M/s Open Silicon Research Private Limited, Bangalore V. ITO, Bangalore

ITA 1128/BANG/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1466 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARAHAT HUSSAIN QURESHI
• Assessee Lawyers: T SURYANARAYAN
• Keywords: Transfer pricing; International transaction; Additional evidence; Wholly owned subsidiary

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IT(TP)A NO.1128/BANG/2011 ASSESSMENT YEAR : 2007-08 M/S. OPEN SILICON RESEARCH PRIVATE LTD., # 11/1 & 12/1, GROUND FLOOR, MARUTHI INFOTECH CENTRE, INDIRANAGAR-KORAMANGALA INTERMEDIATE RING ROAD, BANGALORE 560 078. PAN: AAACO 5915B VS. THE INCOME TAX OFFICER, WARD 12(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI T. SURYANARAYAN, ADVOCATE RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI, CIT(DR) DATE OF HEARING : 07.09.2015 DATE OF PRONOUNCEMENT : 11.09.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 19.9.2011 OF THE ASSESSING OFFICER PASSED U/S. 143( 3) R.W.S. 144C OF THE INCOME-TAX ACT, 1961 ['THE ACT']. IT(TP)A NO.1128/BANG/2011 PAGE 2 OF 14 2. OPEN-SILICON RESEARCH PRIVATE LIMITED (OPEN-SIL ICON INDIA OR THE ASSESSEE) IS A SUBSIDIARY OF OPEN-SILICON HOLDING CORPORATION, MAURITIUS WHICH IN TURN, IS A WHOLLY OWNED SUBSIDIARY OF OPEN -SILICON INC, U.S.A (OPEN-SILICON INC). OPEN- SILICON INDIA INITIATE D ITS OPERATIONS IN 2003 WITH ITS REGISTERED OFFICE IN BANGALORE. THE ASSESSEE IS ENGAGED IN PROVIDING CONTRACT SOFTWARE DEVELOPMENT SERVICES TO ITS ASSOC IATED ENTERPRISE (AE). THE ASSESSEE IS COMPENSATED WITH A FIXED MARK-UP ON THE COST INCURRED FOR PROVISION OF SOFTWARE DEVELOPMENT SERVICES. 3. DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO TH E AY 2007-08, THE ONLY INTERNATIONAL TRANSACTION THAT TOOK PLACE BETW EEN OPEN-SILICON AND ITS ASSOCIATED ENTERPRISES WAS PROVISION OF SOFTWARE DE VELOPMENT SERVICES TO THEM AT A PRICE OF RS. 13,00,95,066, FOR WHICH A TP ADJUSTMENT WAS MADE BY THE TPO TO AN EXTENT OF RS. 1,22,83,858. 4. THE ASSESSEE ALSO CARRIED ON THE SAID SOFTWARE D EVELOPMENT ACTIVITIES DURING THE PREVIOUS YEAR FROM THE UNDERT AKINGS REGISTERED WITH THE STPI AUTHORITIES. THE ASSESSEE IS ELIGIBLE FOR AND ACCORDINGLY, CLAIMED DEDUCTION IN RESPECT OF PROFITS OF BUSINESS OF THE SAID UNDERTAKINGS UNDER SECTION 10A OF THE ACT OF AN AMOUNT OF RS.2,11,68,8 74. OF THE SAID DEDUCTION CLAIMED, THE ASSESSING OFFICER HAS MADE A DISALLOWANCE OF AN AMOUNT OF RS. 4,34,085 BY RE-COMPUTING THE DEDUCTIO N IN RESPECT OF THE UNDERTAKING. IT(TP)A NO.1128/BANG/2011 PAGE 3 OF 14 5. ORIGINALLY, A DRAFT ASSESSMENT ORDER WAS PASSED ON 20.12.2010 CHALLENGING WHICH, THE ASSESSEE FILED ITS OBJECTION S BEFORE THE DISPUTE RESOLUTION PANEL (DRP). 