The Commissioner Of Income Tax vs M/S H P Global Soft Ltd on 17 January, 2012

[Cites 0, Cited by 8]

Karnataka High Court

The Commissioner Of Income Tax vs M/S H P Global Soft Ltd on 17 January, 2012

Bench: D.V.Shylendra Kumar, H.S.Kempanna

4%

mm...

'~.2iJh€':§':€i" "abs Tribzmai is CQEEQCE in haiding iha': in
acceréanee wiih Sesiisrz 8Ci[9} sf thee A<;'E{ ':Ef;€

Assessiggg Qfﬁcsr has $9 aégduce €¥'iCi'€~§iC€.:"a §§ﬁ' .

assign rsasans Cegemily gné assigm :?§3"as:er§sL-''f;>::f'''[ "

'":v{:k1'r1§ ths Section and canget 3113i"§'I'€§vL1ﬁ"£€f"':h€ 

sxistence sf dose cennectiséjxg'aV1=3:*af?{:gs:::r:$f:t.'i%::t%_:h.sétf

purpose sf invskirtzg Setiiigrz 8;{}:'A_[ 9} Sf  

2»

W}1eth€r 'ihé Tyibmzai iga-'--er;§f:fe'&:tA.§n '1'i(x}~:§_ing»§ that in
acceréance xazitlﬁ   ﬁgad with Section
1GA(6) '€1163.88653???' ?L'f1(i.' .it£;;b Bigital Group
Xkfgyldxaﬁgié}"<Q€2€r§%:&S --:§ieé§:iT ii':>t._ __éC3.:ua11y maintain
books?   the profit would

706 an fffiei éﬁé-I ::;f:e;}_:n-g;7é1:..2_;_V1*1<j«:   .  V

3, i?'J§iC,7fjhsr ihé'  Cemmissioner is SSITSCE in
_h§3§di§"i§ éhaiw E3€fi%I"§"'ih€ boaks Cmﬂd be fgjecied, iihé
'3:.%$$;§sV§§ﬁgA' V"'C%ffi::;&§ has is satisfy himseif the

A " » _V;3:f£0é<:f.s:.§:0"3*:§ gs? Sectisn 145 ef the Act and :19: Sesssiéaztz

 .8i;"i§i';Ei§  wiﬁ: $s:*s:i£::': Eﬁékiﬁé 85 {he $93

 A1: $323 iime gf hearing S§'i,G.§{ama}3.€1ha::

Siaéééirzg $923339} a§§$a:°i::g {Gr iha a;Q§€':§&n%:--:€::e::ua

   H _:«i:33a§::i¥:*£€d 'Ska: :56: aﬁgéhef gxzestiszz 3:2,, $EVh€'ih:€'E" '$535

a§§eﬁ8.:€ ;'§§§{§3GEi§§$S Ei7€§'é";" €'3€}§§'€C.'{ ix: haidizzg ﬂag: {he

 



"J:

MQDVAT crédﬁ incsms 3,8 EUEEQ as afaiua Sf the ﬁgsigig

stack fer Ehe current 8;SS€SS1'E1€1"i{ year. as heEd_.?:>:§%-«._f§§:.e 

Asgesssing Offiser, is alsc» a questien that."':ari$§§{"*

examination in the abova:  é fem: "   '9,§>'p§.?ﬂs._V V

S:i_Surya.naraya::a, iearnﬁd ceufis€§~._8;1:pe:'x3fih-g 

yespandentassessee hav§§;i§:~L..--..__§;;bfi":i7£E<:riV  {his "

question aisa arises    Ehess
appsais far 313;? answei;  appsals in
the soriiexé:  gaurpase cf
disposal   

 We, V "'E;a;gf€~ 9 i1(;7ar_d' ~'Sr:i.Kam.:»11adhar, Earned

gtanding "'c;_>:;:s"~3V:':iéE_ té;ﬁ:p%3é§:i:1Vg far ihe 8.§p€HEtI}if1'€'if€1'1§§;€

 and.Sr%.'E'.Su:'§%a:3.ara_§:ma, §€&§'ﬁ€ﬂ Caunsél appearing for

 Ss:;e':;:,;s€,jA,"» __

5.,'  3;SS€SS€€ is a Enéiazz Cgmpany amd carriea

 '>:";:": ¥:E':s..--"b1/zsizkess 9? maaufacture <3? haféware ané

"~sV::f:i:?a§€ 312$ €X§Q§'€3 iis predzieis, beih E:a:"éw3::*€ and

 " ~»v-sgigftxyars. Whﬁe {he ﬁrs? qzgésiiea reiaiéng is $316

sgiiiiemsai claimed §f§ iihs agsaggea Eéﬂdﬁf {he

 



6%

pmazégiegg of Sestion Eéﬁ G? the Enseme: "EEK Act: 

