PR. COMMISSIONER OF INCOME TAX vs. M/S INFOSYS BPM LTD

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ITA/277/2022HC KarnatakaKAHC01022672202224 September 2024Bench: S.G.PANDIT,C.M. POONACHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal, granting the Revenue liberty to revive it if exceptions under relevant CBDT circulars apply. The substantial question of law was kept open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order that deleted disallowances for software expenses. The assessee argued that the tax effect was below the threshold specified in a CBDT circular, making the appeal non-maintainable.

What were the issues?

Whether the appeal is maintainable due to low tax effect as per CBDT circulars, and the correctness of the ITAT's deletion of software expense disallowances.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 40(a)(i)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39734-DB ITA No. 277 of 2022

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 277 OF 2022 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX, BMTC COMPLEX, KORMANGALA, BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME, CIRCLE 3(1)(1), BENGALURU. …APPELLANTS

(BY SRI. SANMATHI E I.,ADVOCATE)

AND:

1.

M/S INFOSYS BPM LTD., NO. ELECTRONICS CITY, HOSUR ROAD, BENGALURU, PAN NO.AACCP4478N. …RESPONDENT

(BY SMT TANMAYEE RAJKUMAR, ADVOCATE)

THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 11.12.2020 PASSED IN ITA NO.491/BANG/2018 FOR THE ASSESSMENT YEAR 2011-2012, PRAYING THIS HON’BLE COURT TO: (1) 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 16/07/2021 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, 'C' BENCH, BENGALURU,

Digitally signed by B LAVANYA Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39734-DB ITA No. 277 of 2022

AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO.491/BANG/2018 FOR ASSESSMENT YEAR 2011-2012 (ANNEXURE-A) AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Smt.Tanmayee Rajkumar for respondent/assessee.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 11.12.2020 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.491/Bang/2018 for the assessment year 2011-12.

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NC: 2024:KHC:39734-DB ITA No. 277 of 2022

3.

This

Court,

admitted the appeal on 08.07.2024 to consider the following substantial questions of law: “Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in law in deleting the disallowances for software expenses f Rs.1,36,82,093/- u/s 40(a)(i) of the Income Tax Act, 1961 relying on the decision of the Hon’ble Supreme Court in the case of M/s. Engineering Analysis Centre of Excellent Pvt. Ltd., Vs. CIT (2009) 432 ITR (SC) without appreciating that Revenue has filed Review Petition before the Hon’ble Supreme Court in the afore said case and that the decision has not attained finality?”

4.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

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NC: 2024:KHC:39734-DB ITA No. 277 of 2022

5.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

MPK List No.: 2 Sl No.: 43

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