Karnataka High Court
The Pr.Commissioner Of vs M/S Cognizant Global Services on 28 February, 2018
Bench: Chief Justice, S Sunil Dutt Yadav
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF FEBRUARY, 2018
PRESENT
HON'BLE MR. JUSTICE DINESH MAHESHWARI,
CHIEF JUSTICE
AND
HON'BLE MR.JUSTICE S.SUNIL DUTT YADAV
INCOME TAX APPEAL NOs. 777 OF 2017,
778 OF 2017 AND 779 OF 2017
BETWEEN:
1. THE Pr. COMMISSIONER OF
INCOME - TAX, CIT (A),
5TH FLOOR,
BMTC BUILDING,
80 FEET ROAD,
KORAMANGALA,
BENGALURU-560 095.
2. THE DEPUTY COMMISSIONER
OF INCOME - TAX,
CIRCLE-2(1) (1),
2ND FLOOR, BMTC BUILDING,
80 FEET ROAD,
KORAMANGALA,
BENGALURU-560 095.
... APPELLANTS
COMMON IN ALL CASES
(BY SRI K.V. ARAVIND, ADVOCATE)
2
AND:
M/s. COGNIZANT GLOBAL SERVICES
PVT. LTD.,
LAKE VIEW, 5TH FLOOR, BLOCK-A,
BAGMANE TECH PARK, C.V.RAMAN NAGAR,
BENGALURU-560 093.
... RESPONDENT
COMMON IN ALL CASES
(RESPONDENT IS SERVED)
THESE INCOME TAX APPEALS ARE FILED UNDER
SECTION 260-A OF THE INCOME TAX ACT, 1961,
ARISING OUT OF ORDER DATED 30.03.2017, PASSED IN
IT (TP) A NO. 754/BANG/2016 FOR THE ASSESSMENT
YEAR 2008-2009, IT (TP) A NO. 755/BANG/2016 FOR THE
ASSESSMENT YEAR 2009-2010 & IT (TP) A NO.
756/BANG/2016 FOR THE ASSESSMENT YEAR 2010-
2011, RESPECTIVELY, PRAYING: (1) TO FORMULATE
SUBSTANTIAL QUESTIONS OF LAW (2) TO ALLOW THE
APPEAL AND SET ASIDE THE ORDERS PASSED BY THE
INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN IT
(TP) A NO. 754/BANG/2016, IT (TP) A NO.
755/BANG/2016 & IT (TP) A NO. 756/BANG/2016
RESPECTIVELY, CONFIRMING THE ORDER OF THE
APPELLATE COMMISSIONER AND CONFIRM THE
ORDER PASSED BY THE DEPUTY COMMISSIONER OF
INCOME TAX, CIRCLE-2 (1) (1), BENGALURU, (3) TO
PASS SUCH OTHER SUITABLE ORDERS.
THESE APPEALS COMING ON FOR ADMISSION,
THIS DAY, THE CHIEF JUSTICE DELIVERED THE
FOLLOWING:
3
COMMON JUDGMENT
These three appeals by the Revenue under Section 260-A of the Income Tax Act, 1961 ['the Act'], arising out of the common order dated 30.03.2017 as passed by the Income Tax Appellate Tribunal, Bengaluru Bench 'B' ['the Tribunal'] in relation to the same assessee pertaining to the assessment years 2008-2009 to 2010-2011 and involving similar issues, have been considered together; and are taken up for disposal by this common judgment.
Shorn of unnecessary details, the relevant background aspects of the present appeals are that the respondent- assessee is engaged in the business of software development. The Assessing Officer concluded the assessments for the years in question and restricted the claim of deduction under Section 10-A of the Act, while also making transfer pricing adjustment. The assessee company claimed that whatever amount was adjusted/reduced from the export turnover, an equal amount was also required to be reduced from the total turnover for computing profits eligible for deduction under Section 10-A. These contentions 4 were not accepted by the Assessing Officer. However, in appeal, the Commissioner of Income Tax (Appeals), Bengaluru-2 ['the CIT(A)'] accepted these contentions of the assessee, inter alia, with reference to the decision of this Court in the case of COMMISSIONER OF INCOME TAX v. TATA ELXSI LTD.: [2012] 349 ITR 98 (Karnataka). This part of the order so passed by the CIT(A), has been approved by the Tribunal in the order impugned, while following the aforesaid decision in the case of TATA ELXSI LTD.
Seeking to assail the order so passed by the Tribunal, it is sought to be argued on behalf of the Revenue that the Tribunal was not right in allowing the expenses, that had been reduced from export turnover, to be also reduced from the total turnover, since nothing in Section 10-A of the Act provides for such an exclusion.
Having heard learned counsel for the appellants and having examined the record with reference to the law applicable, we are satisfied that no substantial question of law is involved and these appeals do not merit admission. 5
The method of computing the exemption under Section 10-A of the Act and precisely, the question as to whether the expenses excluded from the export turnover are also to be excluded from the total turnover for the purpose of Section10-A of the Act, has been dealt with by this Court in the case of TATA ELXSI LTD. (supra); and this Court has answered the question against the Revenue, while holding, inter alia, as under:
"... In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The 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 10- A, 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 particular word is not defined by the legislature and an ordinary meaning is to be attributed to the same, the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is used. When the statute prescribes a formula and in the said formula, 'export turnover' is defined, and when the 'total turnover' includes export turnover, the very same meaning given to the export turnover by the legislature is to be adopted while understanding the meaning of the total turnover, when the total turnover includes export 6 turnover. 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 turnover, such an interpretation would run counter to the legislative 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 what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover . . ."
(underlining supplied) The principles aforesaid directly apply to the present cases too, and therefore, we are unable to find any infirmity in the order impugned.
These appeals, therefore, stand dismissed.
Sd/-
CHIEF JUSTICE Sd/-
JUDGE BKV/vgh*