{fer Shﬁféi E:€r€in,af':<3:* rafemsd is as '$18 _;§'é'%;'E.. j_~i$: 53:1 

respect of ihs {W9 uﬁits which aye :r1Ve§Ve_<:Z §:f€&tien  

seftware and which is €X§®f€€Ci:l  _?3€éQ%:.d"'-qkiiééiieg:.«

reiafaing :0 MGDYAT crsdi€,"--.:§rhici":~.. {he a',€§,?5sé'3;:5S*§€f  

€:§8J'J11€{'L ag available ﬁgs it  cf 't-1r:1_$v'jA3L::vfvii<:>'a,1:1i;i;':g
peried anéa as :eﬂe<ft'e;\§}¢;I:".M -Qf acceunts 33
unutiiissd  ﬁrhich ariseg in
general azgzsii  "   ....f3f "  ' Wi;r:anufactL:re and
  
  b€T:'W€3€I} the: revenue

311$ ﬁize é.i'::$_és3.é'e  €}IE J£.h€ first questisr; is ens cf

°-ej§:'i:tVi€::?:.*?;r§:._ $3: Ql'€E:1ér'2:.7ise of exemption 32:1 ierms Qf

 Eha ﬁcé, 3?, a pgrseniage Gr 3 f'&'§i€') af

véizggs   €:x:p<>:*§$, as a deduciieﬁ aafailabie :0 the

 assegsssé' in mmpuéiﬁg E53 iaéai ;'.::<:0::1s, "$3.3 ﬂags :3 éhe

' = :%:;:§é:'1 that 836 agsesséng <:»f§§C€§* Qpinﬁd; ths amsgﬁz SC:

' "  --$§a:me§ €92: 5215?: 9% '':ha asséssmsni year as §A§}d€1" zw

 



E9

e§e;"e1'éer: of ihe ship or {he bzgsiness 

repeirs E0 eeearzegoing eeseels er _.--:éiF%.e:*.'.1'L"--- 'V' 

pewered emf}; the Assessing GJ'{:fee;_'. 

computing the prefaés arfki  <1;f-- 

indusiriai aéndertaking Q2' :'he:f__1<}'EeAZ or  $3333 V'  n

er the business 0 fepiiiirs {:3 vaeea5s::~ "e::2;e.. 

eesseis er other pu_;_e§*ee_i --.._;::rczf't' ~ viihe
purposes of {he ;V<i. e':;:£ue--iio:iz.A  «ihis seeiion,
take ihe amount ef'   _1m0,g be
reas0n:'1b«?;$ '-_<?Zee2féA":eeZ  V" aierived

:hereﬁe'r2':_. '1[_,.  "

   :0  provisions of this
Se-r:i:--£::2.n,V essjzya 'p:féﬁ§5S~ ..eL:1d gains derived by an

assessee frem._vé2n._'--~'L'indusi:*zZaE undertaking :9

,«}g%;:2?:€s:?: n:"E2s'_..é  seeiierz apyéies shaii me: be

ifaiféedeé in {he ioiai incense ef ihe assessee,

Eﬁé {5} 'W28 previsiens af s:s§:>»~3eei'ée;:z {8}

 and suéaseeéien E9} 03' seeiiers 8€?~:' shed; safer

as zeczg be agpig in reéaééesz {(3 {he eidusiriai
underzeking rejerred :9 in this seeizierz as iheg
appég jar ihe puaeeses of fee éedgssérieé

enderiesieéeg ;'*efer2"e{;i {e in seeiien Sﬁui



ii

8. Tbs assssssmg @ff§C€31" Csnciudeé S16 ass€S;S:<§ €:§t

on ibis asspest by ;:'e~<:0mp:_riing {E16 alzleziriéj 1G?f'».V§;:e_?:E;.i:V___ _

frem tbs sxpori ef goftware  thé""'ii%;5€; V"-.u:;i::=;,_ 

Viz. Santha Cruz Electronics EXpi0rt:;'P;:a}C€Ts.simg' ?;C1}i€:A :i:;1e:_'

Mumbai and anmiher  1e;:'3.i%;f§(i.  h 
Technalogy Park in B.gnga1;0--§¢;§:A' rate of
ﬁrefit attributable :0  «:§:;p€:¢;;; 1' ':9 be at me
same rate as  in respect of
the antira  agésgésssee for each year

