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1/6 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 13th DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON’BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.1015/2017
BETWEEN:
THE COMMISSIONER OF INCOME-TAX LTU, JSS TOWERS, BSK III STAGE BENGALURU-560 085.
THE DEPUTY COMMISSIONER OF INCOME TAX LTU, JSS TOWERS, BSK III STAGE BENGALURU-560 085.
…APPELLANTS (By Mr. K.V. ARAVIND, ADV.)
AND:
M/S. INTEL TECHNOLOGY INDIA PVT. LTD., No.23-56P, DEVARABEESANAHALLI OUTER RING ROAD, VARTHUR HOBLI BENGALURU-560 103 PAN: AAACI 1539J.
…RESPONDENT
THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT ACT, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW. ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA(TP) No.56/BANG/2011 DATED 30-06-2017 VIDE ANNEXURE-D, AND CONFIRM THE ORDER OF THE DRP
Date of Judgment 13-08-2018 I.T.A.No.1015/2017 The Commissioner of Income-tax & Anr. Vs. M/s. Intel Technology India Pvt. Ltd.,
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CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BENGALURU & ETC.
THIS I.T.A. COMING ON FOR ADMISSION THIS DAY, S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. K.V. Aravind, Adv. for Appellants- Revenue
The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly certain substantial questions of law arising from the order of the ITAT, ‘A’ Bench, Bangalore, dated 30.06.2017 passed in IT(TP)A No.56/Bang/2011 (M/s.Intel Technology India Pvt. Ltd., vs. Deputy Commissioner of Income-tax ) for A.Y.2006- 07.
The proposed substantial questions of law framed in the Memorandum of appeal by the Appellants-Revenue are quoted below for ready reference:- “1. Whether on the facts and in the circumstances of the case, the Tribunal is right in
Date of Judgment 13-08-2018 I.T.A.No.1015/2017 The Commissioner of Income-tax & Anr. Vs. M/s. Intel Technology India Pvt. Ltd.,
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law holding that professional and consultancy charges are not liable to be reduced from export turnover and while computing deduction under Section 10A of the Act by following its earlier orders passed in case of assessee itself which has not reached finality and even when the said expenses are reduced by assessing authority from export as well as total turnover while computing 10A deduction as per the parameters of section 10A of the Act?
Whether on the facts and in the circumstances of the case, Tribunal is right in law in setting aside the recomputation of 10A deduction made by assessing authority by following the judgment of this Hon’ble High Court in the case of CIT v/s. Tata Elxi eventhough the said decision has not reached finality and the assessing authority recomputed the 10A deduction as per the provisions of the Act?”
Learned counsel for the Appellants-Revenue Mr.K.V.Aravind submits that in so far as the aforesaid substantial questions of law are concerned, the same are covered by the decision of the Hon’ble Apex Court in
Date of Judgment 13-08-2018 I.T.A.No.1015/2017 The Commissioner of Income-tax & Anr. Vs. M/s. Intel Technology India Pvt. Ltd.,
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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 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
Date of Judgment 13-08-2018 I.T.A.No.1015/2017 The Commissioner of Income-tax & Anr. Vs. M/s. Intel Technology India Pvt. Ltd.,
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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 13-08-2018 I.T.A.No.1015/2017 The Commissioner of Income-tax & Anr. Vs. M/s. Intel Technology 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 also. 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.
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JUDGE
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