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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI ARUN KUMAR GARODIA
IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Assessment Years : 2006-07 &2008-09
M/s. Thomson Reuters International Services Pvt. Ltd., [Successor-in-interest to Thomson Reuters India Services Pvt. Ltd. and formerly known as Thomson Corporation The Deputy Commissioner of (International) Pvt. Ltd., Income Tax, Vs. Divyasree Technopolis, Circle 12(4), 36/2 and 124, Yamalur Village, Bangalore. VarthurHobli, Off HAL Airport Road, Bangalore – 560 037. PAN: AAACW 1663L APPELLANT RESPONDENT
Assessee by : Shri T. Suryanarayana, Advocate Revenue by : Ms. Neera Malhotra, CIT (DR-II)
Date of hearing : 20.09.2017 Date of Pronouncement : 28.09.2017
O R D E R Per Shri A.K. Garodia, Accountant Member This is an assessee’s appeal directed against the assessment order dated 28.09.2012 passed by the AO for Assessment Year 2008-09 u/s. 143(3) r.w.s. 144C(13) of IT Act, 1961 as per the directions of DRP. 2. The grounds raised by the assessee in IT(TP)A Nos. 1352/Bang/2010 are as under. “The grounds mentioned herein are without prejudice to one another. Transfer Pricing Related 1. That the order of the learned Deputy Commissioner of Income-tax, (Assessing Officer' or AO'), which is in conformity with the directions of the Dispute Resolution Panel, Bangalore ('DRP') to the extent prejudicial to the Appellant, is bad in law, contrary to the facts and circumstances of the case and liable to be quashed.
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 2 of 13 2. The learned AO/DRP erred on facts and in law in not appreciating the fact that the Appellant had prepared the Transfer Pricing ('TP') documentation bona fide and in good faith in compliance with the Income-tax Act,1961 ('the Act') and Income-tax Rules, 1962 ('the Rules') and in upholding the rejection of the TP documentation by the Joint Commissioner of Income-tax (Transfer Pricing) -II, Bangalore (‘TPO’).
The learned AO/DRP erred in law and on facts in upholding the act of the learned TPO in considering secret data (i.e. collecting information, which was not available in the public domain) by exercising powers granted to him under section 133(6) of the Act.
The learned AO/DRP erred in law and on facts in (i) disregarding application of multiple year/ prior year data as used by the Appellant in the TP documentation, that was available as on the date of preparing the TP documentation and (ii) holding that only current year (i.e. financial year 2007-08) data for comparable companies should be used.
The learned AO/DRP erred on facts and in law in upholding the act of the learned TPO: (a) in conducting a fresh benchmarking analysis using non- contemporaneous data and substituting the Appellant's analysis with fresh benchmarking analysis based on his own conjectures and assumptions
(b) in rejecting the comparability analysis of the Appellant in the TP documentation and in submissions provided during the assessment proceedings, and confirming the comparability analysis as adopted by the TPO in the TP order, which is based on inappropriate filters and application of inconsistent comparability criteria
The learned AO/DRP erred in law and on facts in ignoring the limited risk profile of Appellant as detailed in the TP documentation and in upholding the conclusion of the learned TPO and in not allowing appropriate adjustments under Rule 10B of the Rules to account for differences between the Appellant and comparable companies. Other than Transfer Pricing Related 7. (a) That on the facts and circumstances of the case, the learned Assessing Officer and the learned DRP erred in denying deduction under section 10A of the Act in respect of UB Plaza Software Technology Parks of India (`STPI') Unit.
(b) That the learned Assessing Officer and the learned DRP failed to appreciate that no new undertaking was formed and the Company was continuing the business of the existing undertaking already eligible to
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 3 of 13 claim deduction under section 10A of the Act.
(c) That the learned Assessing Officer and the learned DRP has erred in considering that the Company has commenced a 'new business' from UB Plaza Unit.
(d) That the learned Assessing Officer and the learned DRP erred in holding that the unit was formed by acquisition of previously used assets and thereby the Unit does not fulfill the conditions for claiming deduction under section 10A(2) of the Act.
