Karnataka High Court
The Commissioner Of Income Tax vs M/S Wipro Infotech Limited on 25 June, 2008
Author: Ravi Malimath
Bench: Ravi Malimath
IN THE HIGH COURT OF KARNATAKA AT _ H V' DATED THIS THE 251*! £'i!LY'();.Ff PRmsE1~§r_ THE Homaw .
TIIE HOIPBLE HALIHATH LT.A.na.;4m,9;glQq3g:_,{§g_1_§;;i;mo§;»5b1, 504
1. ' of in§iéiuc~Tax '€;'.R.BL1iItii§2.g'% ' ' Qz1een'sROa§i~.
Bai1gaior6V'550._Gfl.:1;
_ 2. . The: De1V§t1tyvV_(39I11missioner of ' I:i£.*oiuc--Tax (Assessments) A A " ~ ._ Range-5 ' QL}2,E21fl,d.i11g, Queens Road " Bang:3l{3re 560 001. ....Appcl1ants Common in all the Four appeals (By Sri M.V.Ses11acha}a, Adv.) hug AIID:
M / s.Wipr0 infotech Ltd. , Foremerly M] s.Wipro Infermation Tschnelogy Ltd; ~. New M/s.Wipr0 Ltd., No.88, M.G.R0aé L' Bangalore 560 001. ....Resp0nd.:§13t"'~..V « Com1Ifif>r1«i.U_. fen: app<~:a1"s3 L. (By Sri Chealdralmmalj & Asgmégtes, jadvg = "
These ITAS flied umier s,éi:.25o"Anf Tax k Act, 3961 arising out of 0rd_<:r'c1atgd 31.120025 passed in ITA No.65 1/Ba;1g/ '1991, ."N9.";'i?2 1,522, 523/'Bang/97 for the assessment 9"1_--92, 9283 and 93-94 praying to allow "the 'fap:p<::a1 set aside the order passed by the Ificame Appeliate Tribunal in the above numbfitré and €,'U'fif'I1.'IE1.VT;fIt3._(2I7:iCi!3I' passed by the C'»0II1II1iSSi(_}F1x'§i'44_ £I'1r;0::1:: {Appeals}! and the assessment' Ofifdfir -%;}:1ég Deputy Commissioner sf fI1€3()_.T€I1£:.'I'éI:-§_ (A;=§:;;ess2i1eI3t)",'Sg¢.r§ia} Range--5, Bangaiore and eta. " '3. . .
Fi'As:cg;1).ing on for dictating the Judgment " V. day; Gopala Gowda, J., deiivered the f01i0Wing:- JGI)Ghw!'fT 'i'§_f1es¢i'~~'}5.ppeaIs are fixed by the Commissioner of "I1'1g:<}n1<--';w---- Tax anti Dy.Comm.iss§oner af income Tax '~{VAss;-éssments) (in. shaft 'the Appellate Tzibuzial')
-~-qitlestianing the correctness of tha common order dated 31.7.2032 passed by the Appeilate "¥'rib1ma1 in ITA m/ for the appellant; Mr.M.V.Seshachala, has re-
Nos.651/Bang/94, 521, 522, 523/Bang/97, 359,370, 461, 462 85 533/Bang/2001 framing two questions of law in the Appeals by ., gounds in support of the the common judwent by axxsyxreisiffihfic L, of the Revenue. The sfiicstions fraxneti reads as 'A < ' 3 *1. Whether themgibunaiss was in h01di.flg._t;'1atith<: gajrovisiqnww made by the assssvseaésfsr and_ ..d<;-1V1'1';tt"¢1i" debt is an a13.ow;1bIé"d43duct11di2.,_ V. " ' 2*.-. Whet.tjtr " committed an 'ez,1*or% in " that Section BOG deduction-sh.9uIdL'be allowed on the gross ;' ~ income, Viweceisred by the assesses by " «provisions of Se<;.8OAB of '*t:;i'm Act which contemplates granting of 'w_$!;iC h "a, deduction on the amount of " :'1r;oaie.~vas computed in accordance with pmyisions of the Act and the Judyaent ..__é)1'-the Calcutta Hign Court reported in ~. 243 ITR Page 10 and that of the Apex in 239 ITR 233."
