STATE STREET SYNTEL SERVICES P.LTD,MUMBAI vs. DCIT RG 8(3), MUMBAI

अपीलाथ� क� ओर से /By Appellant : Shri Dinesh Vyas, A.R. ��यथ� क� ओर से/By Respondent : Shri Vachaspati Tripathi, D.R. सुनवाई क� तार�ख/Date of Hearing : 08.06.2016 घोषणा क� तार�ख/Date of Pronouncement : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-18, Mumbai, dated 22.08.2014 for A.Y. 2010-11 on following grounds:

A.Y. 10-11 [State Street Syntel Services P. Ltd. vs. DCIT] Page 2 “I On the facts and in the circumstances of the case, the learned Commissioner of Income Tax (Appeals) XVIII, Mumbai (‘the CIT(A)’) has erred in upholding/ confirming the order of the Assistant Commissioner of Income Tax Range 8(3), Mumbai (‘the ACIT’) of not considering the Appellant Company’s claim, that the interest income aggregating to Rs.12,86,93,787/- is in the nature of Business Income and is derived from the industrial undertaking and not allowing deduction u/s 10A of the Act in respect of the said interest income.”

“6. We have considered the submissions of the parties and perused the material available on record. It is noticed that identical dispute involving allowance of assessee's claim of deduction under section 10A in respect of interest income was subject matter of appeal before the Tribunal in assessment year 2007-08 and 2008-09. In the latest order in ITA no.3743/Mum./2013, dated 29th February 2016, for assessment year 2008-09, the Tribunal has followed its own decision for assessment year 2007-08 in ITA no.7610/Mum./2011 dated 6th January 2016, and allowed assessee's claim of deduction under section 10A of the Act in respect of interest income. The relevant observations of the Tribunal in this regard are reproduced below:-

"6. We have considered the submissions of the parties, perused the orders of the authorities below and the A.Y. 10-11 [State Street Syntel Services P. Ltd. vs. DCIT] Page 3 material available on record. Solitary issue arising for consideration is whether the assessee is eligible for claiming of exemption under section 10A, in respect of interest income earned by it. While the assessee has claimed exemption under section 10A on the interest income of Rs.1,17,23,280, on the reasoning that it was derived from the business of undertaking. Per- contra, it is the stand of the Department that the interest income having not been derived from the business of the undertaking, it is to be assessed as income from other sources and assessee is not eligible for claiming deduction under section 10A. However, as could be seen, similar issue arose in case of assessee's sister concern M/s. Syntel Ltd. for the assessment years 1997-98, 1998-99 and 2001-02. The Tribunal, while deciding the issue accepted assessee's claim by allowing deduction under section 10A, in respect of interest income as well as some other income such as exchange fluctuation gain and reversal of provisions. Against such order of the Tribunal, the department preferred appeal before the High Court vide Income Tax Appeals no.1974, 1976 and 1978 of 1009. The High Court in order dated 15th December 2009, dismissed the appeal of the Department rejecting the contention that the issue is covered by the decision of the Hon'ble Supreme Court in Liberty India Ltd. v/s CIT. While doing so, the Hon'ble High Court observed that no substantial question of law arise out of the appeals preferred by the Department. As could be seen, following orders of the co-ordinate bench and High Court in case of M/s. Syntel Ltd. as aforesaid, the Tribunal in assessee's own case for assessment year 2007-08 in ITA no.7610/Mum./2011 dated 6th January 2016, has allowed deduction under section 10A, observing as under:-

"3.3.1 We have heard the rival contentions and perused and carefully considered the material on ITA No.6912/Mum/14 A.Y. 10-11 [State Street Syntel Services P. Ltd. vs. DCIT] Page 4 record; including the judicial decisions cited. We find that the very same issue as the issue before us has been considered and decided by a Co- ordinate bench of this Tribunal in the case of the assessee's sister concern, M/s. Syntel Limited, in 2007 dated 31/08/2015 at para 5 and 5.1 thereof. The Co-ordinate bench has held that interest income earned by the assessee has a direct nexus and was derived from the assessee's business and was, therefore, entitled to be considered for deduction u/s.10A of the Act. Following the aforesaid decision of the Co-ordinate Bench in the case of M/s. Syntel Limit (supra), we uphold the impugned order of the Ld. CIT(A) in directing the Assessing Officer to consider the interest income of Rs.53,23,340/- earned by the assessee in the relevant period as having a direct nexus with and being derived from its ITES business and, therefore, to include it while computing the eligible deduction u/s.10A of the Act. It is accordingly ordered. Consequently, the grounds of appeal raised by Revenue are dismissed."

under section 10A after verifying the exact amount of interest income."

There being no material difference in facts brought to our notice by the learned Departmental Representative, respectfully following the consistent view of the Tribunal in assessee's own case, we allow assessee's claim of deduction under section 10A in respect of interest income of Rs.4,46,09,912. Ground raised by the assessee is allowed.”

2.1 Nothing contrary was brought to our knowledge on behalf of Revenue. Facts being similar, so following same reasoning, we allow the assessee’s claim of deduction u/s.10A of the Act in respect of interest income as raised by assessee.

Pronounced in the open Court on this the 24th day of June, 2016.

Sd/- Sd/- (RAJESH KUMAR) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai: Dated 24/06/2016 True Copy S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाइल / Guard file. By order/आदेश से,

उप/सहायक पंजीकार, आयकर अपील�य अ�धकरण, मुंबई ।