(e) That the learned Assessing Officer and the learned DRP failed to appreciate the fact that deduction under section 10A of the Act is undertaking specific and not assessee specific.
(f) That the learned Assessing Officer and the learned DRP erred in applying the provisions of sub-section 7A to section 10A of the Act in the Company's case.
(g) That the learned Assessing Officer and the learned DRP erred in holding that continuance of tax holiday under section 10A is only restricted to a case of amalgamation or a demerger.
(a) That on the facts and circumstances of the case, the learned Assessing Officer and the learned DRP erred denying deduction under section 10A of the Act in respect of Titanium STPI Unit.
(b) That the learned Assessing Officer and the learned DRP failed to appreciate that Titanium unit is a newly established undertaking and has received STPI approval and hence is eligible for deduction under section 10A of the Act.
(c) That the learned Assessing Officer and the learned DRP erred in holding that since the Titanium unit is an extension of UB Plaza unit no deduction could be allowed under section IDA of the Act to Titanium unit as UB Plaza unit itself is not eligible for deduction under section 10A of the Act.
(d) That the learned Assessing Officer and the learned DRP failed to appreciate the fact that Titanium unit is a new unit in its entirety and fulfills all the conditions prescribed for claiming deduction under section 10A of the Act.
(e) That the learned Assessing Officer and the learned DRP failed to appreciate the fact that deduction under section 10A of the Act is undertaking specific and not assessee specific.
(a) That the learned Assessing Officer and the learned DRP has erred in reducing freight, telecommunication and insurance charges collectively amounting to Rs 1,878,874, Rs 13,990,028 and Rs
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 4 of 13 2,064,732 in respect of Hyderabad I unit, Hyderabad II unit and Chennai unit respectively from 'export turnover' while computing deduction under section 10A of the Act as 'expenditure attributable to delivery of software outside India'. (b)That the learned Assessing Officer and the learned DRP has erred in reducing the travelling expenses incurred in foreign currency collectively amounting to Rs 38,223,160, Rs 2,090,948 and Rs 860,996 in respect of Hyderabad I unit, Hyderabad II unit and Chennai unit respectively from 'export turnover' while computing deduction under section 10A of the Act, merely because these expenses were incurred in foreign currency. (c) Without prejudice to the above, the learned Assessing Officer erred in not adjusting the 'total turnover' of the Appellant by reducing freight, telecommunication, insurance and expenditure in foreign currency of collectively amounting to Rs 40,102,034,Rs 16,080,976 and Rs 5,954,728 in respect of Hyderabad I unit, Hyderabad II unit and Chennai unit respectively, consequent to and as a normal corollary to such reduction from `export turnover'. (d) That the learned Assessing Officer and the learned DRP erred in not applying the principles of section 80HHE to section 10A of the Act. Consequently, the learned Assessing Officer and the learned DRP erred in not relying on the various judicial precedents on the said matter. 10. That the learned Assessing Officer and the learned DRP erred in treating debonding charges amounting to Rs 1,624,297 as capital expenditure. 11. That the learned Assessing Officer erred in not adjusting self assessment tax paid amounting to Rs 8,011,420. 12. That the learned Assessing Officer and the learned DRP erred in consequently levying interest awes section 234B of the Act. 13. That the Appellant craves leave to add to and / or to alter, amend, rescind, modify, the grounds herein above or produce further documents before or at the time of hearing of this Appeal.”
At the very outset, it was submitted by ld. DR of revenue that the order of DRP in respect of TP issue is very cryptic and in this regard, our attention was drawn to para no. 9.1 and 9.2 of the directions of DRP available on page no. 13 of DRP directions. She submitted that in view of this, the TP matter should be restored back to the file of DRP for passing a speaking and reasoned order. The ld. AR of assessee raised various arguments and filed written submissions
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 5 of 13 also but in our considered opinion, the order of a quasi judicial authority should be a speaking and reasoned order and in the absence of a speaking and reasoned order of DRP, we feel it proper to restore the matter back to the file of DRP for fresh decision by way of a speaking and reasoned order and therefore, various arguments and written submissions of ld. AR of assessee do not require any consideration at the present stage in respect of the TP issue involved in the present appeal. We set aside the assessment order on TP issue and restore the TP matter back to the file of DRP for fresh decision by way of a speaking and reasoned order.