6. THE DRP UPHELD THE ORDER PASSED BY THE AO. CONSE QUENTLY, THE AO PASSED THE FINAL ORDER DATED 19.09.2011. BASED ON T HE FINAL ORDER, THE ASSESSING OFFICER RAISED A DEMAND FOR THE BALANCE T AX PAYABLE OF RS. 65,92,942. 7. THE PARTICULARS OF THE TRANSFER PRICING (TP) ADJ USTMENT ARE THAT THERE WAS AN EXPORT OF SOFTWARE DEVELOPMENT SERVICES FOR AN AMOUNT OF RS.13,00,95,066 AND AN ADJUSTMENT OF RS.1,22,83,858 WAS MADE BY THE TPO IN HIS TP ORDER. FURTHER, THE TPO COMPUTED TH E NET MARGIN ON COST EARNED BY THE ASSESSEE AND ARRIVED AT THE OPERATING /NET MARGIN (OP/TC) AT 12.63%. THE FOLLOWING ARE THE FILTERS ADOPTED BY THE ASSESS EE IN ITS TP STUDY:- IT(TP)A NO.1128/BANG/2011 PAGE 4 OF 14 8. THE TPO ACCEPTED THE ASSESSEES STAND THAT TNMM WAS MOST APPROPRIATE METHOD TO BE ADOPTED IN THE ASSESSEES CASE. HOWEVER, THE TPO RESORTED TO HIS OWN STUDY AND REJECTED ALL FILT ERS ADOPTED BY THE ASSESSEE, EXCEPT THE FILTER COMPANIES THAT HAD AV ERAGE SALES OF LESS THAN RS.1 CRORE DURING THE TIME PERIOD. 9. THE ASSESSEE/OPEN SILICON SELECTED THE FOLLOWING 18 COMPARABLES:- SIP TECHNOLOGIES & EXPORTS LTD. PROWESS 25% 23% MINDTREE CONSULTING LTD. CAPITALINE 11% 9% COMPUTECH INTERNATIONAL LTD. SEG P 7% 7% KARUTURI NETWORKS LTD. SEG P 4% 4% THE MEAN AVERAGE WITH ADJUSTMENTS WAS AT 11%. 10. OUT OF THE ABOVE 18 COMPARABLES SELECTED BY THE ASSESSEE, TWO COMPARABLES VIZ., SIP TECHNOLOGIES & EXPORTS LTD. A ND MINDTREE CONSULTING LTD. WERE ACCEPTED BY THE TPO AND THE RE MAINING 16 IT(TP)A NO.1128/BANG/2011 PAGE 5 OF 14 COMPARABLES WERE REJECTED. THE TPO APPLIED FILTERS BY USING PROWESS DATABASE, PROWESS SEGMENT DATABASE AND CAPITALINE P LUS DATABASE. HOWEVER, THE TPO BROUGHT IN CELESTIAL LABS LD. AS A N ADDITIONAL COMPARABLE. THE FOLLOWING ARE THE COMPARABLES SELE CTED BY THE TPO:- 11. THE LD. COUNSEL SUBMITTED THAT DUE TO INADVERTE NCE AND OVERSIGHT, THE ASSESSEE HAD NOT RAISED A SPECIFIC GROUND REGAR DING THE EXCLUSION OF MINDTREE LTD., WHICH WAS TAKEN AS A COMPARABLE BY T HE ASSESSEE IN ITS TP IT(TP)A NO.1128/BANG/2011 PAGE 6 OF 14 STUDY AND ALSO BY THE TPO. IT WAS SUBMITTED THAT THE TURNOVER OF MINDTREE LTD. FOR THE FINANCIAL YEAR 2006-07 IS RS. 590.35 C RORES, WHEREAS ASSESSEES TURNOVER FOR FY 2006-07 IS RS. 13 CRORES . THEREFORE, SINCE MINDTREE LTD.S TURNOVER IS BEYOND RS. 200 CRORES, IT OUGHT TO STAND EXCLUDED FROM THE LIST OF COMPARABLES IN THE LIGHT OF THIS TRIBUNALS DECISION IN TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. IN ITA NO.1 054/BANG/2011 , WHICH HAS SUBSEQUENTLY BEEN CONSISTENTLY FOLLOWED B Y THIS TRIBUNAL. 