3.SS€SS§f1éf1§_{ﬁ}['d€%é§-j we'jr~r: 'pasSé::i~V~<>f: such premise:
€53, §R?hi1¢'--§:3--3}§ing'«»i:itQ 'éhie manner of Camputing csf

the §r0fi':';s:_:e:xf ihle 3§Sf3"e.s;;§§sJ;é; Jag revealed in iha pmfii and

Eoss._%j{a,§éc@u§:i:;'?a;:: d; naiicing *:hat the vahlé sf $16 ciasing

 has Egétzrg 'iaksn at 3. 391226: amaumi ssrrsspgzzdizig

"§::; {§'1€  EKKEQEVAT cyeéii said :0 be aV3iEah}e to

 :he44"3:jsE;§§:VSé§é € 33: '£316 lag? day sf 'ihe: a:':ce::::§ir:,g gseyisdg

aérﬁéah fa: '£33 38563333211: year E§§E3-9% was zgefgiceé 3%

L iSj,§L88§,/---- 351$ aftez' havéxzg calieé £1931: {E28 35353366

is furzétigh {?§€ ésiaiis 0? {ha guséificaiian, izsazé {ha

asgegsesr mezeijg Csntaﬁﬁéng 'ma': as E? énaai 539% aﬁﬁeﬁ ﬁiﬁ

'v«i._S9fiware --. '

 



I4

ihé €X§Qi"§ activity of the netifisd iiiemsﬁ but 

filers gheuid be material is inéicate ihat ihié'  "

had indvlgﬁd 1;} an arrangetmenﬁ-'i'ii'iEhi:s§ f0_réig:: bu,y€:'v.,

80 as ':0 produce ':0 the assessee lniore profitisa 

arcéimarﬂy what profits the aS's§ S:see Hiigh:*héyé'*:é§i§€éted 'V

:0 arias frczm out of Eéugh  "i'hl€v ﬁéséssing
afﬁcer having not indiéﬁtéé  evidezzce ta
discbss   the assesses
and its   Ighére is no reason £0
reject    units as claimed by
ihe asfSes_SeeV  is its profit and E953

3.:::¢Q:mtL   'vs,rfii.§:h according to €116 Appeiiate

 "{§jG'§r'::%::iéé3i9":2;er v:?aé '0 r;e canferming to éhas profit margin

A*-as.;'=é:$§ f{;:§§v:§)§;€ﬁi in Oihéf saftware mamzfasturégzxg miits

wifiéch %f£€*:€.:'~31sQ expoﬁing ihess sofixvarg C1'€&i€§ by it anﬁ

: c:15i_:1:i.::g" ﬁeetien ESE': 'se:1efi'€§. The Apgesﬁafie

"{fji§:;*:%::fi$si:}::$r appiiéé this ariew E6: 331 ﬁhs £5312:

'' "'*:3:!ss§ss:::€::¥; jssars 5? $16 9;$s€3S€:€§

E3» E1': zargg 1/zow 3:3 turn af ihe R€3i?GE'§'é.}.€ 'E3 ge ii:

ap§§aE bﬁfﬁfﬁ the 'Fr€E3::§:3i big: 5:16 '"§§§%:2u:":a§ a8 1951* 3:336

 



£5

CGEREIEGEE order daiﬁé 2f5'1L2C?G5 éiamisssd ﬁxes: apgxaaig

rejecting ihs canientions urgw 0:7: behaif 9:" the 

bath <31: the aspec: sf Section 184?: ben§fit__--é§§i:i:é§E-- .

the assesses and so aise the MQ}3_£<iA.'? cred§€"a§_péVét;V'_' 

E4. 1*: is because 0f_':§:;e failure cf tl*;e; Révénéie 

before the Tribunal, the pr<§'Sé§' :?: _ap1§: ea1:é'Vér:id::§ an tbs

quastiims as above.

15' Aﬁxzzéﬁing   reaiating to
Secti0nEO:--'i"   submission of
  St'a1%i:Vding counsel for the
R€x7e:11 ﬁ3,VV'--i$  ﬁad net maintaineﬁ any

separate é;C<:5<3::u:é;f£;s '*.€;e7'  indicate 3:136 preciss pmﬁis

 "~Aaf€:";*§'f§f:}§tabie.A:e t}ié"'%;i:ra gxpezt unitgg that the assessea

1 -..hV:3._fs3 SVSEE any maisréai 0:' books cf accﬁurzig

:"€E'af;£img~ ir; %:;h$se '{}§'§§€S is iﬁ§§€8U{€ eiiher 3;: {ha magma

 : f}fVT3.r:*x§vi:3:g sai ﬁée §3:"0ﬁ1:S atf:ri§:au*:ab1€ :8 ﬁT':€S€ EE§"iié',S er 3:2

"~:;i:r':j;--.*é:>':he:* way, thaé Wham iha Assessing ﬁfﬁstﬁf ﬁgs

' " ~-:f:e*:§;sé {aha Ciasa Feiaiéazzshig 'b::{w€€:1 {E26 assiissee 512:':

'{§i€': éfﬁigrs buyeg aﬁshiiéh is neg aié ii} éésspuie 33% if {ha

 



