EIT SERVICES INDIA vs. THE ASSISTANT COMMISSIONER

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ITA/208/2017HC KarnatakaKAHC01031266201706 April 2021Bench: ALOK ARADHE,M.G.S. KAMAL7 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that the Tribunal failed to adjudicate one of the assessee's grounds independently. The matter was remitted back to the Tribunal for a fresh decision on that specific ground.

What were the facts?

The assessee claimed deduction under Section 10A on profits from Software Technology Park Units. The Dispute Resolution Panel confirmed the reduction of communication and foreign currency expenses from export turnover. The Tribunal partly allowed the assessee's appeal.

What were the issues?

Whether the Tribunal properly adjudicated all grounds of appeal, specifically concerning the exclusion of communication and foreign currency expenses from export turnover for Section 10A deduction.

Which sections of the Income-tax Act were involved?

Section 10A

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 6TH DAY OF APRIL, 2021

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

THE HON’BLE MR. JUSTICE M.G.S. KAMAL

I.T.A. NO.208/2017

BETWEEN:

EIT SERVICES INDIA PRIVATE LIMITED (FORMERLY KNOWN AS HEWLETT PACKARD GLOBAL SOFT PVT. LTD.) PLOT NO.139/40, ELECTRONIC CITY PHASE -II, HOSUR ROAD BANGALORE-560 100 REPRESENTED HEREIN BY ITS TAX MANAGER MR. DHIRAJ BINDAL PAN NO.AAACD4078L ...APPELLANT

(BY SRI T.SURYANARAYANA, ADVOCATE)

AND:

1.

THE ASSISTANT COMMISSIONER

OF INCOME TAX

CIRCLE 3 (1)(2), (ERSTWHILE THE ASSST.

COMMISSIONER OF INCOME-TAX

CIRCLE-11(4), BMTC BUILDING

80 FT ROAD, KORAMANAGALA

BANGALORE-560 095

2.

THE COMMISSIONER OF INCOME TAX -3

BMTC BUILDING, 80 FT ROAD

KORAMANGALA

BANGALORE-560 095 …RESPONDENTS

(BY SRI.K V ARAVIND, ADVOCATE)

THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX APPEAL ACT 1961, ARISING OUT OF ORDER DATED:11/01/2017 PASSED IN IT(TP)A NO.1455/BANG/2010, FOR THE ASSESSMENT YEAR 2006- 2007 ANNEXURE-D PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE (ii) ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE TRIBUNAL DATED:11/1/2017 PASSED IN IT(TP)A NO.1455/BANG/2010 (ANNEXURE-D), TO THE EXTENT QUESTIONED HEREIN; AND (iii) PASS SUCH OTHER OR SUITABLE ORDERS AS THIS HON'BLE COURT DEEMS FIT TO PASS ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE AND EQUITY.

THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal under Section 260A of the Income Tax Act, 1961 has been filed by the assessee against the order dated 11.01.2017 passed by the Income Tax Appellate Tribunal.

2.

The appeal was admitted by a Bench of this Court vide order dated 06.12.2017 on the following substantial question of law:

"Whether, on the facts, in the circumstances and on the grounds urged, the Tribunal was correct in not adjudicating on the Appellant's ground that communication expenses and expenses incurred in foreign currency ought not to be reduced from 'export turnover' while computing the deduction available under Section 10A, although the same were not required to be so reduced in terms of the said provision?"

3.

Facts giving rise to the filing of this appeal briefly stated are that, the assessee is engaged in the business of providing software development and information technology enabled services. For the assessment year 2006-07, one of the assessee filed the return of income after having claimed deduction under Section 10A of the Act to the extent of

Rs.104,27,07,900/- in respect of the profits relating to its Software Technology Park Units. The aforesaid return was taken up for assessment by the Assistant Commissioner of Income Tax and a draft order of assessment was passed. The assessee, against the draft order of assessment, filed objections before the Dispute Resolution Panel. The Dispute Resolution Panel confirmed the draft assessment order with regard to reduction of communication expenses and expenses incurred in foreign currency from export turnover. Thereafter, the respondent No.1 passed a final order of assessment in accordance with the directions issued by the Dispute Resolution Panel. The assessee, thereupon, filed an appeal before the Tribunal. The Tribunal considered the appeal filed by the assessee based on the following grounds:

"9. The Honourable DRP and the learned AO has erred in law and on facts in concluding that communication expenses and expenditure incurred in foreign currency

are to be excluded from the export turnover for the purpose of computation of relief under the section 10A of the Act.

10.

The Honourable DRP and the learned AO has erred in law and on facts in upholding that the said communication expenses and expenditure incurred in foreign currency should not be reduced from the total turnover for the purpose of computation of relief under section 10A of the Act even if these are reduced from the export turnover."

4.

The Tribunal by order dated 11.01.2017 partly allowed the appeal preferred by the assessee. In the aforesaid factual background, this appeal has been filed.

5.

Learned counsel for the assessee, at the outset, while inviting the attention of this Court to ground Nos.9 and 10 mentioned supra submitted that the Tribunal erred in not adjudicating the ground No.9 independently and in holding that the same is covered

by a decision of this Court in 'CIT vs. Tata Elxsi' 349 ITR 98.

6.

Learned counsel for the revenue would not point out from the order passed by the Tribunal that the aforesaid ground has been adjudicated independently by the Tribunal.

7.

We have perused the order passed by the Tribunal. From the order passed by the Tribunal, it is evident that the Tribunal has not adjudicated the ground No.9 independently and has decided the ground Nos.9 and 10 on the ground that the same is covered by CIT vs. Tata Elxsi (supra).

8.

Therefore, in the facts of the case, the impugned order dated 11.01.2017 passed by the Tribunal insofar as it pertains to ground No.9 is hereby quashed and the matter is remitted to the Tribunal for decision afresh on the ground No.9. It is, therefore, not

necessary for us to answer the substantial question of law framed in this appeal.

9.

In the result, the appeal is disposed of.

Sd/-

JUDGE

Sd/-

JUDGE

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