Regarding the issue in respect of deduction u/s. 10A as per the ground nos. 7 and 8, it was submitted by ld. AR of assessee that the AO has disallowed the deduction u/s. 10A in respect of UB Plaza Software Technology Park unit. He submitted that this issue is now covered in favour of the assessee by the tribunal order in assessee’s own case for the Assessment Year 2007-08 in IT(TP)A No. 1206/Bang/2011 dated 06.04.2017. He submitted the copy of this tribunal order and drawn our attention to para no. 17 of this Tribunal order. The ld. DR of revenue supported the orders of authorities below on this issue.
We have considered the rival submissions in respect of ground no. 7 of assessee’s appeal wherein the issue involved is regarding disallowance u/s. 10A in respect of UB Plaza Software Technology Parks of India (‘STPI’) Unit. Para no. 17 of the tribunal order in assessee’s own case for Assessment Year 2007-08 is relevant and the same is reproduced herein below. “17. The assessee submitted that it acquired the UB Plaza Unit, which is registered with the STPI authorities, from TBIIPL with effect from 01.07.2005 pursuant to a Business Transfer Agreement dated 15.06.2005 on a slump sale basis. UB Plaza Unit was, admittedly, a eligible unit for deduction u/s 10A from its formation, i.e. on 24.03.2004, and TBIIPL had been allowed the deduction u/s.10A from the first year of its formation till the period it held the Unit, i.e. till 30.06.2005. Once it acquired the UB Plaza Unit, it claimed deduction u/s 10A for the balance period of eligibility, i.e. from assessment year 2006-07 onwards. Pertinently, its claim for deduction u/s 10A for the said Unit for the immediately preceding year, being the first year after the Unit's acquisition, was allowed by the AO vide the assessment order dated 13.09.2010. Accordingly, it claimed in its return of income for the present a y Rs.10,25,52,834/- as the deduction u/s 10A.
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 6 of 13 Despite, the AO disallowed its claim on the ground that it did not fulfill the conditions necessary for claiming deduction u/s 10A(2)(iii) and also on the ground that the provisions of Section 10A(7A) are applicable only in the cases of an amalgamation or demerger and thus do not apply in cases of a slump sale. The DRP upheld the disallowance in its entirety.” 5. The ld. DR of revenue could not point out any difference in the facts in the present year and therefore, we find no reason to take a contrary view in the present year. Following this tribunal order for Assessment Year 2007-08, we decide this issue in favour of the assessee and accordingly, ground no. 7 of assessee’s appeal is allowed.
Regarding ground no. 8 of assessee’s appeal, it was submitted by ld. AR of assessee that the AO discussed this issue on page no. 8 of the assessment order. He pointed out that as per the AO, the Titanium Unit of the assessee company is extension of UB Plaza Unit and since deduction u/s. 10A was disallowed by AO in respect of UB Plaza Unit, he disallowed the claim of deduction u/s. 10A in respect of Titanium Unit also. He submitted that in view of the tribunal order in Assessment Year 2007-08 as per which the assessee is eligible for deduction u/s. 10A in respect of UB Plaza Unit, deduction should be allowed for Titanium Unit also. He also submitted that in para 12.5 of the assessment order, it is also an objection of the AO that the assessee company had not been able to establish that the Titanium Unit is a separate unit by furnishing a Asset Schedule of the Titanium Unit to establish that it fulfills the provisions of section 10A(2) of the I.T. Act, 1961 along with a separate approval from the Software Technology Park of India [STPI] to establish that it is a separate and independent unit for the purpose of the claim of deduction u/s. 10A of the I.T. Act, 1961. At this juncture, a query was made by the bench regarding stand of the assessee as to whether the Titanium Unit is extension of UB Plaza Unit or a separate unit because if it is extension of UB Plaza Unit then the deduction for this unit will also be allowable up to the year up to which deduction is allowable for UB Plaza Unit and if it is a separate unit then the assessee has to establish that this unit fulfills all the requirements of section 10A of the I.T. Act, 1961.In this regard, the ld. AR of assessee submitted that on page no. 662 of paper book is a separate certificate issued by STPI in
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 7 of 13
respect of Titanium Unit and the AO has been confused by this mention in the said certificate that this approval is for expansion of STPI facility. He submitted that as per this certificate, it is an expansion of STPI facility by establishing a new unit and not it is an expansion of UB Plaza Unit. Ld. DR of revenue supported the assessment order.
