COMMISSIONER OF INCOME TAX vs. M/S. SYMPHONY SERVICES CORPORATION

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ITA/82/2013HC KarnatakaKAHC01013341201302 September 2020Bench: ALOK ARADHE,H.T. NARENDRA PRASAD6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the substantial questions of law were covered by Supreme Court judgments in similar cases. Therefore, the questions were answered against the revenue and in favor of the assessee.

What were the facts?

The revenue appealed against an ITAT order concerning the assessment year 2005-06. The appeals raised substantial questions of law regarding the set-off of business losses and the exclusion of certain reimbursements from total turnover for Section 10A deduction.

What were the issues?

Whether business losses can be set off against profits before Section 10A deduction, and whether certain reimbursements should be excluded from total turnover for Section 10A computation.

Which sections of the Income-tax Act were involved?

Section 10A

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Cases cited in this judgment(3)Show list

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 2ND DAY OF SEPTEMBER 2020

PRESENT

THE HON’BLE MR. JUSTICE ALOK ARADHE

AND

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

I.T.A. NO.83 OF 2013 C/W I.T.A. NO.82 OF 2013

I.T.A. NO.83 OF 2013

BETWEEN:

1.

COMMISSIONER OF INCOME TAX

BANGALORE-III, BANGALORE.

2.

DY. COMMISSIONER OF INCOME TAX

CIRCLE 12(4), BANGALORE. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.,)

AND:

M/S. SYMPHONY SERVICES CORPORATION (I) PRIVATE LIMITED No.13/1, KADUBEESANAHALLI VILLAGE OUTER RING ROAD, VARTHUR HOBLI BANGALORE-560103. ... RESPONDENT (BY SRI. ANKUR PAI, FOR SRI. K.R. VASUDEVAA, ADV.,) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 28-09-2012 PASSED IN ITA NO.1207/BANG/2012, FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE ITAT, BANGALORE PASSED IN ITA NO.1207/BANG/2012 DATED 28-09-2012 AND ORDER OF COMMISSIONER OF INCOME TAX, (APPEALS)-IV, BANGALORE DATED 30-09- 2011 IN APPEAL NO.8/RANGE-12/CIT(A)-IV/2008-09.

I.T.A. NO.82 OF 2013

BETWEEN:

1.

COMMISSIONER OF INCOME TAX

BANGALORE-III, BANGALORE.

2.

DY. COMMISSIONER OF INCOME TAX

CIRCLE 12(4), BANGALORE. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.,)

AND:

M/S. SYMPHONY SERVICES CORPORATION (I) PRIVATE LIMITED No.13/1, KADUBEESANAHALLI VILLAGE OUTER RING ROAD, VARTHUR HOBLI BANGALORE-560103. ... RESPONDENT (BY SRI. ANKUR PAI, FOR SRI. K.R. VASUDEVAA, ADV.,) - - -

THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 28-09-2012 PASSED IN ITA NO.1187/BANG/2012, FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO:

I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. II. ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE ITAT, BANGALORE PASSED IN ITA NO.1187/BANG/2012 DATED 28-09-2012 AND ORDER OF COMMISSIONER OF INCOME TAX, (APPEALS)-IV, BANGALORE DATED 30-09- 2011 IN APPEAL NO.8/RANGE-12/CIT(A)-IV/2008-09.

THESE I.T.As. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:

JUDGMENT

Mr.E.I.Sanmathi, learned counsel for the revenue. Mr.Ankur Pai, learned counsel for the respondent.

2.

These appeals under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) have been preferred by the revenue which were admitted by a Bench of this Court vide order dated 07.10.2013 and 10.06.2013, respectively to consider the following substantial questions of law: “(i) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing the assessing authority not to set off carry forward business losses of STPI unit and current year loss of non STPI unit of Rs.1,94,02,355/- against the

profits of the business before allowing deduction under Section 10A of the Income tax Act? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the reimbursement of expenditure of Rs.2,31,06,882/- towards telecommunication expenses and Rs.3,30,61,328/- towards foreign travel expenses incurred in foreign currency are to be excluded from total turnover as well as 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 IT Act and total turnover has not been defined in the section? (iii) Whether the 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. and CIT Vs. Yokogawa India Ltd. which have not become final since the same have not been accepted by the Department and SLPs are pending before the Hon’ble Supreme Court?”

3.

When the appeals were taken up today, learned counsel for the parties jointly submitted that the substantial question of law No.1 in both the appeals is covered by a decision of this Court in ‘YOKOGAWA INDIA LTD. Vs. CIT AND ORS.’ The aforesaid decision has been affirmed by the Supreme Court in ‘CIT AND ORS. Vs. YOKOGAWA INDIA LTD.’ (2017) 391 ITR 274 (SC). It is further submitted that the second substantial question of law in both the appeals is also covered by a decision of this Court rendered in ‘COMMISSIONER OF INCOME-TAX Vs. TATA ELXI LTD.’ (2012) 349 ITR 98 (KAR) and the aforesaid view has been affirmed by the Supreme Court in ‘COMMISSIONER OF INCOME-TAX, CENTRAL-III Vs. HCL TECHNOLOGIES LTD.’ (2018) 93 TAXMANN.COM 33 (SC).

4.

In view of the aforesaid submissions and in view of enunciation of law by the Supreme Court, the substantial questions of law framed in these appeals are answered against the revenue and in favour of the assessee. In the result, the appeals fail and are hereby dismissed.

Sd/- JUDGE

Sd/- JUDGE

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