12. THE LD. COUNSEL SUBMITTED THAT MINDTREE LTD. W AS CONSIDERED AS PART OF THE COMPARABLES IN THE ASSESSEES TP STUDY SINCE , AT THE TIME OF THE TP STUDY, ITS COMPARABILITY WAS ANALYSED ON THE BASIS OF MULTIPLE YEAR DATA AS THE COMPLETE DATA FOR THE FINANCIAL YEAR IN QUESTIO N WAS NOT AVAILABLE. THE RESULTANT POSITION WAS, THEREFORE, VERY DIFFERENT F ROM WHAT IT WOULD HAVE BEEN, HAD THE DATA OF THE FINANCIAL YEAR IN QUESTIO N BEEN CONSIDERED. THE TPO, HOWEVER, CONSIDERED THE DATA OF THE FINANCIAL YEAR IN QUESTION ALONE AND, HAVING REJECTED THE TP STUDY OF THE ASSESSEE, APPLIED DIFFERENT FILTERS FOR THE COMPARABLE SEARCH. IN THAT VIEW OF THE MATT ER, IT IS SUBMITTED THAT MINDTREE LTD. WOULD NOT BE COMPARABLE TO THE ASSESS EE. IN ADDITION, IT WAS SUBMITTED THAT THIS TRIBUNAL IN QUARK SYSTEMS V. DCIT, (2010) 38 SOT 307 (CHD) , HAS HELD THAT A TAXPAYER IS ENTITLED TO REJECT A COMPANY INCLUDED IN ITS TP DOCUMENTATION ON THE GROUND THAT IT WAS WRON GLY INCLUDED. IT(TP)A NO.1128/BANG/2011 PAGE 7 OF 14 13. FURTHER, IT WAS SUBMITTED THAT DUE TO INADVERT ENCE AND OVERSIGHT, THE ASSESSEE HAD NOT OBJECTED TO THE FOLLOWING EIGH T COMPANIES, WHICH WERE TAKEN AS COMPARABLES BY THE TPO:- (I) ACCEL TRANSMATICS LTD., (II) E-ZEST SOLUTIONS LTD., (III) HELIOS & MATHESON INFORMATION TECHNOLOGY LTD . (IV) PERSISTENT SYSTEMS LTD., (V) QUINTEGRA SOLUTIONS LTD. (VI) IGATE GLOBAL SOLUTIONS LTD. (VII) SASKEN COMMUNICATION TECHNOLOGY LTD. AND (VIII) THIRDWARE SOLUTIONS LTD. 14. OUT OF THE AFORESAID EIGHT COMPANIES, IT WAS SU BMITTED THAT FIVE COMPANIES, VIZ., (1) ACCEL TRANSMATICS LTD., (2) E- ZEST SOLUTIONS LTD., (3) HELIOS & MATHESON INFORMATION TECHNOLOGY LTD., (4) QUINTEGRA SOLUTIONS LTD., AND (5) THIRDWARE SOLUTIONS LTD., OUGHT TO ST AND REJECTED AS COMPARABLES AS THEY ARE FUNCTIONALLY DISSIMILAR TO THE ASSESSEE. FURTHER, TWO MORE COMPANIES, VIZ., IGATE GLOBAL SOLUTIONS LT D. AND SASKEN COMMUNICATION TECHNOLOGY LTD., OUGHT TO BE REJECTED AS COMPARABLES AS THEIR TURNOVERS FOR THE FINANCIAL YEAR 2006-07 EXCE ED RS. 200 CRORES. LASTLY, THE EIGHTH COMPANY, VIZ., PERSISTENT SYSTEMS LTD., OUGHT TO STAND REJECTED AS COMPARABLE AS IT IS BOTH FUNCTIONALLY DISSIMILAR TO THE ASSESSEE AND BECAUSE ITS TURNOVER FOR FY 2006-07 EXCEEDS RS. 200 CRORES. 15. IT WAS FURTHER SUBMITTED THAT THAT THE FUNCTIO NS, ASSETS AND RISKS OF ACCEL TRANSMATICS LTD., E-ZEST SOLUTIONS LTD., HELI OS & MATHESON INFORMATION TECHNOLOGY LTD., PERSISTENT SYSTEMS LTD ., QUINTEGRA SOLUTIONS IT(TP)A NO.1128/BANG/2011 PAGE 8 OF 14 LTD., AND THIRDWARE SOLUTIONS LTD. ARE SUBSTANTIALL Y DIFFERENT FROM THE ASSESSEES FUNCTIONS, ASSETS AND RISKS. IN THE CAS ES OF OTHER ASSESSEES WHO ARE SIMILAR TO THE ASSESSEE, THIS TRIBUNAL HAS HELD THAT THE AFORESAID COMPANIES ARE NOT FUNCTIONALLY COMPARABLE. 