We have considered the rival submissions. So we find that regarding Titanium Unit, the AO has proceeded mainly on this basis that this unit is expansion of UB Plaza Unit. But as per the assessee, this is a separate independent unit. We also find that as per para no. 12.5 of assessment order, this is not the only objection of the AO that separate approval from STPI is not made available. The main objection is this that the assessee had not been able to establish that the Titanium Unit is a separate unit by furnishing the asset schedule of this unit. Before us also, such asset schedule of the Titanium Unit has not been furnished. In the absence of that, we find no merit in the claim of the assessee that this is a separate independent unit. But the disallowance of the deduction u/s. 10A in the present year is not justified because as per the AO, this is an extension of UB Plaza Unit and it has been held by us and by the coordinate bench in Assessment Year 2007-08 that UB Plaza Unit is eligible for deduction u/s. 10A and therefore, Titanium Unit is also eligible for deduction u/s. 10A in the present year although the first year of such deduction for this unit should also be same as that of UB Plaza Unit. Accordingly we hold that in the present year, deduction is allowable to assessee u/s. 10A for Titanium Unit also on this basis that this unit is expansion of UB Plaza Unit. Ground no. 8 is partly allowed.
Regarding ground no. 9, it was agreed by both sides that ground no. 9(C) is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. as reported in 349 ITR 98 and it was agreed by ld. AR of assessee that if the issue involved in ground no. 9(C) is decided in favour of the assessee then remaining part of ground no. 9 is not pressed.
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 8 of 13 9. We have considered the rival submissions and we hold that the expenses reduced by the AO from export turnover should be reduced from total turnover for the purpose of computing deduction allowable to assessee u/s. 10A because this was held by Hon’ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd. (supra) that total turnover is sum of total of export turnover and domestic turnover and therefore, if any amount is reduced from export turnover then the total turnover also gets reduced by the same amount automatically. Accordingly ground no. 9(C) is allowed and the remaining part of ground no. 9 is rejected as not pressed.
Regarding ground no. 10, it was submitted by ld. AR of assessee that this aspect is discussed by the AO on page no. 4 of the assessment order. He submitted that custom duty for De-bonding of assets were paid in respect of capital assets but the payment on De-bonding charges does not add to the value of asset in question and therefore, it cannot be capitalized and it should be allowed as revenue expenditure. At this juncture, this was observed by the bench that even custom duty on import of asset as well as interest on loan borrowed for acquiring assets are required to be capitalized till the assets are put into use. Then how the De-bonding charges is not required to be capitalized. In reply, the ld. AR of asssessee had nothing to say. In this view of the matter, we find no merit in ground no. 10 raised by the assessee.
Regarding ground nos. 11 and 12, it was submitted that these are consequential and hence, we hold that no separate adjudication is not called for in respect of ground nos. 11 and 12.
In the result, the appeal filed by the assessee is partly allowed in the terms indicated above.
IT(TP)A Nos. 1352/Bang/2010 The grounds raised by the assessee in this appeal are as under. “The grounds mentioned herein are without prejudice to one another. 1. That the order of the learned Deputy Commissioner of Income-Tax, Bangalore (Assessing Officer' or 'AO') to the extent prejudicial to the Appellant, is bad in law and liable to be quashed.
