Karnataka High Court
Pr. Commissioner Of Income Tax-5 vs M/S Oracle Solutions Services (India) ... on 30 August, 2018
Bench: Vineet Kothari, S.Sujatha
1/5
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 30TH DAY OF AUGUST 2018
PRESENT
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.126/2018
BETWEEN :
1. PR. COMMISSIONER
OF INCOME TAX-5
BMTC BUILDING
KORAMANGALA
BANGALORE-560001.
2. THE DEPUTY COMMISSIONER
OF INCOME TAX, CIRCLE 12(2)
BANGALORE. ...APPELLANTS
(BY SRI E.I.SANMATHI, ADV.)
AND :
M/s. ORACLE SOLUTIONS
SERVICES (INDIA) PVT LTD.,
PRESTIGE TECHNOLOGY PARK,
VENUS BLOCK, PHASE-I,
LEVEL-6-9, SY.NO.29.
SARJAPUR,
BENGALURU-560087.
PAN:AAACE4354L
...RESPONDENT
*****
THIS INCOME TAX APPEAL IS FILED UNDER SECTION
260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER
DATED 09.08.2017 PASSED IN ITA No.880/BANG/2013, FOR
THE ASSESSMENT YEAR: 2005-2006, PRAYING TO: DECIDE
Date of Judgment 30-08-2018, ITA No.126/2018
Pr. Commissioner of Income Tax-5 & Another Vs.
M/s. Oracle Solutions Services (India) Pvt. Ltd.,
2/5
THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER
QUESTIONS OF LAW AS MAY BE FORMULATED BY THE
HON'BLE COURT AS DEEMED FIT. (a) SET ASIDE THE
APPELLATE ORDER DATED: 09.08.2017 PASSED BY THE
INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH,
BANGALORE, IN APPEAL PROCEEDINGS NO. ITA
No.880/BANG/2013 FOR THE ASSESSMENT YEAR 2005-
2006 AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT
SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF
JUSTICE.
THIS APPEAL COMING ON FOR ORDERS, THIS
DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING:
JUDGMENT
Mr. E.I.Sanmathi, Adv. for Appellants - Revenue.
This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench 'B', Bangalore, in ITA No.880/Bang/2013 dated 09.08.2017, relating to the Assessment Year 2005-06.
2. The substantial question of law framed by the Revenue in the Memorandum of Appeal is as under:
"Whether, on the facts and in the circumstances of the case, the Tribunal has erred in law by directing the assessing officer to reduce the expenditure incurred in foreign currency, both from the Export turnover and Total turnover for the purpose of re-computation of deduction under Date of Judgment 30-08-2018, ITA No.126/2018 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Oracle Solutions Services (India) Pvt. Ltd., 3/5 Section 10A without appreciating the fact that statute allows exclusion of such expenditure only from ETO by way of specific definition of export turnover as envisaged by sub-clause(4) of Explanation 2 below sub-section 8 of Section 10A. On the other hand, there is no specific provision in Section 10A warranting exclusion of above expenses from total turnover also? "
3. The issue is covered by the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC).
4. The relevant portion of the judgment of the Hon'ble Supreme Court in the case of HCL Technologies Ltd. (supra), is quoted below for ready reference:-
"17. The similar nature of controversy, akin this case, arose before the Karnataka High Court in CIT v. Tata Elxsi Ltd. [2012] 204 Taxman 321/17/taxman.com 100/349 ITR 98. The issue before the Karnataka High Court was whether the Tribunal was correct in holding that while computing relief under Section 10A of the IT Act, the amount of communication expenses should be excluded from the total turnover if the same are reduced from the export turnover? While giving the Date of Judgment 30-08-2018, ITA No.126/2018 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Oracle Solutions Services (India) Pvt. Ltd., 4/5 answer to the issue, the High Court, inter-alia, held that when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to it, the said ordinary meaning is to be in conformity with the context in which it is used. Hence, what is excluded from 'export turnover' must also be excluded from 'total turnover', since one of the components of 'total turnover' is export turnover. Any other interpretation would run counter to the legislative intent and would be impermissible.
18. XXXXXX
19. In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature.
20. Even in common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are Date of Judgment 30-08-2018, ITA No.126/2018 Pr. Commissioner of Income Tax-5 & Another Vs. M/s. Oracle Solutions Services (India) Pvt. Ltd., 5/5 satisfied that such deduction shall be allowed from the total turnover in same proportion as well".
5. Having heard the learned counsel appearing for the Appellants-Revenue, we are therefore of the opinion that no substantial question of law arises in the present case. The Appeal filed by the Appellants-Revenue is liable to be dismissed and it is dismissed accordingly. No costs.
Copy of this Order be sent to the Respondent- Assessee forthwith.
Sd/-
JUDGE Sd/-
JUDGE ss.