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1/6 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 29TH DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.109/2018
BETWEEN:
PR. COMMISSIONER OF INCOME TAX-6 BMTC COMPLEX, KORAMANGALA BANGALORE.
DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 6(1)(2), BANGALORE.
…APPELLANTS
(By Mr. E.I. SANMATHI, ADV.)
AND:
M/S. SOFTTEK INDIA PVT LTD OZONE MANAY TECH PARK ‘A’ BLOCK, 2ND FLOOR NOS. 56/18 & 55/9 HOSUR MAIN ROAD BANGALORE-560 068.
…RESPONDENT
Date of Judgment 29-08-2018 I.T.A.No.109/2018 Pr. Commissioner of Income Tax-6 & Anr. Vs. M/s. Softtek India Pvt Ltd.,
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THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT ACT, 1961, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON’BLE COURT AS DEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED: 31-08-2017 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH, BANGALORE, IN APPEAL PROCEEDINGS NO. IT(TP)A No.435/BANG/2015 FOR A.Y.2010-11 VIDE ANNEXURE A AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE.
THIS I.T.A. COMING ON FOR ADMISSION THIS DAY, S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. Sanmathi E.I. Adv. for Appellants- Revenue
The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly one substantial question of law arising from the order of the ITAT ‘A’ Bench, Bangalore, dated 31.08.2017 passed in IT(TP)A No.435/Bang/2015 (M/s. Softtek India Pvt. Ltd., vs. Dy. Commissioner of Income Tax) for the A.Y.2010-11.
Date of Judgment 29-08-2018 I.T.A.No.109/2018 Pr. Commissioner of Income Tax-6 & Anr. Vs. M/s. Softtek India Pvt Ltd.,
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The proposed substantial question of law framed in the Memorandum of appeal by the Appellants-Revenue is quoted below for ready reference:- “Whether on the facts and circumstances of the case and in law Tribunal is correct in excluding expenses incurred in foreign currency from the Total Turnover which are excluded from the Export Turnover while computing the deduction under section 10B of the Act in view of the fact that the Term “Total Turnover” is not defined in the section 10B of the Act and the said interpretation was relying on definition of Total Turnover as envisaged under section 80HHC of the Act?”
Learned counsel for the Appellants-Revenue Mr.E.I.Sanmathi submits that in so far as the aforesaid substantial question of law is concerned, the same is covered by the decision of the Hon’ble Apex Court in the case of Commissioner of Income-tax, Central – III vs.
Date of Judgment 29-08-2018 I.T.A.No.109/2018 Pr. Commissioner of Income Tax-6 & Anr. Vs. M/s. Softtek India Pvt Ltd.,
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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 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
Date of Judgment 29-08-2018 I.T.A.No.109/2018 Pr. Commissioner of Income Tax-6 & Anr. Vs. M/s. Softtek India Pvt Ltd.,
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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 29-08-2018 I.T.A.No.109/2018 Pr. Commissioner of Income Tax-6 & Anr. Vs. M/s. Softtek India Pvt Ltd.,
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Having heard the learned counsel for the Appellants-Revenue, 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.
Copy of this order be sent to the Respondent- Assessee forthwith.
Sd/- JUDGE
Sd/-
JUDGE