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 9 of 13
Transfer Pricing Related
That the learned AO and the learned Dispute Resolution Panel ('Panel') erred in upholding the rejection of Transfer Pricing (TP) documentation by the learned Joint Director of Income Tax, (Transfer Pricing-II) ('TPO') and thereby erred in not appreciating that the Appellant had prepared the TP documentation bona fide and in good faith and conducted the comparable analysis based on the detailed Functional Asset and Risk analysis performed with due diligence and the data available at the time of conducting the comparability analysis.
That the learned AO and the learned Panel erred in ignoring the limited risk nature of the services provided by the Appellant as detailed in the TP documentation and in upholding the conclusion of the learned TPO that no adjustment on account of risk differential is required while determining the Arm's Length Price of the international transactions of the Appellant, but for an adjustment towards differences in the working capital position between the Appellant and the entrepreneurial comparable companies.
That the learned AO and the learned Panel erred both in facts and law in confirming the action of the learned TPO of making an adjustment to the transfer price of the Appellant by Rs.132,271,085 holding that the international transactions do not satisfy the arm's length principle envisaged under the Act and in doing so grossly erred in:
4.1. Upholding the act of the learned TPO of collecting selective information of the companies by exercising power granted to him under section 133(6) of the Act, that was not available to the Appellant in the public domain and relying on the same for comparability purposes in denial of natural justice to be observed in the assessment proceedings.
4.2. Disregarding application of multiple year/ prior year data as used by the Appellant in the TP documentation and holding that current year (i.e. Financial Year 2005-06) data for comparable companies should be used despite the fact that the same was not necessarily available to the Appellant at the time of preparing the TP documentation, and in doing so have grossly erred in: 4.2.1. interpreting the requirement of 'contemporaneous’ data in the Rules to necessarily imply current year/ single year (i.e. FY 2005-06) data; and
4.2.2. expecting the Appellant to perform act of impossibility in terms of being able to use data subsequently available (i.e. during audit proceedings).
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 10 of 13 4.3. Upholding the rejection of comparability analysis of the Appellant in the TP documentation and confirming the comparability analysis as adopted by the learned TPO in the TP Order by applying additional filters and introduction of companies as comparables that are either functionally dissimilar or have differing asset base and risk profile, and also rejection of other potentially comparable companies.
4.4. Concluding that the amended proviso to section 92C(2) of the Act under Finance (No 2) Act, 2009, would be applicable for Assessment Year 2006-07 and in not appreciating that even if the arms' length price falls outside the 5% tolerance band the adjustment would have to be reckoned after allowing the benefit of +/- 5% variation as provided in proviso to Section 92C(2) of the Act, while determining the arms' length price.
4.5. That, in any event, Infosys Limited, KALS Info Systems Limited, Tata Elxsi Ltd. (Segment), Accel Transmatics Ltd. (Seg), and Flextronics Software Ltd ought to be excluded from the list of comparables to the Appellant's software development service segment as they are functionally dissimilar to it besides otherwise failing the test of comparability.
4.6. That, in any event. Aztec Software Ltd. and Megasoft Ltd ought to be excluded from the list of comparables to the Appellant's software development service segment as their related party transactions to total sales in FY 2005-06 are in excess of 15%.
4.7. That, in any event, Vishal Information Technologies Ltd. and Goldstone lnfratech Ltd. (earlier known as Goldstone Teleservices Ltd) ought to be excluded from the list of comparables to the Appellant's information technology enabled services segment as they are functionally dissimilar to it besides otherwise failing the test of comparability.
4.8. That, in any event, Datamatics Financial Services Ltd. ought to be excluded from the list of comparables to the Appellant's information technology enabled services segment as its related party transactions to sales in FY 2005-06 are in excess of 15%. Other than Transfer Pricing Related
That the learned AO erred in not allowing deduction under section 10A of the Act of the entire profits of the undertaking registered with the Software Technology Park of India.