55>

ﬁgsessing Qfficsr also ézad naticsd the abrzsymai "high

profit ratio Shéwn by $326 as.3€s$e€ 03:13:; in r€spec%~.§f«_i i:.e

sxporiz tgmiis and in comparégen is the avera_<_;'€:-- pr;j§§i'sM $25 ~

tha entire preduction of the assesses,' if ihevés-:;ies7sm:>:n"£,_V V'

affieer found 'ihai the profit 

export saies was abn0rma11y..§iigh af:d__ ti3.§:rejf€jé:é';"':f "had "

applied the pmﬁt margig at':1':t:V:.§-gréfage ;'t:f0f:.f ztiiargin of
the asserssse inclusive "ﬁt: that was a
Very reasonalgnké:f§fi:£ngi;%  ug's.8G£ {9}
sf the Act?  there was :10
0ccasij3ti"fL6rx.::i;Vif;v6 CE§_ﬁ::D:issioner as W611 as the
fribuﬁéé  'f;e3  with such erder of the

Agsessgrzg  :_h«;%3:iiy:   "

  3. §'. Ee/§f';--E§an:a}adhar has 8339 géaceé f€fﬁ8J?;€€ an

:h§~..§1;§:;g;;i.';2n:iV"bf {ha S:.:,p§6m€ C9321"? in the sass of

 E£a,§§ag§;::;::.'4 B9ck Lid. ~» VS --~ Cemmissigﬁer cs? Enseme
VA Cjn i3§{'f.£EX§fess Pmﬁés $51}: ragarésci in {@583 63% {ER egaa
égrawing 9:2? aiismien. Est: €116 gazégméné sf ihe ﬁuprems

Saar: in {mg cage whisée, was ﬁzz the cwzisxi: <31' iha

@§"€:¥"J§S§G§§S 9% Eﬁﬁiiﬁﬁ 4:242} 8f 131% kzﬁian k1<::::§r::€ Tax A2?

/J,





{X} sf 1§22g whish prsvigien 3330 dﬁais with 3 Si£u§iiSﬁ

Sf an afrangameni between a regident and _::~._::}:3:1%_--

rssiciem: énsuriﬁg that the prcsfits att:*ii31:t_;;f§1r;é4A .

res1'd€nt assessee are transferredge the :19:/iV%':'<é':§,s»3'c1:"e::_'é;.Voziu "

the resident aSS€SS€€ by an arré:ngéiﬁéni'~x;dth a ~§f:--Qf':¥.:

resident business contact, e:1Su_ring"'ihat_Viis_ §1f0"§i£s"jare * '

reduced will be 8. Sit§18jEiOﬂ .E'i§,){%%;§?ﬁ1'§_g  '};2§€)X«'7i€SiOI:S Qf
Seciien 42 of ths   the Supreme
Court having; _f;j%1§\i.V/#5-g,s€ssee, in that
case that   .-im the part, of the
re$idej:£'§xrhx;:é:ﬁv   speit Gut by the
Asseséimgf  iogic appiiss "m the prsserst

situgiion éirggvy ah:-d ";x;h;:%n mice the Assessing Qfficer

 '-17'."«.(Z>V'L§{iV:€d"*C:':E1.f';€ xx?a$"fiSt 9:13}; @1353 relatienship, but aisa

 ~..tV;éa§;4iiié'-..§§§§:E§ :.§3a:'giaa aiirébuiabie :9 {ha ﬁxptrﬁ azsstiviiy

was abzzéfsnaiiy high in QOE§1p8.§'"iSQI1 £13 Elia eﬁaﬁr

'éugiaéa-::é acéivityv ihsre W33 1:19 sseasign f@§ {ha

' "A.{5gg:p:3§ai€ Cgmaaésgiegﬁy GT {E15 '§ri'au31a§ £0 i;"'i§€}i"'fEY€ 'R733'?

 "  ssydér 3:351 :;F1sr€fo:*€:§ submits that ﬂag Cfﬁﬁfg gassai

by Iihe ;%§p€1§a'5s/3 C§§"§§§.':EiSS§Gﬁ€§" a:;& {he '§:§bur:a1 séésuié

 



$8

'as S8': aside 333$ {E16 Qrﬁsr gasssé by the inceme Tax

Qfficsr should be restsreﬁ.

