COMMISSIONER OF INCOME TAX vs. SCOPE INTERNATIONAL PVT LTD

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TCA/483/2018HC 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 Hon'ble Supreme Court in the case of Commissioner of Income tax, Central-III, HCL Technologies Ltd. [(2018) 93 taxmann.com 33 (SC)]. In that decision, it was held that the definition of 'total turnover' as given under Sections 80HHC and 80HHE cannot be adopted for the purpose of Section 10A. Instead, the technical meaning of 'total turnover', which does not envisage the reduction of any expenses from the total amount, is to be taken into consideration for computing the deduction under Section 10A. When the meaning is clear, there is no necessity of importing the meaning of 'total turnover' from other provisions. Consequently, following the Supreme Court's decision, the appeal filed by the Revenue was dismissed, and the substantial question of law was answered 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 December 8, 2016, passed by the Income-tax Appellate Tribunal (ITAT), Chennai. The appeal pertained to the assessment year 2010-11 and concerned the assessee, M/s. Scope International Pvt. Ltd. The core of the dispute involved the computation of deduction under Section 10A of the Act. The ITAT's order, which is under challenge, held that telecommunication expenses and foreign currency expenses should be excluded from the total turnover for the purpose of calculating the Section 10A deduction.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the order of the Tribunal was right in law and perverse on facts in holding that telecommunication expenses and foreign currency expenses had to be excluded from the total turnover while computing the deduction under Section 10A of the Act, when the section does not provide for such exclusion and the said expenses cannot form part of the total turnover, and whether the Tribunal's order is perverse and against accounting principles? The Revenue contended that the definition of 'total turnover' for the purpose of Section 10A does not envisage the reduction of any expenses, and the technical meaning of total turnover should be considered. The Revenue argued that there was no necessity to import the meaning of 'total turnover' from other provisions. The Revenue relied on the Supreme Court decision in Commissioner of Income tax, Central-III, HCL Technologies Ltd. [(2018) 93 taxmann.com 33 (SC)]. The judgment does not record any specific arguments made by the assessee.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

T.C.A.No.483 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.483 of 2018 Commissioner of Income Tax, Chennai. .. Appellant/Appellant -vs- M/s.Scope International Pvt. Ltd., Ist Floor, Europe Building, Grindlays Gardens, No.1, Haddows Road, Nungambakkam, Chennai – 600 006. PAN: AAECS 9043E .. Respondent/Respondent Appeal under Section 260A of the Income-tax Act, 1961 against the order dated 08.12.2016 on the file of the Income-tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.No.2314/MDS/2016 for the assessment year 2010-11. For Appellant : Mr.J.Narayanasamy Senior Standing Counsel For Respondent : Mr.S.P.Chidambaram ****** 1/4 http://www.judis.nic.in T.C.A.No.483 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 08.12.2016 passed by the Income-tax Appellate Tribunal 'A' Bench, Chennai, in I.T.A.No.2314/MDS/2016 for the assessment year 2010-11. 2.The above appeal has been filed by raising the following substantial question of law:- “Whether on the facts and in the circumstances of the case the order of the Tribunal was right in law and perverse on facts and holding that the telecommunication expenses and foreign currency expenses had to be excluded from the total turnover while computing the deduction u/s.10A of the Act when the section does not provide for such exclusion and the said expenses cannot form part of the total turnover and whether the Tribunal order is perverse and against the accounting principle? 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 2/4 http://www.judis.nic.in T.C.A.No.483 of 2018 decision it was held that Definition of 'total turnover' given under sections 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.483 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.483 of 2018 28.08.2019 4/4 http://www.judis.nic.in

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