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1/5 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 30TH DAY OF AUGUST 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.116/2018
BETWEEN : 1. THE PR. COMMISSIONER OF
INCOME-TAX,
5TH FLOOR, BMTC BUILDING
80 FEET ROAD, KORMANGALA
BENGALURU – 560 095.
THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(3) PRESENT ADDRESS DCIT, C-3(1)(2) 2ND FLOOR, BMTC BUILDING 80 FEET ROAD, KORAMANGALA BENGALURU – 560 095.
...APPELLANTS (BY SRI.DILIP ADV. FOR SRI.K.V.ARAVIND, ADV.)
AND : M/s. GLOBAL E-BUSINESS OPERATIONS PVT. LTD., HP TOWER 1, 2 & 3 GOLF VIEW CAMPUS, WIND TUNNEL ROAD MUGUGESHPALYA BENGALURU – 560 017.
…RESPONDENT (SRI.ANKUR PAI, ADV.)
Date of Judgment 30-08-2018, ITA No.116/2018 The Pr. Commissioner of Income Tax & AnotherVs. M/s. Global E-Business Operations Pvt. Ltd.,
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THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED:16/08/2017 PASSED IN IT(TP)A NO.298/BANG/2014, FOR THE ASSESSMENT YEAR 2005-2006 VIDE ANNEXURE-D WITH A PRAYER TO 1. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE. 2. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT(TP)A NO. 298/BANG/2014 DATED:16/08/2017 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(2), BENGALURU. 3. TO PASS SUCH OTHER SUITABLE ORDERS AS THIS HON'BLE COURT DEEMS FIT TO GRANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE INTEREST OF JUSTICE AND EQUITY.
THIS APPEAL COMING ON FOR ORDERS, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr.Dilip Adv. for Sri.K.V.Aravind Adv. for Appellants – Revenue. Mr.Ankur Pai, Adv. for Respondent-Assessee
This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bangalore, in IT[TP]A No.298/Bang/2014 dated 16.08.2017, relating to the Assessment Year 2005-06.
The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under:
Date of Judgment 30-08-2018, ITA No.116/2018 The Pr. Commissioner of Income Tax & AnotherVs. M/s. Global E-Business Operations Pvt. Ltd.,
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“Whether, on the facts and circumstances of the case, the Tribunal is right in law in holding that the expenses reduced from the export turnover has to be reduced from the total turnover also when no provision under Section 10A provides for exclusion of such expenses from the total turnover?””
The issue is covered by the decision of the Hon’ble Supreme Court in the case of Commissioner of Income-tax, Central – III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC).
The relevant portion of the judgment of the Hon’ble Supreme Court in the case of HCL Technologies Ltd. (supra), is quoted below for ready reference:- “17. The similar nature of controversy, akin this case, arose before the Karnataka High Court in CIT v. Tata Elxsi Ltd. [2012] 204 Taxman 321/17/taxman.com 100/349 ITR 98. The issue before the Karnataka High Court was whether the Tribunal was correct in holding that while computing relief under Section 10A of the IT Act, the amount of communication expenses should be excluded from the total turnover if the same are reduced from the export turnover? While giving the answer to the issue, the High Court, inter-alia, held that when a particular word is not defined by the legislature and
Date of Judgment 30-08-2018, ITA No.116/2018 The Pr. Commissioner of Income Tax & AnotherVs. M/s. Global E-Business Operations Pvt. Ltd.,
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an ordinary meaning is to be attributed to it, the said ordinary meaning is to be in conformity with the context in which it is used. Hence, what is excluded from ‘export turnover’ must also be excluded from ‘total turnover’, since one of the components of ‘total turnover’ is export turnover. Any other interpretation would run counter to the legislative intent and would be impermissible.
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In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature.
Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well”.
Date of Judgment 30-08-2018, ITA No.116/2018 The Pr. Commissioner of Income Tax & AnotherVs. M/s. Global E-Business Operations Pvt. Ltd.,
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Having heard the learned counsel appearing for the parties, we are therefore of the opinion that no substantial question of law arises in the present case. The Appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
Sd/- JUDGE
Sd/- JUDGE