N 2. During the course of arguments, the learned mg framed the substantial questions of law by memo which read thus: 9' L. .
"1. Whether the correctly held that the e\gridence--V addiueec'. ' by the assessee was neat isufficient 1'10' - Show that the badgiebts retutneii' ' as irrecoverable erroneously hold thatthe assessee*nee'c1 not prove the debt ha'v'in7g-- become" .~
2. Whether the Tribune} holding that to be the .,.'gross» .jreoeip'ts out of ammmt fte1eased' in _ , foreign " "eve-,r"'-311:: t'.--.ahnce deduction _ under"~Seg;.8G'«O. o'ffthe"Actf. is to he allowed " "net computed in 'the provisions of the Act as . ¢contempiated'n»undef _Sec.8(}--AB of the Act?'. bf aforesaid legal contentions, he V' .Aha-S: committed an error in Law the cases back to the Assessing Ofiieer to bad doubtful debts after recording an erroneous that the assessee on facts was entitled to VA (ieduction in respect of provision of bad and doubtful the made by the assessee for deduction of bug
4. The learned counsel in suppoxt of his submission has pieced reiiance upon the Division Bench decision of the Allahabad High Court in of JUBILANT ORGANOSYS (ronwxgre ? _ oacmmc crmmcns 131).} Va. off "
mconm TAX reported in (2m4)d=c3roL.cgis"exfr=1z"azogeiig, 3 wherein the said Division f3ez1ch upon the explanation to d_ the Act which was inserted .2001 and held that ijetmissibie in respect of any provision ufoajd bad-__ e11d=:€ioubtf1fi debts made in the '~ :of_asseSsee.....'«'i'he said decision according to the the Revenue is afiirmed by the Apex Cou;Etéby_«d2i'S:eVissiI1g the S.L.P in SLP No.38'28/04 filed the and he has also placed reliance upon ' " decision of the Madras High Ceuxt in the case d f9fe.I.'r Vs. mcrtonmx svsmms PVT. L'l'l)., (zoos) e; 277ITR4mmAm "X of the Act and came to the conciusion that it is the income after deducting the expenses irlcunedj gby 4. A assessee to earn the gross incomeeeeeupon tVhe_jg. benefit of deduction in the rett.u'1'i1=.3V is under See.80-O of the Act.
7. Further it is b§,;f»Athe_'1eéz.*11ed counsel for the Revenue that has committed an efror Law aside the order regarding _(;_i:i the espenses out of gross income _ by placing reliance upon the 'clmisierr ef"§d.§T.D;1stur's case reported in 62 on 'the basis of the said decision ap1§r.:$ves;1%.b3.-<ti;eis in 0.? No.58/98 (IT) disposed on 4/6/200--1 v--._'§1%1tfi;out taking into eonsideratioxl the cr"sec.s0~AB(5) of the Act which provisions by the Apex Court in Distributors fe3a1'0cif " ays case reperted in 1935 (1:55) rm 120 which ll decision is followed by the Division Benches_:"'o'fl _ Court referred to supra. _
8. The learned (x)unsel_ these cases has sought to the findings and reasons .. the impugned judment the claim made eye 37(:)(vi:) which are am doubtful debts written tloe previous years by showing l of accounts applying 'Mereggfitile filceounting' which method of V. 'permissible under the Income Tax Act TI"! 9; learned counsel for the assesses further that the Assessing ofiieer and the first appellate .A:V'a;xthoI'ity who has dis~alIewe<:1 the claim of the assesses ' Without examining the provisions applicable to it for \N/ (1981) 130 17:1: 95 (GGJ) in the case of H.nHANJmHA1 BARDANWALA 'qg.} eomm$sIémERe " A x or INCOKE TAX, GUJARAT wiaeregne reference to the repealed M' examined the method 91' of posting the debit eI1t1'iVe's.-fille .e:§:d_V}oss Account and credit CI1t1':i_€f;€»_.iI1 Account is sufiiciem: 01: Sec.36(2}(b) of the are pariwlllateria with s¢e.3eu)k{$§i13 end alse placed reliance upon anotVI'1e:_f deeisieifg .fl1C Apex Court in the ease of . SGBHAGHAND Vs. eoumssxonzezn 01-' MADRAS reported in (1971) 82 rm 591 (Sena: er his submission that the finding of fact 'vljecorelcdia by the Appellate Tribunal is justified and the 7sw.e=11mAeLT¢'ee«_need not be interfexed with by this Court in h .._ exe%rcise of its appellate jurisdiction unless it is shown fthat the substantial question of law framed in the the legal submission made on behalf of the VT " Rfivenue on the second substantial question of law re-