16. FURTHER, IGATE GLOBAL SOLUTIONS LTD., PERSISTE NT SYSTEMS LTD. AND SASKEN COMMUNICATION TECHNOLOGY LTD. OUGHT TO STAND REJECTED AS BEING COMPARABLES IN THE LIGHT OF THE AFORESAID DECISION OF THIS TRIBUNAL IN TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) AS THEIR TURNOVERS FOR THE FINANCIAL YEAR 2006- 07 ARE RS. 747.27 CRORES, RS. 293.75 CRORES AND RS. 343.57 CRORES RESPECTIVELY. THUS, SINCE THEIR TURNO VERS ARE IN EXCESS OF RS. 200 CRORES, THEY OUGHT TO BE EXCLUDED FROM THE LIST OF COMPARABLES BY THE APPLICATION OF THE TURNOVER FILTER OF RS. 200 CRORE S, AS IS CONSISTENTLY HELD BY THIS TRIBUNAL. 17. THE ADDITIONAL GROUNDS OF APPEAL SOUGHT TO BE RAISED READ AS FOLLOWS:- 4.5 THAT, ACCEL TRANSMATICS LTD., E-ZEST SOLUTION S LTD., HELLOS & MATHESON INFORMATION TECHNOLOGY LTD., QUIN TEGRA SOLUTIONS LTD., AND THIRDWARE SOLUTIONS LTD. OUGHT TO STAND REJECTED IN VIEW OF THEM BEING FUNCTIONALLY DISSIMI LAR TO THE APPELLANT. 4.6 THAT, IGATE GLOBAL SOLUTIONS LTD., MINDTREE LT D. AND SASKEN COMMUNICATION TECHNOLOGY LTD. OUGHT TO STAND REJECTED IN VIEW OF THEIR TURNOVERS BEING RS. 747.27 CRORES, RS. 590.35 CRORES AND RS. 343.57 CRORES, RESPECTIVELY, AND ARE THUS BEYOND THE UPPER LIMIT OF RS. 200 CRORES BY APPLYING THE T URNOVER FILTER, AS IS CONSISTENTLY BEING HELD BY THIS HONBLE TRIBU NAL. IT(TP)A NO.1128/BANG/2011 PAGE 9 OF 14 4.7 THAT, PERSISTENT SYSTEMS LTD. OUGHT TO STAND R EJECTED IN VIEW OF IT BEING FUNCTIONALLY DISSIMILAR TO THE APP ELLANT AND ALSO IN VIEW OF ITS TURNOVER BEING RS. 293.75 CRORES AND THUS BEYOND THE UPPER LIMIT OF RS. 200 CRORES BY APPLYING THE T URNOVER FILTER, AS IS CONSISTENTLY BEING HELD BY THIS HONBLE TRIBU NAL. 18. IT WAS SUBMITTED THAT THE CONSIDERATION OF THE ADDITIONAL GROUNDS WILL NOT REQUIRE EXAMINATION OF ANY ADDITIONAL EVIDENCE AND FOR THE FIRST TIME BEFORE THIS TRIBUNAL, THE ASSESSEE IS ENTITLED TO R AISE THE AFORESAID ADDITIONAL GROUNDS. THE OMISSION IN RAISING THE AD DITIONAL GROUNDS IS DUE TO A BONA FIDE MISTAKE AND NOT WITH ANY INTENTION TO P ROTRACT THE PROCEEDINGS. 