E? Ingofar as the question rélating   K V' 

0f the MODVAT credit is 

assessee at ihe end of gins: ai:(;o'un:inVg7.périoﬁj  

canceyned, it is s1,13:>I:1i3:£é 'c"§».._V'»V' t1f1a':   gﬁpﬁéllate
Qammissisner as   hage; Without
assigning proper  ---§{}§:h0L1: even
demonstratiﬁgﬁ   passed by :he
é5;ssess;:_1e§:1:t~».Vs2ffz"5§:§f   in law {Jr on facts,
had  assessment erder an this

aspect a«::€§§:h.sréf@f'<:§; ':s"%i:ot sustamable.

   iifil E: ;s a§Sé"'s1ibmiti5d: Ehai: tins assesaee haé; not

'»T._if';:a':sr§aE sizther befars '£16 Rssessing

§;i:.»*::i_rV:3:';i5:~:~*'  Eafgré {he ﬁgmeélate Authgriéy is ghsw that

 :%1é»&... 'a€':1:a§3? paid '$3? cca*:es§0n&in§ Sxsias éutyg

"  13p 9:0 £236 8.':"§'1£1§l§'}'§Z of tbs §sIE{'}§'2.?A'E' C§'€§i{ aixﬁich

   had ﬂaéméd as 1'v'EQE'%fz'--§T srasdii avaiéabia is it 3;: ''{he

and 552:? the accguﬁiigg §e:*i35. and ihsrsfwe, was is $36

 



E'?

sxaiudeﬁ ﬁr: sompating the vaius sf ihs Ciosing siock:

{hat when 'éhs iniiziai. paymsnts iisslf has 

dsmonsirsisd, a claim sf this nature was nsf.""isnafbE§é'.----s  ~

is also pointed 01:: that the Asssss::1g' .{§vf£:s§:<»r'."§::ﬁ;nd._V '

sufﬁcisnt reasons to ysjsct the :: iani1_si7 of'*;:§'a§.::€s::é;;::f5s.:.

of the amounts for the pL1rps,sL é:~.VQf a§9:":i2_%1:*:g st £::1é"p1'éfits * L'

sf the: assesses and i:1,----s;:s:'c;fs€ --th's p0§x?érs..u.,3 143(2)
sf ihe Act, if had rejsséiéﬁﬁ being
sf the opinisnﬁfg-at slething but a
devise :0  'the assesses and if
had rrgsds'  of the duty ciaimsd as
s ded*;ict'§snV  of {he séacks there was

nsthizgg  Vvszifiiz  same and ihe Apgsﬁaie

""-.C:;é;r§%::§'sVsis::s: si:§;""1:hs Cammissionsr shsuld E20: hays

  iigsﬁsifssfsgi *;5f:ii';I:'_j§'§:s Qsﬁciusisn sf tbs ASSt3SS§E§;g Qfféssii

4' .. hviﬁa éthe séhsz' hands, SriSz:r§zai:arsys§:a,

 Essmsd ssussssi apgsaring sis 'sshs§f sf the assesses

igiriﬁz rsfersrsse is ihs qassiiszx sf aéaim u,/s,1§§;. of the

AC: ssﬁgsziiiis that ﬁgs ssssssisg iﬁffécsr had sriihoui sriy

§r§§s§ isgssrz as" jéisiﬁésséiszz prssssdsd is §€~és:§.r§1:§§:s

 



"EC;

A501;

{he prgfifé margin; thai *:h€ ;'»":pp€§§.at»:=: z%uih§§:ié%§"-.if;--${€i..

examined éhe matter in éeiiaéi éefgre ihe Ceréxzfﬁisgsxgéné§i ' ' V'

and f::::.::1d tha: in €ompa:iscs'f1M t'§:€_ '-.pr§;f§.'§ " 1:1Va:*gir:*;

atiribuiabis ':0 the export ::f3.Cf£iVit:34?'._Q:f.V;'£h€3  uni{:§'."i3{i"

respeci Q1? expsrt cf scrftwarﬁ  t%,v§._§;:';i§.§ 
faveufably with the  ;~::jmi1a;:9v"C<éi;npar:ies
in ihe same iinefzf   there was me
rsasor: er    any doubt 93:
suspicion  Qfficer haﬁ mm
noticeﬁi  indicative of such
arrangéﬁigfzfg  teaser: to r<:3~determ1n€ the

pmﬁfig" _.He2 3:56 gzibﬁiits that the assesses having

:':i:3.a_i:;i3i:f1eé 'éﬁs account backs in a standard form anﬁ

 '§§'é§;$d'z;zfe,._ﬁ<i§:z"é wag :19 r€as's0:: for 131$ asgsassizig office?

is ;{*£:3§€::--.:: §:.§";~:§ same by §i1'JC§§iﬁg Secfiien $45!?) 9? iha gist

V.  2% Enggffar as $26 €,§i§S%1§QE'E 95 arrasiing {E6 prefét

 2 ﬁxaygin sf $13 aagssses 3: the same peycsaéage 1::

sesgesi sf Ehﬁ G'€f€§ aﬁ b£1S§EfZ€8S 5 $26 agssssseea :5
cgncsrmeﬁ ihai it wag w?;ah$a.:': §13Si§fi€:a':i%I} ami

