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

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 09TH DAY OF NOVEMBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD

I.T.A. NO.351 OF 2016

BETWEEN: 1. THE PR. COMMISSIONER OF INCOME-TAX,

5TH FLOOR, BMTC BUILDING,

80 FEET ROAD, KORMANGALA,

BANGALORE-560 095.

THE DEPUTY COMMISSIONER OF

INCOME-TAX,

CIRCLE-3(1)(1),

2ND FLOOR, BMTC BUILDING,

80 FEET ROAD, KORMANGALA,

BANGALORE – 560 095. …APPELLANTS (BY SRI K.V.ARAVIND, ADV.)

AND: M/S. INFOSYS BPO LTD., PLOT NO.26/D, 26/4 & 26/6, KONNAPPA AGRAHARA, ELECTRONIC CITY, HOSUR ROAD, BANGALORE – 560 100. …RESPONDENT (BY SRI T.SURYANARAYANA, ADV.) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED:09/12/2015 PASSED IN C.O.NO.92/Bang/2015, FOR THE Assessment Year 2006-2007.

THIS I.T.A. COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT

This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment Year 2006-07. The appeal was admitted by a Bench of this Court vide order dated 02.11.2017 on the following substantial questions of law:

“1. Whether on the facts and in the circumstances on the case, the Tribunal is right in law in setting aside the computation of section 10A deduction made by assessing authority without appreciating that judgment of this Hon’ble Court in CIT V/s Tata Elxsi has not reached finality and moreover section 10A does not permit the assessee to reduce expenses incurred in foreign currency from both from export and total turnover?

Whether on the facts and in the circumstances on the case, the Tribunal is right in law in setting aside the findings of assessing officer with regard to set of losses of 10A unit sand non 10A units by placing reliance on the decision of this Hon’ble Court in the case of CIT V/s Yokogowa which has been challenged before Apex Court?

Whether on the facts and in the circumstances on the case, the Tribunal is right in laws setting aside the disallowance of Rs.14,62,586 made under section 14A by the assessing authority even when no expenses under section 14A of the Act could be attributed for maintenance/monitoring the investment in mutual funds and the without proper appreciation of Notification in S.O.547(E) dated 24/3/2008?”

The facts giving rise to filing of this appeal briefly stated are that the assessee is engaged in the business of processing research. The assessee filed the return of income for the Assessment Year 2006-07. The Assessment Officer completed the assessment by making various disallowances under Sections 10A and 10AA of the Act by assessing additional income. The

Assessing Officer also disallowed a sum of Rs.14,62,586/- under Section 14A of the Act. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who by order dated 28.03.2014 partly allowed the appeal preferred by the assessee. Thereafter, the revenue as well as the assessee filed appeals before the Income Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’, for short). The Tribunal by order dated 09.12.2015 has dismissed the appeal preferred by the revenue and has partly allowed the appeal preferred by the assessee. In the aforesaid factual background, this appeal has been filed.

When the matter was taken up today, learned counsel for the assessee submitted that the first substantial question of law, which has been framed by this Court has already been answered by the Hon’ble Supreme Court in ‘COMMISSIONER OF INCOME TAX CENTRAL-III NEW DELHI VS. HCL TECHNOLOGIES

LTD.’, 2018 404 ITR 719. The aforesaid legal position could not be disputed by learned counsel for the revenue. In view of aforesaid enunciation of law by the Hon’ble Supreme Court, first substantial question of law is answered against the revenue and in favour of the assessee.

It is further submitted by learned counsel for the assessee that second substantial question of law is also answered in favour of the assessee by the decision of Hon’ble Supreme Court in ‘CIT vs. Yokogawa India Ltd.’, (2017) 391 ITR 274 (SC). The aforesaid fact could not be rebutted by the learned counsel for the revenue. In view of the decision of the Hon’ble Supreme Court in the Yokogawa India Ltd. (supra), the second substantial question of law framed by a bench of this Court is also answered against the revenue and in favour of the assessee.

The third substantial question of law pertains to disallowance of Rs.14,62,586/-, which was claimed by the assessee under Section 14A of the Act. The Tribunal on the basis of meticulous appreciation of evidence on record has recorded a finding in paragraph No.29 of its order and has held that no expenditure was incurred by the assessee directly or indirectly to earn the dividend and therefore, the claim of the assessee under Section 14A of the Act is allowed. The aforesaid finding is a finding of fact, which is based on meticulous appreciation of evidence on record. The aforesaid finding could not be demonstrated to be perverse. It is well settled principle of law that unless and until a finding of fact is demonstrated to be perverse, this Court in exercise of power under Section 260-A of the Act, would not interfere with the findings of the Court. (SEE: ‘HERO VINOTH (MINOR) VS. SESHAMMAL’, (2006) 5 SCC 545; 'VIJAY KUMAR TALWAR VS. CIT',

(2011) 1 SCC 673; 'UNION OF INDIA VS. IBRAHIM

UDDIN', (2012) 8 SCC 148 and 'MANGALORE GANESH BEEDI WORKS VS. CIT', (2016) 2 SCC 556. For the aforementioned reasons, the third substantial question of law is also answered against the revenue and in favour of the assessee.

In view of preceding analysis, we do not find any merit in this appeal. The same fails and is hereby dismissed.

Sd/- JUDGE

dn/- CT-HR

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