THE PRINCIPAL COMMISSIONER OF INCOME TAX vs. BTP INFOSERVE PRIVATE LIMITED

ITA.No.100019/2016 1 IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 20th DAY OF NOVEMBER, 2017 PRESENT THE HON’BLE MRS. JUSTICE S.SUJATHA AND THE HON’BLE Dr. JUSTICE H. B. PRABHAKARA SASTRY ITA No.100019/2016 BETWEEN: THE PRINCIPAL COMMISSIONER OF INCOME TAX DR.B.R.AMBEDKAR VEEDHI, BELAGAVI

… APPELLANT

(BY SRI.Y.V.RAVIRAJ, ADV..)

AND:

BTP INFOSERVE PRIVATE LIMITED 4112, PATSON HOUSE B.P.ROAD, BELAGAVI-590003 KARNATAKA PAN AACCB0971C

…RESPONDENT

(BY SRI.GANGADHAR J.M. FOR ARVIND D KULKARNI, ADV.)

THIS ITA IS FILED UNDER SECTION 260-A OF THE I.T.ACT, 1961 ARISING OUT OF ORDER DATED 17.08.2015 PASSED IN ITA NO.250/PNJ/2015, DATED 17.08.2015, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED THEREIN AND ALLOWING THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE ITAT, PANAJI IN ITA NO.250/PNJ/2015, DATED 17.08.2015 CONFIRMING THE ORDER OF THE COMMISSIONER OF INCOME TAX, BELAGAVI.

THIS APPEAL COMING ON FOR ADMISSION THIS DAY, S.SUJATHA J., MADE THE FOLLOWING:

ITA.No.100019/2016 2

JUDGMENT

This appeal is preferred by the Revenue under Section 260A of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’, for short). The substantial question of law that arises for our consideration is: “Whether deductions under Section 10A of the Act are to be made only at the stage of computation of gross total income under Chapter VI of the Act and not at the stage of computation of the total income under Chapter IV of the Act before setting off the loss, particularly in view of the circular of CBDT dated 16/07/2013? 2. The respondent-assessee is a limited company carrying on the business of providing Data Processing Service to its foreign customers. The assessment for the assessment year 2010-11 was concluded under Section 143(3) of the Act accepting the returned income, allowing the claim of exemption under Section 10A of the Act.

ITA.No.100019/2016 3 3. The Commissioner of Income Tax exercising the powers under Section 263 of the Act passed an order holding that the order of the Assessing Authority granting exemption under Section 10A of the Act was erroneous as well as prejudicial to the interest of the revenue, as the Assessing Authority had not followed the CBDT circular dated 16.07.2013 and accordingly, set aside the assessment order. The Commissioner directed the Assessing Authority to redo the assessment. Aggrieved by the same, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Panaji Bench, Panaji in ITA.No.250/PNJ/2015, which came to be allowed relying upon the judgment of the jurisdictional High Court of Karnataka in the case of Yokogawa India Limited reported in 341 ITR 385. Aggrieved by the said order of the Income Tax Appellate Tribunal, the revenue is in this appeal. 4. The learned counsel appearing for the revenue would fairly submit that, in view of the judgment passed

ITA.No.100019/2016 4 by the Hon’ble Apex Court in Civil Petition No.8498/2013 (Disposed of on 16.12.2016), the issue involved in this appeal is no longer res integra. The Hon’ble Apex Court confirming the judgment of this Court in M/s. Yokogowa India Ltd., has categorically held that the stage of deduction under Section 10A of the Act 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. Accordingly, the learned counsel submits that the substantial question of law that would arise for consideration in this appeal is required to be answered in favour of the assessee. 5. We have heard the learned counsel for the parties and perused the material on record. 6. The submission made by the learned counsel for the revenue has force in view of the judgment of the Hon’ble Apex Court in Civil Petition No.8498/2013.

ITA.No.100019/2016 5 Accordingly, we find it appropriate to hold that the Income Tax Appellate Tribunal was justified in setting aside the order of the Commissioner of Income Tax passed under Section 263 of the Act, observing that the deduction under Section 10A of the Act has to be made at the stage of the Chapter IV of the Act. Accordingly, we answer the substantial question of law in favour of the assessee and against the revenue. The appeal stands rejected.

Sd/- JUDGE

Sd/- JUDGE

VB/-