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1/7 IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 19TH DAY OF JUNE 2018
PRESENT
THE HON’BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON’BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.589/2016
BETWEEN :
Pr. COMMISSIONER OF INCOME TAX-5 BMTC COMPLEX, KORAMANGALA, BANGALORE.
DEPUTY COMMISSIONER OF INCOME TAX OFFICER CIRCLE 5 (1) (1), BANGALORE. ...APPELLANTS
(BY SRI E.I.SANMATHI, ADV.)
AND :
M/s NOUS INFOSYSTEMS PVT. LTD. 1ST MAIN, 1ST BLOCK, KORAMANGALA, BENGALURU, PAN: AAACN4584B
…RESPONDENT
(BY SRI ANKUR PAI, ADV.)
THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05.02.2016 PASSED IN ITA NO.1369/BANG/2015, FOR THE ASSESSMENT YEAR 2006-07 PRAYING TO (1) 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 05.02.2016 PASSED BY THE ITAT,
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
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'C' BENCH, BENGALURU, AS SOUGHT FOR, IN THE RESPONDENT-ASSESSEE'S CASE, IN APPEAL PROCEEDINGS IN ITA NO.1369/BANG/2015 FOR A.Y.2006-07 AND GRANT SUCH OTHER RELIEF AS DEEMED FIT.
THIS APPEAL COMING ON FOR ORDERS, THIS DAY, Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING:
J U D G M E N T
Mr. E.I.Sanmathi, Adv. for Appellants - Revenue Mr. Ankur Pai, Adv. for Respondents - Assessee
Both learned Counsels at the Bar submit that the issue involved in the present case is covered by the decision of the Hon’ble Supreme Court in the case of ‘Commissioner of Income Tax And Another v. Yokogawa India Limited’ reported in 2017 (391) ITR 374 (SC), holding that deduction under Section 10A of the Act is to be computed at the stage of computing gross total income of the eligible undertaking under Chapter IV of the Act and at the stage of computation of total income under Chapter VI of the Act and deduction under Section 10A of the Act only qua the eligible under taking and without reference to other eligible or non eligible units or undertakings of same assessee.
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
3/7
The findings of the learned Tribunal about deduction of Section 10A of the Income Tax Act, 1961 is quoted below for ready reference: “8. Having considered the rival submissions as well as relevant material on record, we note that the issue prior to the amended provisions of Section 10A/10B was decided in favour of the Revenue by the Hon’ble Jurisdictional High Court in the case of CIT v. Himatasingike Seide (supra). However, there is a substantial change in the provisions of Section 10A/10B vide amendment by Finance Act, 2000 w.e.f. 1.4.2001. “The Hon’ble Jurisdictional High Court in the case of Yokogawa India Ltd. (supra) has considered the provisions of Section 10A/10B as amended by the Finance Act, 2000 & 2001 and after noting the change in the provisions, the Hon’ble Jurisdictional High Court has decided this issue in favour of assessee. Thus prior to the amendment, this provision was considered as exemption; whereas post-amendment, this provision is only a deduction. We further note that for the AY 2004-05, the Hon’ble Jurisdictional High Court in assessee’s own case in ITA No.189/2009 vide order dated 6.4.2015 has
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
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decided this issue in favour of the assessee in para 4 as under: “4. In such view of the matter, we are of the view that no substantial questions of law remains to be answered by this Court. Sri K.V.Aravind, learned counsel for the appellant states that in the case of COMMISSIONER OF INCOME-TAX vs. TATA ELXSI LTD. (supra), appeals have been filed before the Apex Court which have been admitted on the questions of law.”
In view of the above facts and circumstances of the case and by following the decision of the Hon’ble Jurisdictional High Court in assessee’s own case, we do not find any effort or illegality in the impugned order of CIT (Appeals).”
The Hon’ble Supreme Court in YOKOGAWA’s case [supra] has held as under: “From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
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other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9.8.2000 which states in paragraph 15.6 that, “The export turnover and the total turnover for the purposes ofsections 10A and 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains.
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
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At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total income of the assessee” in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression “total income of the assessee” in Section 10A as ‘total income of the undertaking’. Therefore, though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI.”
Date of Judgment 19-06-2018, ITA No.589/2016
Pr. Commissioner of Income Tax-5 & another Vs.
M/s Nous Infosystems Pvt. Ltd.
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Accordingly, the present Appeal is disposed of in same terms.
Sd/- JUDGE
Sd/- JUDGE
AN/-