissioner of Income Tax Circle-6, Ahmedabad Vs. Himanshu V.Shah reported in [(2019) 104 Taxmann.com 279 (Ahmedabad) (Tri)(SB)]. In the said decision it was held that the assessee is a franchisee of BSNL, engaged in installing, maintaining and operating EPEX system to support functioning of BSNL could be treated to have provided 'basic telephonic services' and thus, was eligible for deduction under Section 80- IA(4)(ii). 6. In the light of the above decision, the substantial question of law arising in these appeals have to be answered in favour of the assessee. In the result, the appeals filed by the assessee are allowed and the substantial question of law is answered in favour of the assessee. No costs. (T.S.S., J.) (V.B.S., J.) 08.07.2019 ska/mp Index: Yes/No To The Income Tax Officer, Ward-III (1) Tiruchirappalli-620018 http://www.judis.nic.in 5

T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. ska/mp Tax Case Appeal Nos.435 to 437, 439 & 442 of 2019 08.07.2019 http://www.judis.nic.in