ﬁg/}€§€§€}§€§ ihe Qfﬁﬁi" 0:" {he agaeggmeeni is 13.9: amstaénabiﬁ

$1

    



7':

amﬁ; the Gfdé? cf the: Appeiiata Auihsrity E3 :9 be

sustaingd, Also submits $13: $16 profit: ma$gV_§§';_4»?~§.::

software business is aéways cgmparaiiveiy mtzch .

than that in hardware busin.€ss, ~a1i1_d iliié"3£é§;éé'i.V'_' 

Aaseming Qfficer had last sight Sf,  ' 

21. Insofar as the aspeiéf  
credit to the value  fgheézﬁ 0f the
acceuntimg Periad is  counsel for
éihe   iiﬁ§§....;iSS€SSe6 having
maintaigfﬁti  the standard form,
thsre   Assessing Officer U) have

réjected i=': a:':dV"*:h.é:A s.2:ﬁ;:.§ has been véry cmfrectly set»

 _ rigisééy' 132% A§'§sé§1at§ Auiheriiiés.

 1 Eésgéfa? ag the reiigzszca §I;a<:€§ '$32' Kamaéaéhai,

lea-§::€§;~ct3::.sé3e} far @315 Ravemxe an ﬁle gguﬁgmem: GE éhis

 ::ef:/xi ézé 331% :\&a.3223;2@0§ fFh€ Cﬁmmr Of ﬁzaéema 'fag:

"  «~ ':'*x;'E,"';§ﬁ:;g§':a§ Géabai Sefi Liiﬁjé E3 Qﬁiiﬁﬁiféﬁﬁg

  -»v---ésgbmiis S131: 1:236 qaeséien yaised thsmizz is me: €2<:a::i§y

as in $215 garesezzi S§§1i3Si§G}'E§ ﬁéaii ii 'i?:?3;S 8; 333% Sf

 



N
ix}

Cusiemg and €XC§f:':€ éazéy ;:s2:ic:i and fer whiah éeﬁuciian

had been ciaimeé and {he rsmissian Grdef by ihis~.Ci<.7}:iI'§

was only {G as-sceﬁain whether the amounisfgaxfe .

gaid er 1'10': arid 110*: an the quesxiiezzs as afiaééai .i'r':  %l:I:1e_ ''

present appeais which reiate :0  

Mr.Surya:';arayana fi;3f_ﬂ':€1: 'L11__1:>rni'ts_  {he *

Tribunai has cs:»r:'e€:t1};--- .g:iispQ.$€{i.. 5:36 apﬂ;5e::1Ts.~:3n these
mm aspacis and thareféfgf  ars rrsquired

ta be answ€r::«:i'i:1'*~fa,v{§ur:af'.m¢A'aLs--$_¢Sse€:'V and against the

§€V€1{1L'L€ =

 ._ Wé _"7:2_§§st_a:&?€:ﬁ aux' attentisn ta the
subm§.§si'{::_:$ ;aQL- Véheébar, perused 'ths Grder ef 'ths

ASS<§§:SSi§:g at1€Lh,Q§i§§f, C§:'§11:I:§ssio::e: €91" Ezzcggis 'Fax

»  @130 of ihe 1115:3316 tax j%.p§€EEa3:& Tribmgaié

25;; §f::1S0faf as 3:116 ﬁyg-2: "iusséiazg is €%ﬁ€€§ﬁ€&§
 . "2

 whiie 'i:i;'§s $35235 ihai §"i%i'€ éiﬁ axis: 3 $3386 C{}§EEE€Cii€3§i

 -%i€:'}}i'§;'€ﬁ§"} ihe 8.S§€SS€€ §:@mp3.::y 3&6} the feraigzé bL'éy€F

~~--é::é ii is ﬁe: §§§§i)fE€§ ihafi {he siher mgguirsgrzezsi Susi':

33 ﬂéﬁ naiurs if arfaagémeni 35:6 fihe maﬁzggr" G?

 



7?

f€j€C1:§.Qﬁ 9? the preﬁis margin dug is exgasrt saies":~:s

inﬂated praﬁts attribzitabla is expori  .

1101: E16613 Ciisciosed; by 1:116 Ass€SS§:1.gj_Offi$éf  Vii}3s::5'g;gE1V 

Censiderabie reiiarkce is placed Ezy :i5:e~ '1eé;:~:1'e:i' 5:{'3§i2:tSE%§.:

far the respondent 91': the' .j f;'1dgmé:;tV__ a>f_V§<1_é"«:._SLupr§3m€ = L

(hurt, whila it is true :hatAV---*:o.A."sof:*:<: extaerzi E5686 iwe pmvisions are anaieggué {S.42.:'i'gi1d.'E§{€cii'<3n 801 (9) 0f the Act} the que§:£a3::_:§§-_th:§§V%?é§§:: the judgment of the :::f;e?:f.' on {he so called ﬂ:::i'é3;ii1i%y as :0 the deeming p1'QViS}i§§F3 "the rssideni: or £116 393..