That on the facts and in the circumstances of the case, the learned AO erred in reducing the telecommunication expenses of Rs 52,267,275 from 'export turnover' while computing deduction under section 10A of the Act as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A of the
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 11 of 13 Act. 7. That on the facts and in the circumstances of the case. the learned AO erred in considering the insurance expenses of Rs 5,925,140, which comprises of staff medical insurance and insurance on fixed assets, as 'expenditure attributable to delivery of software outside India’ under Explanation 2(iv) to Section 10A of the Act and reducing the same from 'export turnover' while computing deduction under section 10A of the Act. That the learned AO failed to appreciate that the insurance expenses were incurred in Indian Rupees and was paid locally to Indian Insurance Companies. 8. That on the facts and in the circumstances of the case, the learned AO erred in reducing the expenses incurred in foreign currency of Rs81,910,211 from'export turnover' while computing deduction under section 10A of the Act, merely because these expenses were incurred in convertible foreign currency. 9. That on the facts and in the circumstances of the case, the learned AO erred in not appreciating the fact that the Appellant is not engaged in the business of providing technical services outside India. 10. That even assuming but not admitting that the above expenditure aggregating to Rs 140,102,626 is to be reduced from 'export turnover', the learned AO erred in not reducing the said expenses from the 'total turnover'. 11. That the learned AO erred in not allowing deduction under section 10A of the Act, before set-off of unabsorbed depreciation, in computing the total income of the Appellant. 12. That the learned AO erred in consequently levying interest under section 234B and section 234D of the Act. 13. That the Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal.”
At the very outset, it was submitted by ld. DR of revenue that the order of DRP in respect of TP issue is very cryptic and in this regard our attention was drawn to page nos. 10 and 11 of the order of DRP. She submitted that in view of this, the TP matter should be restored back to the file of DRP for passing a speaking and reasoned order. The ld. AR of assessee raised various arguments and filed written submissions also but in our considered opinion, the order of a quasi
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 12 of 13
judicial authority should be a speaking and reasoned order and in the absence of speaking and a reasoned order of DRP, we feel it proper to restore the TP matter back to the file of DRP for fresh decision by way of a speaking and reasoned order and therefore, various arguments and written submissions of ld. AR of assessee do not require any consideration at the present stage in respect of the TP issue involved in the present appeal. We set aside the assessment order on TP issue and restore the TP matter back to the file of DRP for fresh decision by way of a speaking and reasoned order. 14. Regarding corporate tax issues raised by the assessee as per ground nos. 5 to 12, it was submitted that in these grounds, only two aspects of the dispute in respect of allowability of deduction u/s. 10A of the I.T. Act, 1961 are involved.
The first aspect as per ground nos. 5 to 10 is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd.(supra) as per which, it was held that total turnover is sum of total of export turnover and domestic turnover and therefore, if any amount is reduced from export turnover then the total turnover also gets reduced by the same amount automatically and if this aspect is decided in favour of the assessee then the remaining aspects are not pressed by the assessee.
Regarding ground no. 11, it was submitted that this issue is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Yokogawa India Ltd. as reported in 341 ITR 385 wherein it was held that exemption u/s. 10A has to be allowed without setting off brought forward unabsorbed losses and the depreciation from earlier assessment year or current assessment year either in the case of non-STP units or in the case of the very same undertaking. We have considered the rival submissions. Regarding the first aspect of this issue in respect of allowability of deduction u/s. 10A of IT Act, 1961 and we direct the AO to reduce the expenses which were reduced by him from export turnover from total turnover also by respectfully following the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. (supra).Ground nos. 5 to 10 are disposed of in this manner.
IT(TP)A Nos. 1352/Bang/2010 &1565/Bang/2012 Page 13 of 13 17. Regarding ground no. 11, we direct the AO to compute the deduction allowable to assessee u/s. 10A before set off of unabsorbed depreciation by respectfully following the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs. Yokogawa India Ltd. (Supra).Ground no. 11 is allowed. 18. Ground no. 12 is consequential and ground no. 13 is general.
In the result, both the appeals filed by the assessee are partly allowed in the terms indicated above.
Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, the 28th September, 2017. /MS/
Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order
Senior Private Secretary, Income Tax Appellate Tribunal, Bangalore.