Karnataka High Court
The Commissioner Of Income Tax vs Anz Information Technology on 30 November, 2009
Bench: K.L.Manjunath, Aravind Kumar
IN THE HIGH COURT OF' KARNATAKA, BANGALORE
DATED THIS THE 30TH DAY or? NOVEMBER, 2009
PRESENT n"*"*'
THE HONBLE MR. JUSTICE K.L ~
AND
THE HONBLE MR. JUSTICE3..A»ARAVIi\TIj"KUMAR
W.A. N0. 1565/2;006"_'_'('x'?I'I_'1)~.
BE! WEI-EN
The Commissioner of ..InComAe--+-{elk-.
Banga1ore--V ' ' " ~
C.R.Building _ .
Queens Road, V '
Bangalore--560.00._1. '
_ _ Appellant
{By Sri.M.V.'Seshae'1:al'a..j--«._A'r}.\(oeei'{.e}., '
' Z': . . .
ANZ Info1:rnat1on
Pvt L_td., Registered Offiiée
Che;-fry Iélllls, Level 2,3 82; 4
= _AEn.iLb'assy Golf Links-'Business park.
Intermediate Ring Road,
_ 1 .
Repfesented its
Chief Financial Officer,
l'._V?N.V.U'rne:sh, Aged about 44 years.
Respondents
S:mt.S.Nitya, Adv. For M/s K.R.Prasad, Adv.)
This Writ Appeal filed u/s.4' of the Karnataka High
Court Act praying to set aside the order passed in the
Writ Petition No.754/2006 Dated 24/ 07/ 2006.
This Appeal coming on for hearing,
ARAVIND KUMAR, J delivered the follovminggtpppgg'. b .,
JUDGMENT it
The Revenue is assailinguhtdhe r_o4rder,:"paSsed in
W.P.No.754/2006 dated pg.2%4--7--'2oo6. Wh:€='IeT§ii'ntleifl.l'"thew.L
learned single Judge has alloiired pe.':.:ition and
set aside the ordeijirdat-ed'lV_ Arinexure G~i
passed by the lneoriiiejv Bangalore.
filing of this petition
are: sought for revision of the
order, undlerisecvtiorl of the Income~tax Act, 1961
p[herCeii?iv after referred to as the Act) claiming benefit
10(5B) and seeking exclusion of the tax
e0l.iect'edl.h»yl the employer on behalf of the employee.
ffile Cornmissioner by order dated 16-52002 rejected
it v_th-es: claim on the ground that the employee was
'V »---i'unctioning as the Managing Director of the company
//..
and not exclusively as technician. Amongst other
grounds writ petition came to be filed before this
in W.P.No.19530/2003 challenging the etéietf'
16-5-2002 contending that Mrgeim Pttitti'e--17tie;d beeni "
empioyed by the Respondent ass'essee" i
as per the term of which asse_s's.ee waste bear"the on V
remuneration paid to him aiidii _ ' rameiineration
paid to him was eiigibiet payment of
tax for a period be subject to
the coriditiion:.stip1ii,ateti*:-'titicler itliection 10{5B} of the Act
are the grounds urged in
writ petition be allowed on 25-6-2003
remitting .rr1atterV"~*back to the Commissioner of
forttacijuydicating afresh after affording the
~h'e.rein an opportunity to place all such
to reiconsider the matter afresh.
materiais_a:1d also with a direction to the Commissioner
(gt,/"'
3. Thereafterwards on consideration of the
materials placed by t.he respondent aridljalso
appreciation of the material already a-.%t;§l11abt1y¢ .
record, the Commissioner ofmineomelll'ta:x'jby'w oitdeif l"
dated 8-T2005 rejected the c1iaim--:_'_'o*f the
which is at Annexure G1. Vordei waSVi1L_1e'sti'oned by'-it
the respondent herein hefore-'t~h.e_:-learned s'ing1e.. dudge in
W.P. No.'/"54/2006. isizsgle Judge on
consideration the the writ petition
as also eoiitentions raised by the
it conclusion that the
employee Ilpossessed MS. degree in
Con1piiter4"'Seieno,e. A'-._TheV benefit claimed under Section
Cannotllbedis-allowed merely on the ground
thath:e..;:als'oa::incidentally happens to be the Managing
now questioned in this Appeal.
