THE PR. COMMISSIONER OF INCOME TAX-4 vs. M/S MPHASIS LTD.,

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ITA/795/2018HC KarnatakaKAHC01050497201825 June 2021Bench: SATISH CHANDRA SHARMA,R. NATARAJ4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that income earned through onsite software development by an associated enterprise on behalf of the assessee is eligible for deduction under Section 10A of the Act. This decision was based on a previous judgment by a coordinate bench for an earlier assessment year.

What were the facts?

The revenue appealed against the ITAT's order which allowed deduction under Section 10B for income earned by the assessee's associated enterprise through software development. The revenue argued that the assessee failed to fulfill the conditions for the deduction.

What were the issues?

Whether income earned by an associated enterprise through software development is eligible for deduction under Section 10B, and if the conditions for such deduction were fulfilled by the assessee.

Which sections of the Income-tax Act were involved?

Section 10B,Section 263,Section 10A,Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 25TH DAY OF JUNE, 2021

PRESENT

THE HON'BLE MR. JUSTICE SATISH CHANDRA SHARMA

AND

THE HON'BLE MR. JUSTICE NATARAJ RANGASWAMY

I.T.A. NO.795 OF 2018

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX-4, C.R. BUILDINGS, QUEENS ROAD, BANGALORE.

2.

THE COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), BANGALORE. ...APPELLANTS

(BY SRI. SANMATHI E.I., ADVOCATE)

AND:

M/S. MPHASIS LTD., ABACUS SQUARE, BAGMANE WORLD TECHNOLOGY CENTRE, BLOCK–B, 1ST FLOOR, K.R. PURAM, MARATHHALLI, ORR, DODDANEKUNDI, BANGALORE-560 048. PAN: AAACB6820C …RESPONDENT

THIS APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF THE ORDER DATED: 01.06.2018 PASSED IN ITA NO.653/BANG/2014, FOR THE ASSESSMENT YEAR 2008-2009 PRAYING THIS HON`BLE COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED 01.06.2018 PASSED IN ITA NO.653/BANG/2014 FOR ASSESSMENT YEAR 2008-2009 (PRODUCED AS ANNEXURE-A) BY THE INCOME TAX APPELLATE TRIBUNAL, B-BENCH, BANGALORE AS SOUGHT FOR, IN THE ABOVE CASE.

THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 18.06.2021, COMING ON FOR ‘PRONOUNCEMENT OF JUDGMENT’ THIS DAY, NATARAJ RANGASWAMY J., DELIVERED THE FOLLOWING:

J U D G M E N T

This appeal under Section 260-A of the Income Tax Act, 1961 is filed by the revenue challenging the order passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru, (henceforth referred to as ‘the Tribunal’) in ITA No.653/BANG/2014 dated 01.06.2018. By the aforesaid order, the Tribunal held that the income earned by the assessee through the development of software by an Associated Enterprise of the assessee is eligible for deduction under Section 10B of the Income Tax Act, 1961 (for short, ‘the Act’).

2.

This appeal is admitted to consider the following substantial question of law:

“Whether the Tribunal on the facts and in the circumstances of the case, is right in holding that assessee is entitled for exemption under Section 10B of the Act to the full extent as claimed by it when assessee has failed to fulfill the conditions set out in said section and Commissioner rightly invoked proceedings under Section 263 of the Act?”

3.

It is not in dispute that the very same substantial question of law arose in the case of the assessee for the assessment year 2007-2008 and a coordinate Bench of this Court in ITA Nos.263-264/2014 (decided on 29.07.2015), held that the income earned by the assessee through onsite development of software by an Associated Enterprise on behalf of the assessee would be eligible for deduction under Section 10A of the Act.

4.

In view of the above, the substantial question of law framed by this Court is answered against the revenue and in favour of the assessee.

Hence, this Appeal is dismissed.

Sd/- JUDGE

Sd/- JUDGE

sma

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