rasidsgt a§i':§ V3359",-.aS"Vié"*'ih€ manner of b1lSi§1€SS activity "-.aI":é. 6;s:i$te:1-:6 5':f'""£he business cennectien which 3'{:<gt;:::*%,,;'§';<:afi :;i3:«.}b'§;.§*aa§f Q? the assegsee W33 negaiivedc

25. --'f}é«::E= éesirsa sf basingss was as agyaggeé gm:

ihﬁ ' '?Z?E.:1§SJ%§E€8S trazzsasiéaﬁ beiwsﬁn mfg uméis 0%" {he 33335333 whigh might sxpssisﬁ :3 arise in tbs basinsgs égnéértgéiing 91* 316 3:91:63. The xvayé 'appeazﬁ gamma 'as iaiiers in isalaiiezr: éaﬁasrs the qizaiifyézag zargrés :3? 'ss a::'a;§:ga§ aviih $26 *b::_si::€:ss morﬁ iriazi ﬁgs Gréinary 2% praﬁts. 'Whiie an the firs: agpegt there is nag: mach éisgute. The secené requirement via, it is 3. cQz;:%;34e?.§f busirzess is 39 arranged as is resuif in an i:1f§:¥;:.§:§¥cCiw~'_'p:fg§f§l%i___ _ is nm: forihcoming from the o:fd..t::f_ of _-'i1i<~':= ::£?xs'$'essingV4 Officer and unfortunately far 9f the Appeliate Autherity a1s§'-go infgfs is v V L' that the proﬁt ma.rgiI:__. gs re§re.,s,;Ed '5:.§_$e§see is 9. reasozzable profit ma:'g' i:: ig ether similar units. '{I1i:irr;.f;;i:.4:%:;1;y:,_ ts indicate that the 80 arranged as to inflate: *é§{}:1ig1'i:er profit margin 1:0 the twe e:<LipQi°:'_V * :'z;:;'s$essee, ﬁve are unable to answar the"~q:1&:s:§9:i--V_iﬁfavQur of the Revenue, but the .,GZ1}":§ °a1.:;3we:f can 'i':.:'%' 'ihai {he tribunal was justiﬁzzd in

-..té.,i;i5::g :sié_j;.:s: azzzd ihsrefsre, the first quesiien is

3.§«%3T§gV€I"{ii§. ihe 8ffi:"}fil8,'iZiE§'€ and in faxreur 3f the A "3,S:S£§SSt'Z§::'af:C§ agaiast izhs Rszvezme' 25, Ezgsﬁar {ks Séﬁéiﬁé quesiigiz is Qﬁilﬁﬁfiléé, we rfieiice #3335: ﬁre gzzegiian '§as:£<::a3§§' arise §e€:3;§;sa $26 Asgasgérzg éguihmétg rszjﬁsiezi ichg meihaé sf 8.C42$'§§.i'}fZ§§}§ 23 ibileweé by 31% 3.533535% far ihe pumose 0:" camgzziing its profits in iertxns sf She prefit and loss a::c0:;.:;%;'-.La};11_eE the Appeiiaiize Cemmissiszzer as wail as .

have fcazmd that there was no rea_:_s..Qn__ or 3}:iS1:i"f;':<'_;:aiiG:i.fo: " "

tbs Assessing Officer to have lrsjeéted iihse ¥3a<5ii:~:--._E;if :

acceunts as maintained bf,z_ "t..1:;e assggseé was r L' according is standard ,:51CC{)11§'§ii3"i:§--:Qf'aC'£iC€S.' 2'7 . The Tribune} Commissioner have apinegi «tf:_e computing the profits Qf aéséssee having followed the the Assessing Officer sheuid éccasuzats as maintained by ti1e,..:~§is'sessee sf Section 145(1) 9f the Act and »As}1s}x;1s:i §§§3'£. Ihave rejeszteé the same by imzaking Sesiion 'i?%7€ netice iiiat While §'£:j€€'£i83:1 of {he acgéisariis; maizgiained by the assesses in ierxns $5 $336 ":f;§§§¥i§§§;i}S af Sasciiszz 3:é:§{2§a has enabled $16? Agsassmg ' {}%ff£c€:* its yraseeé pass ms': jzgégmézzi assessmeﬁi; bag? at: ihg 8§.}3"i€ iimé {tie aréer shsaid ggneii $22: zreasisszs arzé £323 éasis, is: §as$§::g a hes: jzzdgemazat arﬁezz, Z6

