PRINCIPAL COMMISSIONER OF IN vs. M/S. INAUTIX TECHNOLOGIES IN

T.C.A.Nos.615 & 632 of 2019 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.615 and 632 of 2019 and C.M.P.No.18336 of 2019 Principal Commissioner of Income Tax 2, No.121, Mahatma Gandhi Road, Chennai. .. Appellant in both Appeals -vs- M/s.Inautix Technologies India Pvt. Ltd., 10th Floor, Tidel Park, No.4, Canal Bank Road, Taramani, Chennai-600 013. PAN: AAACI6177K .. Respondent in both Appeals Appeals under Section 260A of the Income-tax Act, 1961, against the common order dated 08.02.2017, made in I.T.A.Nos.150 & 80/Mds/2015 on the file of the Income Tax Appellate Tribunal 'C' Bench, Chennai for the assessment year 2009-10. For Appellant : Mr.Karthik Ranganathan, SSC assisted by Mr.S.Rajesh ****** 1/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 COMMON JUDGMENT (Delivered by T.S.Sivagnanam, J.) These appeals filed by the Revenue under Section 260A of the Income- tax Act, 1961 are directed against the common order dated 08.02.2017, made in I.T.A.Nos.150 & 80/Mds/2015 on the file of the Income Tax Appellate Tribunal 'C' Bench, Chennai for the assessment year 2009-10. 2.The appeals have been filed raising the following substantial questions of law:- T.C.A.No.632 of 2019 :- “(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT was correct in confirming to reduce the expenses incurred in foreign currency from the Total Turnover for computing deduction u/s 10A of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in excluding the expenditure incurred in foreign currency from the total turnover when the clause (iv) to Explanation 2 to Section 10A specifically excludes the same only from the export turnover? (iii) Whether on the facts and in the circumstances of 2/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 the case and in law, the Hon'ble Tribunal was right in holding that the travelling expenses, telecommunication charges incurred in foreign exchange is to be excluded from the total turnover of the assessee for the purpose of deduction claimed u/s 10A of the Act? (iv) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in holding that the expenditure incurred in foreign currency is to be excluded both from export turnover and total turnover while computing deduction u/s 10A of the Act? (v) Whether on the facts and circumstances of the case and in law, the ITAT was correct in relying on the decision of Sak Soft Limited, when the issue has not reached finality? (vi) Whether on the facts and circumstances of the case and in law the ITAT was correct in deleting the disallowance made u/s 14A of the Act while computing book profit u/s. 115JB of the Act. (vii) Whether on the facts and circumstances of the case and in law the ITAT was correct in ignoring the Explanation 1(f) to Section 115JB(2) of the Act where such disallowaces made are to be increased for the purpose of computing book profit. And 3/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 (viii) Whether on the facts and the circumstances of the case and in law the ITAT was correct in holding that disallowance of business expenses would increase the business profit of the assessee and consequent increase in the claim of deduction u/s.10A of the Act.” T.C.A.No.615 of 2019 :- “(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT was correct in confirming to reduce the expenses incurred in foreign currency from the Total Turnover for computing deduction u/s 10A of the Income Tax Act, 1961? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in excluding the expenditure incurred in foreign currency from the total turnover when the clause (iv) to Explanation 2 to Section 10A specifically excludes the same only from the export turnover? (iii) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in holding that the travelling expenses, telecommunication charges incurred in foreign exchange is to be excluded 4/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 from the total turnover of the assessee for the purpose of deduction claimed u/s 10A of the Act? (iv) Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in holding that the expenditure incurred in foreign currency is to be excluded both from export turnover and total turnover while computing deduction u/s 10A of the Act? And (v) Whether on the facts and circumstances of the case and in law, the ITAT was correct in relying on the decision of Sak Soft Limited, when the issue has not reached finality?” 3.Heard Mr.Karthik Ranganathan, learned Senior Standing Counsel assisted by Mr.S.Rajesh, learned Standing Counsel for the appellant. 4.The learned Senior Standing Counsel for the appellant submits that the above appeals are not pursued by the Revenue on account of the low tax effect in terms of Circular No.17/2019, dated 08.08.2019 issued by the Central Board of Direct Taxes. By the said Circular, the monetary limit for filing or pursuing an appeal before the High Court has been increased to Rs.1 Crore. It is further submitted that the tax effect in this case is less than the threshold limit. 5/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 5.In the light of the said submissions, the above tax case appeals are dismissed on account of the low tax effect. The substantial questions of law framed are left open. In the event the tax effect is above the threshold limit fixed in the said circular, liberty is granted to the Revenue to make a mention to this Court to restore the appeals to be heard and decided on merits. No costs. Consequently, connected miscellaneous petition is closed. (T.S.S., J.) (V.B.S., J.) 29.08.2019 Index : Yes/No Speaking/Non-Speaking Order abr To 1.M/s.Inautix Technologies India Pvt. Ltd., 10th Floor, Tidel Park, No.4, Canal Bank Road, Taramani, Chennai-600 013. 2.The Income Tax Appellate Tribunal 'C' Bench, Chennai. 6/7 http://www.judis.nic.in T.C.A.Nos.615 & 632 of 2019 T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. (abr) T.C.A.Nos.615 and 632 of 2019 29.08.2019 7/7 http://www.judis.nic.in