Karnataka High Court
Commissioner Of Income Tax-Iii vs M/S Mphasis Ltd., on 21 March, 2012
Bench: N.Kumar, Ravi Malimath
ONR ER Wer Ar LOUK OF KARNALIAKA HIGH CUURL UP RARRALARA MEG GVURE Wr mania ce 1 ITA 53/2012 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 21587 DAY OF MARCH 2012, PRESENT. a THE HON'BLE MR.JUSTICE K.KUMAR -- AND ~ a | THE HON'BLE MR.JUSTICE RAVI MALIMATH - TANo.53/2012. 1, COMMISSIONER OF INCOME TAX-II, C:R. BUILDING ~ QUEENS RCAD, BANGALORE. "2: DEPUTY COMMISSIONER OF _ INCOME TAX, CIRCLE-12(1) BANGALORE. .. APPELLANTS _-- (SRI. BL SANMATHI, ADV.) M/S. MPHASIS LTD., >. 'BAGMANE TECHNOLOGY PARK - BYRASANDRA . ¢.V. RAMAN NAGAR - "BANGALORE-560 093 RESPONDENT
he ENDED Wet WAN PUPAE WE IAAP ALINAQ EE 2 ITA 33/2012 ee THIS ITA IS FILED UNDER SECTION 260-A- OF. :
LT.ACT, 1961 ARISING OUT OF ORDER DATED 18.10.2011 PASSED IN LT.A 8O.120/3ANG/ 201.1, FOR THE ASSESSMENT YEAR 2006-2007, PRAYING THAT THIS HON'BLE COURT MAY. EE PLEASED TO FORMULATE THE SUBSTANTIAL Ques ESTIONS OF LAW STATED THEREIN, ETC.
THIS ITA COMING. ON FOR ORDERS, THIS DAY, N_KUMAR, J, DELIVERED THE FOLLOWING:
The question involved in this appeal is whether the deduction allowable 'under Section 10-A of the . Income Tex 'Act, 1961 by reducing the expenses | incurred on Telecommunication Expenses are to be : __ excluded £ irom the total turn over. The said question _ arose for consideration before this Court in the cage _ ITA No.70/2009 disposed of on 30.08.2011, where _ this Court held as under: We DEER SMR UE AAIAARIAA PIO CURE OVP RARRAIFARA MIG CUOUKI 3 ITA 83/2012 The formula for computation of the > _-- deduction under Section 10-A would be. as under: oT _ oe Profits ofthe business x exon tunwover a Total turnover .
: pla | aforesaid judgments, what emerges is that, there should be uniformity: in the ingredients ¢ of both the numerator and the denominator of the formula, since otherwise ft would produce anomalies ar absurd resulis. > Section 10-A is a beneficial section, Itis intended to provide incentives to promote exports. 'The incentive is to exempt 7 profits relatabie.fo exports. In the case of
- "combined business of an assessee, having _ export business and domestic business, the i ie mitended to have a formula to ascertain the profits from export business by oS, _ apportioning the total profits of the business on the basis of turnovers. Apportionment of profits "on the basis of turnover was accepted as a method of arriving at export profits. In the case of Section 8OHHC, the export profit is to We DARIN AIA STII MUR Wr RARIALARA TICUTE CUUTE UP RAKNAIAKA HIGH COURT OF KARNATAKA HIGH COURT 4 ITA 53/2012 be derived from the total business income of S -
export profit is to be derived Srom the total -
business of the undertaking. Even in the case | of business of an undertaring, it may inelude ;
export business and domestic business, in other words, export turnover and domestic turnover. The export tumever would be a component or part of a denominator the other component being the domestic turnover in other words, fe 'the extent of export turnover, there would bea commonality between the ren: erator and. the denominator of the formula. In view of the. commonality, the understanding should aise be the same. In other words, if the export turnover is: the numerator is to be arrived at after excluding certain expenses, the ' same should also be excluded in computing the "expore turnover as a component of total turnover in the denominator. The reason being os the total turnover includes export turnover. The im 'components of the export turnover in the numerator and the denominator cannot be different. Therefore, though there is no definition of the term 'total turnover' in Section Le oe ee PNENANEPAINES OF INGET We OE WE NAARINALANA DHGIT GWU E UP RARNAIARA FMEIGH COUKT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COUR' 5 ITA 53/2012 10-4, there is nothing in the said Section to | mandate that, what is excluded from the --
numerator that is export turnover would :
nevertheless form part of the denominator. -- | Though when a particulor word is rot defined by the legislature and an ordinary | nearing is to be attributed to the same, the said ordinary meaning to be attribuied ia auch word is to be in conformity. with the context in: which it is used. When the statute prescribes a& formula and in the said formulis, 'export turnover' is defined, and when the 'total turnover' includes export turnover, the very same meaning given to the export tumover by the legislature is fo be adopted while understanding the meaning of the total turnover, when the total turnover includes export tunaver. if what is excluded
- in computing the export turnover is included 'while arriving at the total turnover, when the export turnover is a component of total aS turnover, suck an interpretation would run counter to the legisiative intent and impermissible. If that were the intention of the legislature, they would have expressly stated So. If they have not chosen to expressly define Le 6 ITA 33/2012 what the total turnover means, then, when the _ total turnover includes export turnover, the 7 meaning assigned by the legisiature to the export turnover is to be respected und given. effect to, while interpreting the totul turnover :
which is inclusive of the export turraver. : Therefore the formula for computation of the deduction under Section 104,° would be as under:
Profits ofthe business © Export turn over Seen ofthe undextaking =X oo fEsepert turn over + domestic turn over} Tote! Turn Over . 11. In that t view of the matter, we do not
- See ary error committed by the Tribunal in following the judgments rendered in the
- : context. of Section 80HHC in interpreting 'Section 104 when the principle underlying a both these provisions is one and the same. os Therefore, we do not see any merit in these appeals. The substantial question of taw oe AEA CORE LER OE PE MEME MEE OMATRINATAIAA FIGEE GWURE UP RARNAIARA FIG CUUKTL OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COURT | framed is answered in favour of the assessee and against the reverue. ee HAMEREAAINAS EHOET WORE WE RAKNAIABRA MIGH COURT OF KARNATAKA HIGH COURT OF KARNATAKA HIGH COUR owe er 7 ITA 83/2012 In view of the aforesaid judgment, the substantial question of law is answered in favour of | the assessee and against the. revenue. : Appeal ig disposed of accordingly. es ~ $d/-
JUDGE Sd/-
JUDGE
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