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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ B ’
Before: SHRI VIJAYPAL RAO & SHRI INTURI RAMA RAO
Per Shri Vijaypal Rao, J.M. : These two appeals by the Revenue are directed against the two separate
orders of Commissioner of Income Tax (Appeals) both dt.20.3.2015.
The Revenue has raised common grounds in these two appeals. The Grounds
raised for the Assessment Year 2010-11 are as under :
“1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case.
2 ITA Nos.804 & 805/Bang/2015 2. The CIT (Appeals) erred in directing the Assessing Officer to follow the ratio laid down by the Hon'ble High Court in assessee's own case for Assessment Year 2009- 10, wherein interalia reliance was placed on the decision of Karnataka High Court in the case of Yokogawa India Limited 341 ITR 385 (Kar) and allow the claim of the assessee of the deduction under Section 10B without setting off unabsorbed depreciation of the earlier years without appreciating the fact that the decision of the Karnataka High Court has not reached finality as a SLP has been preferred against the said decision. 3. The CIT (Appeals) erred in directing the Assessing Officer to allow the claim of the assessee of the deduction under Section 10B without setting off unabsorbed depreciation of the earlier years by relying on the decision of the jurisdictional High Court in assessee's own case for Assessment Year 2009-10, wherein interalia reliance was placed on the decision of Karnataka High Court in the case of Yokogawa India Limited without appreciating the fact that the relief allowed is a deduction and not an exclusion from the total income which is also clarified by the Board’s Circular No.7/2013 ? 4. The CIT (Appeals) erred in directing the Assessing Officer to follow the ratio laid down by the Hon'ble High Court in assessee's own case for Assessment Year 2009- 10, wherein interalia reliance was placed on the decision of Karnataka High Court in the case of Tata Elxsi Limited 349 ITR 98 and exclude the expenditure incurred in foreign currency towards communication, freight and other charges from the total turnover also while computing the deduction under Section 10B that such expenses should be reduced from the total turnover also, as clause (iii) of the explanation to Section 10B provides that such expenses are to be reduced only form the export turnover. 5. The CIT (Appeals) erred in not appreciating the fact that the jurisdictional High Court’s decision in the case of Tata Elxsi Limited 349 ITR 98 on which the jurisdictional High Court relied in assessee's own case for Assessment Year 2009- 10 has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court. 6. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT (Appeals) be reversed and that of the Assessing Officer be restored. 7. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal.”
3 ITA Nos.804 & 805/Bang/2015 3. Ground No.1 is general in nature and does not require any specific
adjudication.
Ground Nos. 2 & 3 are regarding allowing the claim of deduction under
Section 10B without setting off unabsorbed depreciation of earlier year.
We have heard the rival submissions as well as considered the relevant
material on record. The Assessing Officer has restricted the claim of deduction
under Section 10B after setting off of brought forward losses and brought forward
unabsorbed depreciation of the earlier year. On appeal, the C I T (Appeals)
allowed the claim of the assessee by following the decision of Hon'ble
jurisdictional High Court in assessee's own case for the Assessment Year 2009-10.
The learned Departmental Representative has submitted that the issue was
decided by the Hon'ble jurisdictional High Court in the case of Himatasingike
Seide Ltd. Vs. CIT 286 ITR 255 (Kar) and the SLP filed by the assessee against the
judgment of the Hon'ble High Court in the case of Himatasingike Seide Ltd. was
also dismissed by the Hon'ble Supreme Court.
On the other hand, the learned Authorised Representative has pointed out
that the issue is now covered by the decision of the Hon'ble jurisdictional High
Court in assessee's own case for the Assessment Year 2009-10 as well as by the
4 ITA Nos.804 & 805/Bang/2015 judgment of Hon'ble jurisdictional High Court in the case of CIT Vs. Yokogawa
India Ltd. 341 ITR 385 (Kar).
Having considered the rival submissions as well as the relevant material on
record, we find that the judgment in the case of Himatasingike Seide Ltd. (supra)
was delivered by the Hon'ble High Court prior to the amendment in Sections 10A
and 10B vide Finance Act, 2000 and 2001. Therefore, the said judgment is not
applicable on the issue arises from the amended provisions of section 10A & 10B.
The Hon'ble jurisdictional High Court in the case of Yokogawa India Ltd. (supra)
has decided in favour of the assessee by holding that the deduction under
Sections 10A & 10B has to be allowed prior to the setting off of brought forward
losses and unabsorbed depreciation. We further note that in assessee's own case
for the Assessment Year 2009-10, the Hon'ble jurisdictional High Court has
decided this issue in favour of the assessee vide order dt.5.9.2014 in ITA No.549
of 2013 in Pages 2 & 3 as under :-
“ This appeal is preferred by the Revenue raising the following two substantial questions of law : 1. Whether on the facts and in the circumstances and in law the Tribunal was correct in holding that the expenditure incurred in foreign currency excluded from export turnover has to be excluded from total turnover when there is no provision in Section 10B to exclude from total turnover? 2. Whether on the facts and in the circumstances and in law the Tribunal was correct in holding that the unabsorbed depreciation and the brought forward loss cannot be set off from business profits before computing
5 ITA Nos.804 & 805/Bang/2015 deduction under Section 10B of the Act when Section 10B of the Act provides for deduction of benefit on the profits and gains ?
The first substantial question of law is covered by the judgment of this Court in the case of CIT & Another Vs. Tata Elxsi Ltd. & Ors reported in (2012) 349 ITR 98 (Karn.) Similarly, the second substantial question of law is also covered by the decision of this Court in the case of CIT & Another Vs. Yokogawa India Ltd. & Ors reported in (2012) 341 ITR 385 (Karn.) Therefore, as the said questions of law are already answered in favour of the assessee and against the Revenue, we do not see any merit in this appeal.
Accordingly, the appeal is dismissed. However, it was submitted by the Revenue that against the aforesaid two judgments of this Court, appeals are filed and are pending before the Apex Court. Hence, in the event of Revenue succeeding before the Apex Court, the Assessing Authority shall pass consequential orders under Section 260(1A) of Income Tax Act, 1961, as per the orders to be passed by the Apex Court.”
Accordingly, in view of the judgment of Hon'ble jurisdictional High Court on this
issue, we do not find any error or illegality in the impugned order of CIT (Appeals).
Ground Nos.4 & 5 are regarding exclusion of expenditure incurred in foreign
currency towards communication, freight and other charges from the export
turnover as well total turnover.
We have heard the rival submissions as well as considered the relevant
material on record. At the outset we note that this issue is covered by the
judgment of Hon'ble jurisdictional High Court in the case of Tata Elxsi Ltd. 349 ITR
We further note that this issue also decided by the Hon'ble jurisdictional High
Court for the Assessment Year 2009-10 vide order dt.5.9.2014 (supra), the
6 ITA Nos.804 & 805/Bang/2015 relevant part of the Hon'ble High Court has been reproduced in the foregoing
paragraphs. Accordingly, in view of the jurisdictional High Court in the case of
Tata Elxsi Ltd. 349 (supra) and assessee's own case for the A.Y. 2009-10, we do
not find any error or illegality in the impugned order of the CIT (Appeals).
11 In the result, the revenue’s appeals are dismissed.
Order pronounced in the open court on the 12th day of Feb., 2016.
Sd/- Sd/- (INTURI RAMA RAO) (VIJAYPAL RAO) Accountant Member Judicial Member
*Reddy gp
Copy to : 1. Appellant 2. Respondent 3. C.I.T. 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard File.
(True copy) By Order
Asst. Registrar, ITAT, Bangalore