COMMISSIONER OF INCOME TAX vs. M/S. SAFRAN AEROSPACE

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ITA/248/2015HC KarnatakaKAHC01034829201528 September 2015Bench: B.MANOHAR,VINEET SARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions of law raised were covered by its previous decisions in favour of the assessee. Consequently, no substantial question of law arose for determination.

What were the facts?

The Revenue appealed against an ITAT order concerning the computation of deduction under Section 10A. The appeal raised questions regarding the set-off of losses, exclusion of foreign currency expenses from total turnover, and inclusion of certain incomes in the deduction calculation.

What were the issues?

Whether losses should be set off before computing Section 10A deduction, and whether certain foreign currency expenses and other incomes should be excluded from the turnover for Section 10A calculation.

Which sections of the Income-tax Act were involved?

Section 10A,Section 70(1),Section 2(45),Section 260-A,Section 260(IA)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 28TH DAY OF SEPTEMBER, 2015

PRESENT

THE HON'BLE MR. JUSTICE VINEET SARAN

AND

THE HON’BLE MR. JUSTICE B.MANOHAR

ITA NO.248/2015

BETWEEN

1.

COMMISSIONER OF INCOME TAX CENTRAL REVENUE BUILDINGS QUEENS ROAD, BANGALORE-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12 (3) BANGALORE. ... APPELLANTS

(By Sri. E.I.SANMATHI, ADV., )

AND

M/S. SAFRAN AEROSPACE INDIA PVT. LTD., CSRIE, #32, GRAPE GARDEN, 17TH "H" MAIN ROAD, VI BLOCK, KORAMANGALA, BANGALORE. PAN:AAFCS 9003D ... RESPONDENT

This ITA is filed under Sec.260-A of Income Tax Act 1961, arising out of order dated:31/12/2014 passed in ITA No.1261/Bang/2010, for the Assessment Year 2006-2007 with a prayer 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 2) Set aside the appellate order dated: 31/12/2014 passed by the ITAT, 'A' Bench, Bangalore, in appeal proceedings in ITA No. 1261/Bang/2010 for assessment year 2006-2007 as sought for in this appeal.

THIS ITA COMING ON FOR ADMISSION THIS DAY, VINEET SARAN J. DELIVERED THE FOLLOWING:

JUDGMENT

Heard Sri E.I.Sanmathi, learned counsel for the appellants and perused the record.

2.

In this appeal, the following questions of law arise for consideration:

“i. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in directing the assessing officer to compute deduction under Section 10A without setting off of losses (depreciation / business) by

placing reliance on the decision of Hon’ble High Court of Karnataka in the case of M/s.Yokogawa India Ltd., without appreciating the fact that deduction under Section 10A has to be allowed from the total income of the assessee and as per Section 2(45) of the Act, the total income should be computed from various sources after set off of losses from one source against income from other sources under the same head of income in terms of Section 70(1)?

ii. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in directing the assessing officer to exclude telecommunication expenses, insurance charges and other expenses incurred in foreign currency both from the export turnover and total turnover for the purpose of computation of deduction under Section 10A of the Act without appreciating the fact that the statute allows exclusion of such expenditure only from the ETO by way of specific definition of export turnover defined in the Act and there is no specific provision in Section 10A warranting exclusion of the above expenses from the total turnover?

iii. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in directing the assessing officer to consider such income from computation of deduction under Section 10A without appreciating that income derived from interest on deposits to obtain bank guarantee, reimbursement of expenses and recovery from employees has no correlation with the eligible profits of the undertaking for computation of deduction under Section 10A and also the same is not said to be derived from the export activities of the assessee?”

3.

It is not disputed by the learned counsel for the appellants that the first question raised in this appeal is covered by the decision rendered by this Court in the case of The Commissioner of Income Tax –vs- Yokogawa India Ltd., (341 ITR 385 (Kar) whereby the question has been answered in favour of the assessee and against the Revenue.

The second question has been decided by the Judgment of this Court in the case of Commissioner of

Income Tax –vs- Tata Elxsi Ltd. (2012) 349 ITR 98 (Kar) wherein also the question has been answered in favour of the assessee and against the Revenue.

The third question has been decided by the Judgment of this Court in the case of Commissioner of Income Tax –vs- Motorola India Electronics (P) Ltd., (2014) 265 CTR 0094 (Kar) wherein also the question has been answered in favour of the assessee and against the Revenue.

In such view of the matter, we are of the opinion that no substantial question of law arises for determination by this Court.

4.

Sri E.I.Sanmathi, learned counsel for the appellants states that in the cases of Yokogawa and Tata Elxsi Ltd. (supra), appeals have been filed before the Apex Court, which have been Admitted. In the case of Motorola (supra), learned counsel states that the

Revenue is considering to file appeal against the said judgment.

5.

In such view of the matter, it is provided, in the event, the Revenue succeeds in the appeals before the Apex Court, then the Assessing Authority shall pass consequential orders in terms of Section 260(IA) of the Income Tax Act, 1961, and in accordance with law, so as to give effect to the Judgment of the Apex Court.

With the aforesaid observations, the appeal is dismissed.

Sd/-

JUDGE

Sd/-

JUDGE TL

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