PR COMMISSIONER OF INCOME TAX vs. M/S TORRY HARRIS BUSINE SOLUTIONS PVT. LTD

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ITA/557/2015HC KarnatakaKAHC01035901201501 March 2016Bench: B.V.NAGARATHNA,JAYANT PATEL4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was justified in following the existing High Court judgment, even though it was under appeal before the Supreme Court. The appeal was dismissed subject to the observation that the Revenue could take appropriate proceedings if the Supreme Court ruled otherwise.

What were the facts?

The Revenue appealed against an ITAT order that excluded lease line charges and other foreign currency expenses from both total turnover and export turnover for Section 10A deduction. The ITAT had followed a High Court judgment in the case of CIT vs. Tata Elxsi Ltd.

What were the issues?

Whether expenses incurred in foreign currency for software delivery should be excluded from both total and export turnover for Section 10A deduction, and if a High Court decision under appeal to the Supreme Court should be followed.

Which sections of the Income-tax Act were involved?

Section 10A

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1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 1ST DAY OF MARCH 2016

PRESENT

THE HON’BLE MR.JUSTICE JAYANT PATEL AND THE HON’BLE MRS.JUSTICE B.V.NAGARATHNA ITA No.557/2015 BETWEEN:

1.

PR. COMMISSIONER OF INCOME TAX C.R. BUILDING, QUEENS ROAD BANGALORE-560 001

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-12(4) BANGALORE.

... APPELLANTS

(BY SRI E I SANMATHI, ADVOCATE)

AND:

M/S TORRY HARRIS BUSINESS SOLUTIONS PVT. LTD 71, SONA TOWERS MILLERS TANK ROAD BANGALORE-560 052 PAN: AAACT7287M

... RESPONDENT

(BY MS.JINITHA CHATTERJEE FOR SRI S.PARTHASARATHI, ADVOCATES)

ITA / INCOME TAX APPEAL UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 17/04/2015

2 PASSED IN ITA NO.1300/BANG/2014, FOR THE ASSESSMENT YEAR 2007-08 PRAYING THIS HON'BLE COURT TO: (A) 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. (B) SET ASIDE THE APPELLATE ORDER DATED: 17/04/2015 PASSED BY THE ITAT, 'B' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO. ITA NO. 1300/BANG/2014 FOR ASSESSMENT YEAR 2007-08, AS SOUGHT IN THIS APPEAL.

THIS APPEAL COMING ON FOR ADMISSION THIS DAY, JAYANT PATEL J., DELIVERED THE FOLLOWING:

J U D G M E N T

The Appellants-Revenue have preferred this present appeal by formulating the following substantial question of law: “Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the lease line charges and other expenses incurred in foreign currency for delivery of software are to be excluded both from total turnover as well as from export turnover for computation of deduction u/s .10A whereas such exclusion is permitted to arrive at export turnover only as per the definitions given in Sec.10A of the IT Act and total turnover has not been defined in the Section and by following the judgment of this Hon’ble Court in the case of CIT vs. Tata Elxsi Ltd., which has not become final since the same has not been accepted by the Department and SLPs filed by the revenue on this issue are pending before the Hon’ble Supreme Court ?”

2.

We have heard Sri E.I.Sanmathi, learned Counsel appearing for the appellants-revenue and Ms.Jinitha

3 Chatterjee for Sri S.Parthasarathi, who has appeared upon an advance copy on behalf of the respondent. She further states that vakalathnama will be filed within a week.

3.

We may record that while dealing with the subject relating to the aforesaid question of law, the Tribunal in the impugned order at para 7 has observed thus:

“7. As regards ground Nos.3 and 4 on the second issue are concerned, we find that this issue also is covered in favour of the assessee by the decision of the jurisdictional High Court in the case of Tata Elxsi Ltd., wherein it has been held that any expenditure which is excluded from the export turnover will have to be excluded from the total turnover as well for computing deduction u/s.10A of the Act. We find that the CIT(A) has followed the decision of the Hon’ble High Court in granting relief to the assessee. Therefore, we do not see any reason to interfere with the order of the CIT(A) on this issue as well. Thus grounds 3 & 4 are also rejected.”

4.

The aforesaid shows that Tribunal while deciding the matter has relied upon a decision of this Court in case of CIT vs. Tata Elxsi Ltd. reported in 349 ITR 98 [KAR]. As such, when the Tribunal has followed the decision of this Court, it cannot be said that the question of law would arise for determination, as sought to be canvassed. However,

4 learned Counsel for the appellants contended that the decision of this Court in case of Tata Elxsi Ltd supra is carried to the Apex Court and hence, issue may not be held as concluded.

5.

We are not impressed by the submission, since decision of the appeal is as per the decision holding field as on today. It is however observed that if the Apex Court holds otherwise then the revenue may take appropriate proceeding in accordance with law.

6.

Subject to the aforesaid observations, the appeal is dismissed.

Sd/- JUDGE

Sd/- JUDGE

KSR

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