THE PR COMMISSIONER OF INCOMT TAX,CIT (A) vs. M/S INFINEON TECHNOLOGIES INDIA LTD

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ITA/730/2017HC KarnatakaKAHC01040657201705 July 2018Bench: S.SUJATHA,VINEET KOTHARI6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that expenses excluded from export turnover must also be excluded from total turnover for Section 10A computation. This interpretation aligns with legislative intent and avoids an absurd result.

What were the facts?

The Revenue appealed against an ITAT order concerning the computation of deduction under Section 10A for AY 2005-06. The core issue was whether expenses excluded from export turnover should also be excluded from total turnover.

What were the issues?

Whether expenses deducted from export turnover must also be deducted from total turnover when computing deduction under Section 10A.

Which sections of the Income-tax Act were involved?

Section 10A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

1/6 IN THE HIGH COURT OF KARNATAKA, BENGALURU

DATED THIS THE 5TH DAY OF JULY 2018

PRESENT

THE HON’BLE DR.JUSTICE VINEET KOTHARI

AND

THE HON’BLE MRS.JUSTICE S.SUJATHA

I.T.A. No.730/2017

BETWEEN :

1 THE PR. COMMISSIONER OF

INCOME-TAX, CIT[A]

5TH FLOOR, BMTC BUILDING,

80 FEET ROAD, KORMANGALA

BENGALURU – 560 095

2 THE ASST. COMMISSIONER OF

INCOME-TAX,

CIRCLE – 11[4], PRESENT ADDRESS:

CIRCLE – 3[1][1], 2ND FLOOR

BMTC BUILDING, 80 FEET ROAD

KORMANGALA

BENGALURU – 560 095

...APPELLANTS

(BY SRI. K.V. ARAVIND, ADV.)

AND :

M/S. INFINEON TECHNOLOGIES INDIA LTD., 3RD FLOOR, PHASE-I, KALYANAI PLATINA, SURVEY No.6 & 24, KUNDALAHALLI, VILLAGE, K.R. PURAM HOBLI, BENGALURU – 560 066

…RESPONDENT

(BY SRI ANKUR PAI, ADV.)

Date of Judgment 05-07-2018, ITA No.730/2017 The Pr. Commissioner of Income Tax & another Vs. M/s.Infineon Technologies India Ltd.,

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THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 6.1.2017 PASSED IN IT [TP]A No.608/BANG/2011, FOR A.Y. 2005-06 ANN- D, [I] TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE [II] ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT [TP]A No.608/BANG/2011, FOR A.Y. 2005-06 ANN-D, AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 3[1][1], BENGALURU AND ETC.

THIS APPEAL COMING ON FOR ADMISSION, THIS DAY, Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING:

J U D G M E N T

Mr. 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, ‘B' Bench, Bangalore, in IT[TP]A No.608/Bang/2011 dated 06.01.2017, relating to the Assessment Year 2005-06.

2.

Learned Counsel for the Revenue does not press the substantial questions of law raised in the present Appeal, instead presses for substantial question

Date of Judgment 05-07-2018, ITA No.730/2017 The Pr. Commissioner of Income Tax & another Vs. M/s.Infineon Technologies India Ltd.,

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of law now reframed in the memo dated 5.7.2018 which is as under:

“Whether the Tribunal on the facts and in the circumstances of the case was right in holding that the expenses excluded from export turnover has to be excluded from total turnover also while computing deduction under section 10A of the Act?”

3.

Learned counsel for the Appellants-Revenue submits that the issue regarding deduction of expenditure incurred for ‘Export Turn Over’ is also required to be deducted from ‘Total Turn Over’ for the purpose of computing the deduction u/s.10A of the Act, the controversy is no longer res integra and is covered by the decision of the Division Bench of this Court in the case of M/s.Tata Elxsi Ltd., vs. Asst. Commissioner of Income Tax, decided on 20.10.2015 since reported in (2015) 127 DTR 0327 (Kar), which has been affirmed by the Hon’ble Supreme Court in the

Date of Judgment 05-07-2018, ITA No.730/2017 The Pr. Commissioner of Income Tax & another Vs. M/s.Infineon Technologies India Ltd.,

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case of Commissioner of Income-tax, Central – III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC).

4.

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

Date of Judgment 05-07-2018, ITA No.730/2017 The Pr. Commissioner of Income Tax & another Vs. M/s.Infineon Technologies India Ltd.,

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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.

18.

XXXXXX

19.

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.

20.

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 05-07-2018, ITA No.730/2017 The Pr. Commissioner of Income Tax & another Vs. M/s.Infineon Technologies India Ltd.,

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5.

In the circumstances, having heard the learned Counsel appearing for both the sides, We are of the considered opinion that no substantial question of law arises for consideration in the present case.

6.

Hence, the Appeal filed by the Appellants- Revenue is liable to be dismissed and is accordingly dismissed. No costs.

Sd/- JUDGE

Sd/- JUDGE

AN/-

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