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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ON THE 19TH DAY OF NOVEMBER, 2018
BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH
AND
THE HON'BLE MR. JUSTICE K. NATARAJAN
INCOME TAX APPEAL No.174 of 2011
BETWEEN
THE COMMISSIONER OF INCOME-TAX, C.R. BUILDING, QUEENS ROAD, BANGALORE.
THE DEPUTY COMMISSIONER OF INCOME-TAX,
CIRCLE-11(4),C.R. BUILDING, QUEENS ROAD, BANGALORE.
... APPELLANTS (BY SRI K.V. ARAVIND, ADVOCATE)
AND
M/S. INFOSYS TECHNOLOGIES LTD., No.44 & 97A, 3RD CROSS, ELECTRONIC CITY, HOSUR ROAD, BANGALORE – 560 100. ... RESPONDENT (BY SRI T. SURYANARAYANA, ADVOCATE)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 21/01/2011 PASSED IN ITA No.1140/BANG/2009, FOR THE ASSESSMENT YEAR 2004- 2005, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA No.1140/BANG/2009 DATED 21/01/2011 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(4), BANGALORE.
THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Heard.
The appeal was admitted for consideration of the following substantial questions of law: “1. Whether the Tribunal was correct in holding that payment of Rs.10,37,42,694/- made to M/s. AT & T and M/s. MCI to utilize its bandwidth did not attract deduction of TDS u/s.195 of the Act and consequently no disallowance u/s.40(a)(i) of the Act can be made?
Whether the Tribunal was correct in holding that payment of subscription charges of Rs.7,75,87,889/- made of M/s. Gartner Group, Faster Research Inc., Mehta Group and Giga Group to confer a license to post enquiries to analysts around the globe via the Web, conference calls and face to face meetings, was not liable to TDS u/s. 195 of the Act and consequently the expenditure cannot be disallowed u/s. 40(a)(i) of the Act?
Whether the Tribunal was correct in holding that Rs.29,87,75,000/- post sale customer support is an allowable deduction, when the past history showed accumulated provisions which was carried forward and made in excess of requirement?
Whether the Tribunal was correct in holding that telecommunication charges of Rs.10,37,42,694/- was liable to be reduced from both export turnover as well as total turnover for the purpose of computation of deduction u/s. 10A of the Act, even though the definition in the said section did not
contemplate such reduction in the total turnover?
Whether the Tribunal was correct in holding that for the purpose of computation of deduction u/s. 80HHE of the Act, the total turnover of the units eligible for deduction u/s. 80HHE of the Act, should be taken into account and not the entire turnover as per the P & L account as held by the Assessing Officer?”
The first and second substantial questions of law are covered by the judgment of this Court in the case of COMMISSIONER OF INCOME TAX AND ANOTHER vs. M/s. INFOSYS TECHNOLOGIES LTD, in ITA No.422 of 2008 and connected matters, disposed off on 02.06.2014, whereby the said substantial questions of law were answered in favour of the Revenue and against the assessee, subject to the result of the SLP filed by the assessee before the Hon’ble Supreme Court, as noted in the aforesaid judgment at page No.12.
So far as the third substantial question of law is concerned, in terms of the aforesaid order of this Court, the same is remanded to the Tribunal for a fresh consideration in terms of the direction issued in the earlier case of the assessee itself.
The fourth substantial question of law is covered by the judgment of the Hon’ble Supreme Court in the case of COMMISSIONER OF INCOME TAX, CENTRAL-III vs. HCL TECHNOLOGIES LTD. reported in (2018) 93 Taxmann.com 33 (SC). Following the said judgment, the fourth substantial question of law is answered in favour of the assessee and against the Revenue.
The fifth substantial question of law is covered by the judgment of this Court in the case of COMMISSIONER OF INCOME TAX AND ANOTHER vs. M/s. INFOSYS TECHNOLOGIES LTD. in ITA No.422 of 2008 and connected matters, disposed off on 02.06.2014, Following the said
judgment, the fifth substantial question of law is answered in favour of assessee and against the Revenue.
The substantial questions of law are accordingly answered.
The appeal is disposed off.
SD/-
SD/- JUDGE
JUDGE