" framed in these appeals contending mat the Txibunal on Appeal by the Revenue would arise in the further eubmits that the Tribunal has _ concurrent finding of the First, " " "
holding that the same is consideration of material exfieleiaee 5:1 Lfiierefere the fiI'St substantia} q11e$tionVAef£V'e"i§,ar fiet I I. In support: of 1~e@l'§V._$1ibmissions he has placed feI}e£n?ing----€;ecisions:
a) mv ..Ir1r:'ome-Tax -vs- Tiwari reportedin ('1953)V_2'4._fi"R*'537 (B-OM) by xc.I.'i* evs. Kerala State Industrial _ Qevelepment 'erporafion (2007) 289 ITR 238 A 4- e£;;=c.if1*'e%\;*s§VALLABH LEASING & FINANCE co.
1=*vr.V1_;,¢*m; (2004) 265 ITR 1 .. The ieamed counsel for the Assessee has my} careful perusal of the record has examined the particulars available and found fault orders of Assessing Authority t" V Authority to deduct the amount incurred by the assesses fGt'_ 1 gmssmincome as provideti u/ for exporting the software of deduction under Sec.8O--Q4.of__ for the assessment ~
13. a fmdjng of fact on the basis of instengal furnished by the 'fassessee. Whisk' are on the record to show that no eyipeose *'wss...Vine.un*ed by the Assesses, therefore, there Wtvas no, for it to deduct expenses out of gross " " 'T "ea" -rn; ed upon by the assesses for the of software exported as provided 11/ sec. 80- of the Act in respect of the assessment years and b 9' "therefore the learned counsei submits that the Tribunal kw} has rightly Set-aside the concurrent findings of" ., Appeliate Authority in exercise of its jurisdiction and power, therefore 11:5 m'sV1"1brté_:i'1:s second substantial question of lawléreieffed does not arise for consideration' 'this Appeals and requested to': ageiilét the If'€"V€I11.1€.
14. After these» and on careful coigsiderafioai-. contentions urged on behalf of the 'po_rties; substantiai question of iafw l\¥o,..e»i{' faVoxuI=_.Vo f tfxe assessee by assigning the 1'eason_S':- .- __ . appeals the assessee has claimed %o%eo.oo_%%;1:ei% bezjezit ofhveieduction under Section 36(1)(vii} with to provisions of debt/advances in regard to Item so far as Item No.2 in respect of bad or ooubtful debt which is irreeoverabie amount for m/ 22 careful consideration of the Accounts and . the material facts he has recordedAA»va_'f311_d.iii g' holding that it is only a provisioIi"1«bui_'T1'iot'TT71:
from Books of Accounts as its debtors. The said' esfi_ndiz;g~ee}iisc1Aeocha;ueeged.. the assessee before the as erroneous 1'11 gfifinds which contentions of" " with the findings '
(iv) for the appellants has submitted while examining the my the A vveoiicurrent finding of the First
- has come to the conclusion with ' zfeference to entries made in the annual returns and W H 'T ..de(1u:ctions claimed by the assessee by furnishing and extracting various items in respect VT wieduction claimed under the aforesaid statutory ."1'.)I'<)vision. The Tribunal has set-aside the order and \M/ 23 remanded the matter to the Assessing Ofiicer direction to re-eensider the claim of the * light of the material parn'c11lars:~'fi'1rI1ish.ed it item found on at} debt/advances, shown in the profit and lesseeeeunt with. to the entries made in is ibadiiin law, the Tribunal whiie has directed the assessee etiditiexijal evidence before this liiortion of the order is questioliied' for the Revenue. The submissioni"madeV of the assessee that the " ' not applied its mind to the available before him and came to the'sttrong.eo§:1e1usion manning bad and doubtful debts «.._'_"which iseencurred with by the first Appellate Authority.