19. THE LD. COUNSEL FOR THE ASSESSEE, SHRI T. SURYA NARAYAN, SUBMITTED BEFORE US THAT THE ASSESSEE SEEKS REJECTION OF 19 O UT OF 26 COMPARABLES SELECTED BY THE TPO FOR THE FOLLOWING REASONS:- (1) 9 COMPARABLES SELECTED BY THE TPO AT SL. NOS. 1, 2, 3, 5, 8, 12, 14, 19 & 25 ARE TO BE REJECTED AS FUNCTIONALLY DISS IMILAR IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF NXP SEMICONDUCTORS INDIA P. LTD. V. ACIT, ITA NO.1174/BANG/2011 (PARAS 18 TO 20 AND 26 TO 28 OF THE ORDER). (2) ONE COMPARABLE AT SL.NO.7 VIZ., GEOMETRIC LTD. IS TO BE REJECTED AS ITS RPT EXCEEDS 15% IN VIEW OF THE DECISION OF T HIS TRIBUNAL IN 24/7 CUSTOMER.COM PVT. LTD. IN ITA NO.227/BANG/2010 AT PARA 13 OF THE ORDER. IT(TP)A NO.1128/BANG/2011 PAGE 10 OF 14 (3) 4 COMPANIES AT SL. NOS.6, 9, 17 AND 22 ARE TO B E REJECTED, APPLYING THE UPPER LIMIT OF RS.200 CRORES TO THE TURNOVER IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. IN ITA NO.1054/BANG/2011 (PARAS 11 TO 20 OF THE ORDER) . (4) 4 COMPANIES AT SI. NO. 10, 18, 24 AND 26 MAY B E REJECTED AS FUNCTIONALLY DISSIMILAR IN VIEW OF THE DECISION OF THIS TRIBUNAL IN THE CASE OF NXP SEMICONDUCTORS LNDIA P. LTD V ACIT IN ITA NO. 1174/BANG/201I (PARAS 24 TO 26 AND 27 AT PAGES 24 TO 28 AND 33 OF THE ORDER) AS ALSO APPLYING THE UPPER LIMIT OF R S.200 CRORES TO THE TURNOVER IN VIEW OF THE DECISION OF THIS TRIBUN AL IN THE CASE OF TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD.(SUPRA) . (5) 1 MORE COMPANY AT SI. NO. 11 MAY BE REJECTED A S FAILING THE TPOS OWN FILTER OF 25% EMPLOYEE COST AS HELD IN (SUPRA) IN PARAS 20-21 AT PAGES 20-21 OF THE ORDER); AS ALSO IN VIEW OF IT S RPT EXCEEDING 15% OF SALES IN VIEW OF THE DECISION OF THIS TRIBUN AL IN THE CASE OF (SUPRA) . 20. IT WAS THE SUBMISSION OF THE LD. COUNSEL FOR TH E ASSESSEE THAT IF THE 19 COMPANIES OUT OF THE 26 COMPARABLES SELECTED BY THE TPO ARE REJECTED, THE ARITHMETIC MEAN OF REMAINING 7 COMPARABLES WOUL D BE 9.86%. HE SUBMITTED THAT THE 7 COMPARABLES SELECTED BY THE AS SESSEE FROM THE COMPARABLES GIVEN BY THE TPO ARE AS FOLLOWS:- IT(TP)A NO.1128/BANG/2011 PAGE 11 OF 14 21. FURTHER, THE NET MARGIN OF THE ASSESSEE IS 12.6 3% AND THE ARITHMETIC MEAN OF MARGINS OF THE COMPARABLES IS 9.86%. + 5% OF THE ARITHMETIC MEAN COMES TO 15.35% AND 5% OF THE ARITHMETIC MEA N COMES TO 4.36%. HENCE, THE NCP MARGIN OF THE ASSESSEE WOULD BE WITH IN + / 5% OF THE ARITHMETIC MEAN AND THUS THE TP ADJUSTMENT MADE BY THE TPO HAS TO BE SET ASIDE. 22. FURTHER, THE LD. DR, SHRI FARAHAT HUSSAIN QURES HI, OBJECTED TO THE SUBMISSION OF THE LD. COUNSEL. THE LD. DR POINTED OUT THAT IT MIGHT BE THE CONTENTION OF THE ASSESSEE THAT DUE TO INADVERTENCE , THERE WAS NO OBJECTION BEFORE THE TPO TO THE 8 COMPANIES WHICH W ERE TAKEN AS COMPARABLES BY THE TPO, HOWEVER, THE FACT REMAINS T HAT DECIDING THE ISSUE WILL BE WITHOUT THE INPUT FROM THE TPO WITH RESPECT TO 7 COMPARABLES AS MENTIONED AT PARA 13 HEREINABOVE AND ALSO