M/S. SASKEN TECHNOLOGIES LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 6(1)(1), BANGALORE

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

Page 2 of 5 fresh assessment order u/s 143(3) r.w.s 254 of the Act. However, the AO had passed an “Order Giving Effect” (OGE) on 13.11.2017 allowing full relief to the assessee on the following issues, which were actually restored by the Tribunal for fresh examination:- (a) Disallowance u/s 14A of the Act (b) Whether Royalty income is eligible for computing deduction u/s 10A/10AA of the Act. (c) Whether foreign currency expenses should be reduced from export turnover for computing deduction u/s 10A/10AA. The Ld PCIT took the view that allowing relief to the assessee in the OGE without conducting fresh examination as directed by AO and without passing fresh assessment order has rendered the OGE erroneous and prejudicial to the interests of revenue. Accordingly, the Ld PCIT initiated revision proceedings u/s 263 of the Act. After hearing the assessee, the Ld PCIT held that the OGE dated 13.11.2017 is erroneous and prejudicial to the interests of revenue. Accordingly, he set aside the OGE and directed the AO to pass a fresh assessment order in accordance with section 254 r.w.s 143(3) of the Act.

M/s. Sasken Technolgies Ltd., Bangalore

Page 3 of 5 “Substantial question of Laws 1. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law giving relief to assessee in respect of computation of deduction under section 10A by relying upon the decision of this Hon’ble Court in case of CIT V/s Tata Elxsi when said judgement has been challenged before Apex Court”? 2. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the addition of Rs.16,43,07,085/- treated as royalty income by the assessee while computing the deduction under section 10A/10AA by following the decisions in the case of Wipro Ltd., and Motorola India Electronics Pvt. Ltd. even when the assessing authority rightly held that the same is not derived by the export business of the industrial undertakings and ingredients of sections 10A/10AA are not satisfied to claim such deduction”? 3. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in aside the re-computation of reduction in respect of 10A/10AA claim of the assessee with respect to telecommunication charges, insurance charges and foreign currency expenses by following the decisions of this Hon’ble High Court in the case of Emphasis Ltd., Motor Industries Company Limited and Kshema Technologies Limited even though the said decisions have not reached finality and assessing authority had rightly recomputed the deduction in accordance with the provisions of the Act”?

The Ld A.R submitted that Hon’ble High Court has since passed the order on 05th November, 2018 in of 2017, wherein it has decided all the questions of law in favour of the assessee. Accordingly he submitted that the issue no.(b) and (c) (mentioned supra) pointed out by Ld PCIT shall become infructuous.

M/s. Sasken Technolgies Ltd., Bangalore Page 4 of 5 (c) Whether foreign currency expenses should be reduced from export turnover for computing deduction u/s 10A/10AA. However, as observed by the Ld PCIT, the AO has failed to pass a fresh assessment order u/s 143(3) r.w.s. 254 of the Act. Instead, the AO has passed an OGE and granted relief to the assessee in respect of all the three issues mentioned above without examining them at all. Thus, granting to relief to the assessee without examining the issues as directed by ITAT and also failure to pass a fresh assessment order u/s 143(3) r.w.s 254 of the Act would definitely render the OGE erroneous and prejudicial to the interests of revenue. Hence we do not find any infirmity in the impugned revision order passed by Ld PCIT.