§irector.the Company. It is this order dt.24.'/T2006
., 3'
c' _ .«-"
4. We have heard the learned counsel for the
parties and perused the records.
E"). Sri.Seshachala. learned counsel"
the revenue would contend thatghthei:interpre'tation_lin"sot
far as Section lO{5B) is to beflwithinllthe fou'§.'.cvor'ners
enumerated in the Sectionllliltself and is a
finding of fact with ._e;tnp1oyeeVVcarrying out
the work of the.ManagingiDirector"theV».'1;enefit cannot be
extended iskteichnijcians who will be
entitledto lO[5B) of the Act.
6. 'Coritra Nitya, learned Advocate
appearing ford::Srip.:£{.R.Prasad would contend that
';Ci@Ct;1ments"~-.produced before the Commissioner of
=1f1c.or£:e R7t:aXA'p:=.otrerwhelmingly supports the case of the
ernploszeel that the employee comes within the purview of
2 itechnician particularly in the background of the degree
Vfhe possessed and also the work hitherto executed by
him clearly establishes the fact that he is a technician
thus entitled for exemption under Section 10 (5_B]l_:the
Act. In order to appreciate the contentions.lu1%§¢~.d'
the learned counsel it would be...neces'sary'-dtol"eXtract°'
Sec.10(5B) of the Act, and the a1ii.en.'dn'ienlt~ther:eoi'
reads as foilows:
"Section 10: In computing' the.. total linflome of a
previous year ofyany 1i_)erso"n,._V_a.ny.income falling
within any of the 'fo'llo'wVi.i1g clauses.shall not be
included in r
V"l'5["B")-:_l:n thE*:"case"*of ari"in'diVidual who renders
":seI§.'icegqVas"'a 'technician in the employment
(commencing; frofn_a_. date after the 31811 day of
March, 1993]' of"the Government or of a local
__auth0rityVo-r of any corporation set up under
any special law or of any such institution or
taodyp estabhshed in india for carrying on
3 scie.nti_fic research as is approved for the
i. "p1_i"rp"cse's of this clause or sub--clause (viia] of
'cismsecrisy by the prescribed authority or in any
btisirielss carried on in India and the individual
washot resident in India in any of the four
" financial years immediately preceding the
financial year in which he arrived in India and
the tax on his income for such services
chargeable under the head Salaries' is paid to
the Central Government by the employer
gt.»
anything contained in section 200 of the
Companies Act, l956( 1 of 1956]]. the tax so
paid by the employer for a period not ex,ceed.ing
forty--eight months commencing from the"d_ate'~i.vv
of his arrival in India:
Provided that the Central G.Qv'e.rnment it
may, if it considers it necessary or_'exped'ient
the public interest so t0 waiv_e"--.,the_ A'
condition relating to non--r"e,sidence inlndia
specified in this clause indth-e case-A.oi' any."
individual who is employed in incl~ia"*~for
designing, erection comInis_sio'nin;g of
machinery or plant or --.s'upervising --activities
connected \xrit'i1.,_."sucl:i giesigiiinof, erection or
commissioning. H ' * *
Explanaiiortn For pu1*po_ses":of this clause,
'techniciaif meansja pe,rsr:§n having specialised
knoi'ivled'ge"'a'n.dg eX,pefie_r'ice-i11..4~
-ii) ._ -- coiist1fuctional_, ' ~ or manufacturing
' «. operatiforis«,.__"*or..-~ in mining or in the
generation of electricity or any other form
V . _ "of 'povv--er,'.or""
(ii) agriculture, animal husbandry, dairy
.,farmin'g," deep sea fishing or ship
v,b*uilding, or
- gijiii ~ such other field as the Central
Government may, having regard to
* flavailability of Indians having specialised
V knowledge and experience therein, the
needs of the country and other relevant
circumstances, by notification in the
Official Gazette, specify
who is employed in India in a capacity in
which such specialised knowledge and
experience are actually utilised". 3
Amended Section 10(5B):
"in exercise of the powers c-o'n'fe:rred- by
sub--(:l. (iii) of Explanationjto cl; (_5B) .;of Vs.«.i_Q"of
the n' Act, 1961 (43 of'»._1981.3--; theeA.cen:m1"l'ee'l
Government having regard1__to._ availability 'of V
Indians having specialised 'v.knoWi'edge~-V...and
experience, the needs ofthe countrya andfother
relevant c1rcurristances,____ specifies theyv following
fields for the pur'posesi'*of the said cl. (5BJ," --
(1') Grading -T-andj'evaluatiojn of diamonds
«for diarrrorid e;x:p.ort orirnport trad;
(11).. "'...C'ook=eryg; "
(iii) 5i'nfo1*nfiation technology including
_.'''=_coit:<1pL'it'er '' '---.,arcij1itecture systems
fliatforms " and associated
_ tefchriology, software development
" r 'process and tools".
