Madras High Court
Commissioner Of Income Tax vs M/S.Servion Global Solutions Ltd on 4 June, 2019
Bench: T.S.Sivagnanam, V.Bhavani Subbaroyan
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.06.2019
CORAM :
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
Tax Case Nos. 241 & 647 of 2008
Commissioner of Income Tax,
Chennai. ...Appellant in both the cases
-vs-
M/s.Servion Global Solutions Ltd.,
12 Wallace Garden I Street,
Chennai – 600 034. ...Respondent in both the cases
Tax Case Appeals under Section 260-A of the Income Tax Act,
1961 are directed against the orders passed by the Income Tax
Appellate Tribunal “C” Bench in I.T.A No.1806/Mds/2005 dated
15.06.2007 for the assessment year 2001-02 and in I.T.A.No.369/Mds/
2006 dated 03.10.2007 for the assessment year 2002-03.
For appellants : Mr.T.R.Senthil Kumar, assisted by
Mrs.K.G.Usha Rani
For Respondents : No appearance
******
http://www.judis.nic.in
2
JUDGEMENT
[Judgement of the Court was made by T.S.Sivagnanam, J.] These tax case appeals are filed by the Revenue under Section 260A of the Income Tax Act, 1961, ('the Act' for brevity) are directed against the orders passed by the Income Tax Appellate Tribunal in I.T.A No.1806/Mds/2005 dated 15.06.2007 for the assessment year 2001- 02 and in I.T.A.No.369/Mds/2006 dated 03.10.2007 for the assessment year 2002-03.
2.The above Tax Case Appeals have been admitted on the following substantial questions of law:-
"(i) Whether in the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled to the benefit of Section 10A for its STPI unit even though the products are the same as produced in the other units, the same and even the employees are common?
(ii) Whether in the facts and circumstances of the case, the Tribunal was right in holding that the expenditure incurred in foreign exchange which have even specifically excluded from export turnover by http://www.judis.nic.in 3 explanation 2(iv) to Section 10A would also not form part of the total turnover for the purpose of Section 10A of the Act.”
3.We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel assisted by Mrs.K.G.Usha Rani for the appellant in both the cases.
4. So far as substantial question of law No.2 is concerned, it is not disputed by the Revenue that the same is covered against the Revenue in the light of the decision of the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vs. HCL Technologies Ltd., reported in [2018] 404 ITR 719. Accordingly, substantial question of law No.2 is decided against the Revenue. This leaves us with substantial question of law No.1 to be taken up for consideration and take decision.
5. We have heard the above appeals together because the order impugned in T.C.A No.647 of 2008 rejects the Revenue's appeal by following the order passed by the Tribunal dated 15.06.2007 which is impugned in T.C.A No.241 of 2008. Thus, if a decision is taken in T.C.A No.241 of 2008, it will cover the case in T.C.A No.647 of 2008. http://www.judis.nic.in 4
6. Though the respondent/assessee has entered appearance through counsel, when the case was heard by another Division Bench of this Court on 10.04.2019, the learned counsel submitted that he has returned the brief to the assessee and requested his name to be deleted. Accordingly, the Division Bench directed the name of the erstwhile counsel be deleted. Thus, the assessee is not represented by any counsel before us.
7. The assessee for the relevant assessment years namely 2001-02 and 2002-03 claimed the benefit of exemption under Section 10A of the Act for its STPI unit. The Assessing Officer while computing the assessment vide orders dated 31.03.2004 and 31.03.2005 respectively disallowed the claim for exemption in its entirety. The sum and substance of the conclusion arrived at by the Assessing Officer is that even after the formation of STPI unit, physically it was not possible to distinguish between STPI and non-STPI as the employees with both the units are same, the products and services are also same and the infrastructure is also similar. Thus, the Assessing Officer concluded that the intention of introducing Section 10A of the Act, will be defeated if such kind of arrangements can be allowed to avail the benefit of exemption.
http://www.judis.nic.in 5
8. The assessee carried on the matter on appeal before the CIT(A) for the assessment year 2001-02 in ITA No.120/2004-05. The CIT(A) allowed the appeal by order dated 27.01.2005. We have carefully gone through the order passed by CIT(A) and we find that the discussion starts from paragraph 9.1. The CIT(A) after going through the entire factual matrix, held that the assessee has furnished sufficient material to show that there is a separate and distinct STPI formed which has engaged itself in export and development of software involving substantial investment in infrastructure including computers and software and employees and the Assessing Officer's conclusion that there is a splitting up of the existing unit is not correct and such finding has been given without analysing and appreciating all the relevant facts. The CIT(A) proceeds to elaborately take note of the factual position, the profit and loss account, the amount of expenditure incurred etc., and record the factual finding that there is no splitting up of existing business and the assessee has fulfilled the relevant conditions under Section 10A of the Act.
9. The Revenue filed appeal as against the said order before the Tribunal. The Tribunal once again does a fact finding exercise and concludes that the case that same machinery as that of the old unit http://www.judis.nic.in 6 were used by the STPI is only based upon suspicion and not tenable as the assessee has acquired total assets worth Rs.1.43 Crores for the STPI Unit for the financial year 2000-01. This order passed by the Tribunal was followed for the assessment year 2002-03 impugned in T.C.A No.647 of 2008.
10. Thus, we find that the following fact finding exercise was done by CIT(A) by assigning independent reasons and thus, we find that there is no question of law much less substantial question of law arising for consideration in these appeals. Accordingly, these appeals stands dismissed. No costs.
(T.S.S., J.) (V.B.S., J.)
04.06.2019
mrm
Index: Yes/No
To
Income Tax Appellate Tribunal “C” Bench, Chennai. http://www.judis.nic.in 7 T.S.Sivagnanam, J.
and V.Bhavani Subbaroyan, J.
mrm Tax Case No. 241 & 647 of 2008 04.06.2019 http://www.judis.nic.in