WITH RESP ECT TO ONE MORE COMPARABLE BEING MINDTREE CONSULTING LTD. THE LD. DR ARGUED THAT THE MATTER SHOULD BE SENT BACK TO THE TPO, WHO SHALL GO THROUGH THE EXERCISE IT(TP)A NO.1128/BANG/2011 PAGE 12 OF 14 OF TP STUDY WITH RESPECT TO 7 COMPARABLE AND MINDTR EE CONSULTING LTD. ALSO. 23. WE FIND THAT THE HONBLE SPECIAL BENCH OF CHAND IGARH TRIBUNAL IN DCIT V. QUARK SYSTEMS P. LTD. (2010) 38 SOT 307 HAS HELD THAT THE TRIBUNAL IS A FACT FINDING BODY AND THEREFORE HAS T O TAKE INTO ACCOUNT ALL THE RELEVANT MATERIAL AND DETERMINE THE QUESTION AS PER THE STATUTORY REGULATIONS AND THAT TAX PAYER IS NOT ESTOPPED FROM POINTING OUT A MISTAKE IN THE ASSESSMENT, THOUGH SUCH MISTAKE IS A RESULT OF EVIDENCE ADDUCED BY THE TAX PAYER. IN SHORT, IT IS WELL SETTLED THAT A SSESSEE IS ENTITLED TO RAISE AN OBJECTION REGARDING COMPARABILITY AT ANY STAGE OF P ROCEEDINGS AND EVEN IN A CASE WHERE THE ASSESSEE HAS NOT RAISED OBJECTION FOR INCLUDING THE SAME AS A COMPARABLE BEFORE THE LOWER AUTHORITIES, OR TH E ASSESSEE HAD CHOSEN IN ITS TP STUDY A COMPANY WHICH IT SEEKS TO EXCLUDE AS A COMPARABLE. HOWEVER, AN OPPORTUNITY HAS TO BE GIVEN TO THE TPO TO EXAMINE THE COMPARABLES UNDER TP STUDY IN SUCH A CASE WHERE THE ASSESSEE RAISES AN OBJECTION WITH RESPECT TO COMPARABILITY IN THE APPE LLATE STAGE. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO/TPO TO EXAMINE THE COMPARABLES BEING 8 IN NUMBER, AFTER AFFORDING OPPO RTUNITY TO THE ASSESSEE. RECOMPUTATION OF DEDUCTION U/S. 10A 24. THE AO PROCEEDED TO RECOMPUTE THE DEDUCTION U/S . 10A OF THE ACT BY REDUCING INTERNET EXPENSE OF RS.20,07,285 AND FO REIGN TRAVEL EXPENSES IT(TP)A NO.1128/BANG/2011 PAGE 13 OF 14 OF RS.6,60,418 FROM THE EXPORT TURNOVER, BUT NOT FR OM THE TOTAL TURNOVER AND THEREBY DISALLOWED 10A DEDUCTION TO THE EXTENT OF R S.4,34,085. 25. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF THE AMOUNT IS REDUCED FROM THE EXPORT TURNOVER, IT SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER AND RELIED UPON THE DECISION OF THE HONBL E HIGH COURT OF KARNATAKA IN CIT V. TATA ELXSI LTD., 349 ITR 98 (KARN). SINCE IT IS SETTLED LAW THAT IF THE AMOUNT IS REDUCED FROM THE EXPORT T URNOVER, THE SAME SHOULD ALSO BE REDUCED FROM THE TOTAL TURNOVER, RESPECTFUL LY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DIRECT THE AO TO DECIDE THE ISSUE IN LIGHT OF THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF TATA ELXSI LTD. (SUPRA) . 26. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 11 TH SEPTEMBER, 2015. /D S/ IT(TP)A NO.1128/BANG/2011 PAGE 14 OF 14 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.