'E:~Iaving---w.heard the learned counsel for the
p;a;rt,ies,..v_Vwe'«fi"nd_ from records that the employee in the
instant case was having wide range of experience in the
'.Vfieldulo.f lllinfolrmation technology and other allied Works
ll.ffandl"'this is supported by Annexure "G1"where in the
details of the technical background of the employee are
succinctly enumerated. The only ground on which the
Commissioner of Income Tax proceeded to
exemption claimed by the employee was ~
that he was also carrying out the..wo_1fk csflthellliyi nu
Director and in this regard
our attention to the definiti._o'n__enuinerated, iIi""Sec:tion "
2(26] of the Companies.Act .rea_ds as'fol1o.ws:
"S.(26) : "mana'g_ing'e.__directo_r'»'.r means a
director who, by yirtue of ..an""a,greerr"1ent with
the company_or ;of at rgesolutionpassed by the
cornpariy general lmeeltinlg Vorwby its Board
of dire'ctors"'-or, bygyviituer its memorandum
or arti.c1e_s;*'; of 'association, is entrusted with
[svubestapfitialipowers of""'1n.anagement] which
woulri not ..otherwise_ be exercisable by him,
and ' ._includ,es. 'i'.a.'-.,ydirector occupying the
position of-a"man"a--ging director, by whatever
name"'calledg:'V--. A V' "
A " Pifcviéed thatmthe power to do administrative
._ar:ts,of_ routine nature when so authorised
byr"t.h"e Board such as the power to affix the
A "--.l'corr1rVnnn;= seal of the company to any
document or to draw and endorse any cheque
onathe account of the company in any bank
or T or» "to draw and endorse any negotiable
«-instrument or to sign any certificate of share
..*or to direct registration of transfer of any
share, shall not be deemed to be included
within substantial powers of management:
I0
Provided further that a managing director of
a company shall exercise his powers subject
to the superintendence, control and direction
of its Board of directors"
to contend that When the employee is carrying:
work of the Managing Director he ceases
the work of the technician"»AAlland._ Has'
Commissioner was right in,denying"the claim"mad.e"'by"V.g
the respondent. However "record"sl_W'e that the
employee in questioil.,,,Mr.jLlo--hAnl:,'Pi'nn.is was "not only
possessed withgall the and also he
was di_scharging<._Vsuch»_functions in the assessee Bank
and this "'-facltvhaving scrutinised and analysed by
theflearned sitigle Jtzdge in his order has come to the
.A¢QnciL1Vsio:iLrslghtly that merely because the employee
the work of the Managing Director, it
j wodid "notdisentitle him to claim the benefit of Section
lO{5.B) of the Act.
El
9. We find that said order neither suffers from any
legal infirmity nor from any factual error wh1el:«jt=e§;}a1res
to be interfered by the Appellate Court
we desist from doing so and confirm tjhe'VV'4£)'1;der"oljthe V'
learned single Judge. Henee,1°'the'_Alfelleiarlrxgl
passed:
ORDER
The writ appeal i's'%disr11is'sf:d._--' Order as to costs.