COMMISSIONER OF INCOME TAX-III vs M/S SAMSUNG INDIA SOFTWARE OPERATIONS PVT LTD

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 25TH DAY OF JUNE, 2020

PRESENT

THE HON'BLE MR. JUSTICE ALOK ARADHE

AND

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

INCOME TAX APPEAL NO.293 OF 2012

BETWEEN:

COMMISSIONER OF INCOME TAX-III C.R.BUILDING, QUEENS ROAD, BENGALURU.

ADDITIONAL COMMISSIONER OF INCOME TAX, CIRCLE-12(1) BENGALURU.

... APPELLANTS (BY E I SANMATHI, ADV.)

AND:

M/S SAMSUNG INDIA SOFTWARE OPERATIONS PVT. LTD.,

2 BLOCK - B, BAGMANE LAKEVIEW BAGMANE TECPARK, CV RAMAN NAGAR, BENGALURU – 560 093.

... RESPONDENT

(BY SRI SURYANARAYANA, ADV. FOR SRI V.VINAY GIRI, ADV.)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED: 13.04.2012 PASSED IN ITA NO.399/BANG/2012, FOR THE ASSESSMENT YEAR 2007-2008 PRAYING TO:

i. FORMULATE THE QUESTIONS OF LAW STATED THEREIN.

ii. SET ASIDE THE APPELLATE ORDER 13.04.2012 PASSED BY THE ITAT, ‘A’ BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT –ASSESSEE’S CASE, IN APPEAL PROCEEDINGS ITA NO.399/BANG/2012, IN THE INTEREST OF JUSTICE AND EQUITY.

THIS INCOME TAX APPEAL COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., MADE THE FOLLOWING: JUDGMENT

Sri E.I.Sanmathi, learned counsel for the appellant – Revenue.

Sri T. Suryanarayana, learned counsel for Sri V. Vinay Giri, learned counsel for the respondent – assessee.

This appeal is filed under Section 260A of the Income Tax Act, 1961, by the Revenue, being aggrieved by the order dated 13.04.2012 passed by the Income Tax Appellate Tribunal, Bengaluru, in ITA.No.399/Bang/2012.

The appeal was admitted by a Division Bench of this Court vide order dated 05.11.2012, for considering the following substantial questions of law: 1. Whether in the facts and circumstances of the case, the Tribunal is justified in law in allowing deduction under Section 10A in the situation of purchase of plant and machinery cannot be termed as new in the hands of the purchaser and accordingly, failed to satisfy the condition that not more than 20% of plant and

4 machinery should have been previously used by any other person?

Whether the Tribunal is justified in allowing deduction under Section 10A of I.T. Act ignoring the provisions of sub Section 7A of Section 10A, which provides for continuance of benefit under Section 10A in the hands of a transferee company only in situation of demerger or amalgamation but not in a situation of slump sale?

Whether the Tribunal’s order can be said as perverse in nature as tribunal has relied on the earlier orders of Tribunal in the case of M/S LG Soft India Pvt. Ltd. And GXS Technology Centre Pvt. Ltd., to grant relief to the assessee eve when the said orders have not become final in view of Department’s appeal pending before the Hon’ble High Court?

5 4. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the foreign currency expenditure amounting to Rs.47,89,64,483/- has to be excluded from total turnover as well for computation of deduction under Section 10A whereas such exclusion is permitted to arrive at export turnover only as per the definitions given in Section 10A of the I.T. Act and total turnover has not been defined in the Section?

Whether the Income Tax Appellate Tribunal is correct in law in holding that the deduction under Section 10A should be computed in the above manner following the judgment of jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd., which has not become final since the same has not been accepted by the department and SLPs are pending before the Hon’ble Supreme Court?”

When the matter is taken up today, learned counsel for the parties submitted that the substantial questions of law No.1 to 3 have already been answered in favour of the assessee and against the Revenue vide judgments dated 14.11.2018 passed by a Division Bench of this Court in I.T.A.No.368/2010 and I.T.A.No.4/2011. It is further pointed out that the substantial questions of law No.4 and 5 have already been answered by the Hon’ble Supreme Court in the case of Commissioner of Income Tax, Central III VS. HCL Technologies LIMITED reported in [2018] 93 taxmann.com 33 (SC) in favour of the assessee and against the Revenue.

In view of the aforesaid submissions and the reasons assigned in the aforesaid judgments and in the light of the Circular No.1/2013 dated 17.01.2013 issued by the Central Board of Direct Taxes, the substantial questions of law Nos.1 to 3 are answered

7 in favour of the assessee and against the Revenue. In view of the law enunciated by the Hon’ble Supreme Court, the substantial questions of law No.4 and 5 are also answered against the Revenue and in favour of the assessee.

In the result, we do not find any merit in the appeal. Accordingly, the appeal is dismissed.

Sd/- JUDGE

nvj

COMMISSIONER OF INCOME TAX-III vs. M/S SAMSUNG INDIA SOFTWARE OPERATIONS PVT LTD