28.; '?he reaean if a': all as disceingsibiﬁ fmm 'ihe asséssmemt Qrﬁer 9:: this aspect, can 9:13}? be ':hv3 i.f;E}€ Asssssing Officer is sf éhe grim; that ':he as;:<¥§SSe~§éV:'--x:ia--'.s§___' _ I10': entiﬂed fer ihe deduction in §€::i:::_s the Ass': 33 the actual paymeniis hﬁéﬁ :§i:3€'Tbéen"Ifiaﬂé:'g0ésﬁ_:

by gating befcre €he»[._V:"';;%§e.$eSs§ﬁ:g. _V ﬁthé Cammensurate maiermé fog.-*:h.év-_2i€.¢0u:1£i;1g péried ef axsise duty and Custanis, " ' 29, En' behaif sf the assessee not a deduction claimécfl but an availabie MODVAT Crsdii xaz§1i;:1r1~ was 3f the value sf 'arm closing stack 33316 éﬁsessss had :30": faciioreﬁ ihe duties paié E': 2::v€;§f;e.4;is:~ag'€ cf Vahzing its gurchases. are if the asiéaraz {hat 3: wag aefi an 2jzs:::§:.2r:t§'f:g" §mCee:iurr5: 'Q13': wag i§iEV§§.':?'€§ in a ciaim mads X'b3z<--iE9:e aSss3s€§ insefar as $36 §€§':§;CﬁGE§ wag Clgimeszi ~~.a}*:?::*§§u1:a'a§e is éihe §vE$B'*JA'E' £r€§i':, '$13 a speciﬁc ﬁgézzctiazz ciaimeé in ragpési 3:7 ihe aafaéiabia MQEVA 27 eredié, em ea; {he same time We eiee fine :ei;2:. Aeeeeeing Officer peseibiy' eeuld me': E333:-re the entire EVIQDVAT ereciit withoe.-£:"éVf§er§i1i§1g u te the asseseee is make geed theA:'a_ei--2,_ie1 paj:€me'::te'w. 3: had made in reepee: ef the'--ve.§uerehesee' ui'i--%v4'V:"*e's§')ee1: 'V sf which amount the .3Le.eeseee"§s:af:ie'Li.ﬁe. deduction to be made or an addition 1:0 'e~eVma'd»e' tQ.._it:é jee':::t of purchase 91" the raw ma:e:iVa;_1., é _, V .

3}. This. as:ifp_eet.havé;1g _:f.:oj'_ebee1?i' examined by any of the aélﬁiehdeiﬁiee:_I:;Ve3<}é?:'1 Vére .;;,§fe the opinion that this requizes : prej;j'e;l:"- .. AAe:§é;ini r1atien at the ievei of the Aeseeeie.§7'e{}ffieef._ 1'.here§ere, {he seemed questier: peeeﬁ A_ fe:_~e%2,:r §a:1ewe:'"ivee,::e*evered in {he negative and againea:

..Ve;s.eueeseee"'v'eu: after settaig aeide the ordeys ef ihe "§:r§'%;e;:1e§ e;'::ﬁV;'e1=§VE1e Aepeﬂeée €3e1;'::::§esé_e::er en éhis aspect ihe :'e.at:er is yereaeéed ie the Aeeeseieg Ofﬁee: en 'ihie A eeﬁeeé: Lew iegeréieg iiee eléaim ef eke aeeeseee fer feéueéeg ihe TEVEGBVAT ereéifi egiseﬁeble {e E: at ﬁle enii :35 ihe eeeeeznsieg eerieﬁ free? the ﬁeiie ef the eieeieg eieek eer} fer eeeh §1,§§"p8S€§ ﬁne Assessing Qffieer ehaﬁ give 28 an Qyporéuniiy $9 the 8.8868866 1:9 glass :§23i--€r:§a¥} gags czrdsrs afresh 0:: this aspect .<:v§»:}:5:€ » '. 32% Ac¢::>rding1y% these appéaia §i_:;€::.8;ﬁO{?€E1,: but only {:2 the limited extarmindiéaférd abo§iE §9' éné2fIA:}:i<?'V Ehﬁ E3.SS€SS€€ to make gazed 3:3 cf excise duiy paid by thé"a$ses§éé§ ..x-fenc§:§:5s Lind seek for reductian in vaiue regard is the discussiorg :;E.§§;§%xe t1:~:;~.v*'E3ec;f§:i;§£.i* q{J.§3ﬁ3on§ the matter is However, it is Qpen fejf évidense 0:' material to make ﬁts Asssssing Officer on this a,:§§@c: ' a;isV{§;"« ' "

éiiaarcﬁ :1: §ar't, garféss is bsar iheir ' i"£i§?s'§1€f§'i§;".?'> ¢.i'. % m gggw

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Karnataka High Court

The Commissioner Of Income Tax vs M/S H P Global Soft Ltd on 17 January, 2012

Bench: D.V.Shylendra Kumar, H.S.Kempanna