it is contended by the learned counsel that 'Fribunai is justified in setting aside that portion of tithe order and remitting back the matter for re- 25 him, that has not been done either by the _ Authority or by the first Appellate A§.;thoz'it;.r.~» u the Tribunal is perfectly justifietfirl aeide Vjthe concurrent finding cf the 'A that contentious point' in T. evidence the Tribunal the conclusion that the matter' hence the same was Authority to an which is in compfiafiee : of natural justice. Therefore, vifeu ax that the first substantial » law this appeal placing reliance on fl1BV.$*EiI'§0t1S'~p:i'{Ji?iSi0nS of the Act and decisions referred to" of this judgnent by the _ ieaxneéi for the appellant does not arise for our for the reaeon that we have to accept the .___"::eneIusions arrived at by the 'I'ribuI1a} in its judgment V the contentious point that arose for its censideration M2 26 for Iemanding the matter to the Assessing _ are in respectful agreement the 'ieetté 'v recorded by the Appellate debt and therefore, the is «mg e E-'irst Appellate Authotfity ef reéeotltsidefing the claim of the aPP€HI;I 1t V the material particulars ezatjaiffi g{§i':ig #32 record shall stxictty in View the explanation 1) of the Act and the :ef__'A:11a1r1abad Higa Court in the at onennosvs Vs. TAX reported in (2004) V V' . to substanaial question No.2, the
4. ime' toebe answered in favour of the Revenue for reasons: V 27 (1) The ieamed counsel for théei Mixseshachala has rightly piaced :".s.;I.3g.${.iii»i'ifhé;..A K ' Division Bench Judment of 1 ._ ASSISTANT coimxsswrmk _1nodn1_E'!r,§2_: " ' mmnmmmxe A1lDv§Y8'1fE§t8i:= .s;i1n11'mD, reported in (2006) wlierein the Division Benghifié to Section 8()~0, .;iefcrring to various decisi(:>I1s"'0i€ £1 in HOTILAL mncmm mu. 1'. on reported in [2009] V2;6ii£1ieis"'i:1earl)r laid down the law with " :5 cie§:luc'iit:'ri"'t1/sec.80~0 & 80-AB(5) of the Act at 207 which reievant paragaph of the is extracted as hcreunder:--- sections SOAA and SOAB of the Income- Ai Act, 1961 wen'-: introduced by the Finance *._(}5io.2) Act, 1980. While secfion SGAA was to have retrospective cfiect from April 1, 1968, ssectzion 80AB was to have operation with effect from April I, 1981. Section SOAA had the cfibct of cffacing the decision of the Supreme Court in Cloth Trades (P.)Ltd. :1. Addl.C1T(1979) 118 ITR 13/ ' "skexEsi:/ehpvaefi/25934' ' first Appellate Authority is erroneous in law. Therefore, the substantial question of iaw referred to supra cextairlly arise for our consideration and A' % answer the same in favour of the extent the Judment of the e. e
17. The appeals are e3£efie'ed V above.
?u&9e Sd/"' Judge =__s1;/3_1u3_/ bpy 14108