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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF APRIL 2018
PRESENT
THE HON’BLE MR.JUSTICE B.S. PATIL
AND
THE HON’BLE MR.JUSTICE S.SUNIL DUTT YADAV
I.T.A.NO.145/2016
BETWEEN:
The Pr. Commissioner of Income-Tax, CIT(A)
5th Floor, BMTC Building,
80 Feet Road,
Kormangala,
Bangalore – 560 095.
The Deputy Commissioner of Income-Tax,
Circle-11(1),
2nd Floor, BMTC Building,
80 Feet Road,
Kormangala,
Bangalore – 560 095.
...APPELLANTS
(By Sri.K V Aravind, Adv.)
AND:
M/s. ARM Embedded Technologies Pvt. Ltd., Bagmane World Technology P. Ltd., SEZ Citrine Block, 5th and 6th Floor, Marathahalli Outer Ring Road, Doddanakundi Village,
2 Mahadevapura, Bangalore – 560 048.
.. RESPONDENTS
(By Ms. Manasa Ananthan, Advocate for Sri.T. Suryanarayana, Advocate)
THIS ITA IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 31.08.2015, PASSED IN ITA NO.1560/BANG/2014, FOR THE ASSESSMENT YEAR 2009- 2010, PRAYING TO (i) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW Etc.,
THIS ITA COMING ON FOR ADMISSION THIS DAY, B.S.PATIL J., MADE THE FOLLOWING:
O R D E R
This appeal is filed under Section 260-A of Income Tax Act 1961. The appellants have challenged the order passed by the Income Tax Appellate Tribunal in I.T(TP).A.No.1560/Bang/2014 disposed of on 31.8.2015.
The issue involved in the appeal before the Tribunal was, whether the Revenue was justified in making a grievance against the order passed by the Commissioner of Income Tax (Appeals) directing exclusion of telecommunication and other expenses incurred in foreign
3 currency from the total turnover also while computing deduction under Section 10-A of the Act.
The Tribunal has dismissed the appeal placing reliance on the judgment of the Co-ordinate Bench of this Court in the case of Commissioner of Income Tax and another Vs. Tata Elixi Limited reported in (2012) 349 ITR 98.
It is in this background, learned counsel appearing for the appellants Sri. Aravind and the learned counsel appearing for the respondent Ms. Manasa Ananthan, submit before the Court that, indeed substantial question of law raised in this appeal is squarely covered by the judgment rendered in the case Commissioner of Income Tax and another (supra).
On perusal of the impugned order and the materials on record and in the light of the submission made at the bar, we find that a Co-ordinate Bench of this Court has categorically laid down the law in the case of
4 Commissioner of Income Tax and another (supra) as under: “ From the aforesaid judgments, what emerges is that, there should be uniformity in the ingredients of both the numerator and the denominator of the formula, since otherwise it would produce anomalies or absurd results. Section 10-A is a beneficial section. It is intended to provide incentives to promote exports. The incentive is to exempt profits relatable to exports. In the case of combined business of an assessee, having export business and domestic business, the Legislature intended to have a formula to ascertain the profits from export business by apportioning the total profits of the business on the basis of turnovers. Apportionment of profits on the basis of turnover was accepted as a method of arriving at export profits. In the case of section 80 HHC, the export profit is to be derived from the total business income of the assessee, whereas in Section 10-A,
5 the export profit is to be derived from the total business of the undertaking. Even in the case of business of an undertaking, it may include export business and domestic business, in other words, export turnover and domestic turnover. The export turnover would be a component or part of a denominator, the other component being the domestic turnover. In other words, to the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator…”
In the light of the above and as this question is squarely covered by the pronouncement made by the Co-ordinate Bench of this Court, following the said
6 judgment, this appeal is dismissed as being devoid of any merit.
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JUDGE
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JUDGE
Dvr: