Karnataka High Court
The Pr Commissioner Of vs M/S Mphasis Limited on 14 August, 2018
Bench: Vineet Kothari, S.Sujatha
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 14th DAY OF AUGUST 2018
PRESENT
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
AND
THE HON'BLE Mrs.JUSTICE S.SUJATHA
I.T.A.No.910/2017
BETWEEN:
1. THE PR. COMMISSIONER OF INCOME-TAX-4
BMTC COMPLEX, KORAMANGALA
BANGALORE.
2. THE ASSISTANT COMMISSIONER OF INCOME-TAX
CIRCLE-12(1), BENGALURU.
...APPELLANTS
(By Mr. SANMATHI E.I. ADV.)
AND:
M/S. MPHASIS LIMITED
BAGMANE WORLD TECHNOLOGY CENTRE
K.R. PURAM, WTC-3, BLOCK-B
1ST FLOOR, MARATHHALLI
ORR, DODDENEKUNDI, BANGALORE-560048
PAN: AACCB6820C.
...RESPONDENT
THIS I.T.A. IS FILED UNDER SECTION 260-A OF THE IT
ACT, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW
AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE
FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. SET
ASIDE THE APPELLATE ORDER DATED 07-06-2017 PASSED IN
IT(TP)No.1258/BANG/2012 FOR A.Y. 2005-06 VIDE ANNEXURE-
Date of Judgment 14-08-2018 I.T.A.No.910/2017
The Pr. Commissioner of Income-tax-4 & Anr. Vs.
M/s. Mphasis Limited
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'A' BY THE INCOME TAX APPELLATE TRIBUNAL, 'B' BENCH,
BANGALORE, AS SOUGHT FOR, IN THE ABOVE CASE & ETC.
THIS I.T.A. COMING ON FOR ADMISSION THIS DAY,
S. SUJATHA J. DELIVERED THE FOLLOWING:-
JUDGMENT
Mr. Sanmathi E.I. Adv. for Appellants- Revenue
1. The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly one substantial question of law arising from the order of the ITAT, Bangalore Bench 'B', Bangalore, dated 07.06.2017 passed in IT(TP)A No.1104/Bang/2012 (M/s.Mphasis Limited vs. Asst. Commissioner of Income-Tax ) for A.Y.2005-06.
2. The proposed substantial question of law framed in the Memorandum of appeal by the Appellants-Revenue is quoted below for ready reference:-
"Whether on the facts and circumstances of the case, the Tribunal is correct in applying the ratio of the decision of the Hon'ble High Court of Date of Judgment 14-08-2018 I.T.A.No.910/2017 The Pr. Commissioner of Income-tax-4 & Anr. Vs. M/s. Mphasis Limited 3/5 Karnataka in the case of M/s. Tata Exlsi Ltd., (349 (ITR 98 when the Revenue has not accepted the decision and SLP has been filed which is pending for adjudication?
3. Learned counsel for the Appellants-Revenue Mr.E.I.Sanmathi submits that in so far as the aforesaid substantial question of law is concerned, the same is covered by the decision of the Hon'ble Apex Court in the case of Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC).
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 Date of Judgment 14-08-2018 I.T.A.No.910/2017 The Pr. Commissioner of Income-tax-4 & Anr. Vs. M/s. Mphasis Limited 4/5 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 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.
Date of Judgment 14-08-2018 I.T.A.No.910/2017 The Pr. Commissioner of Income-tax-4 & Anr. Vs. M/s. Mphasis Limited 5/5
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 satisfied that such deduction shall be allowed from the total turnover in same proportion as well".
4. Having heard the learned counsel 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 Srl.