M/s. Sasken Technologies Limited, Bangalore V. Deputy Commissioner of Income Tax, Circle 6(1)(1), Bangalore

ITA 147/BANG/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7086 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Revision of order; Question of law; Set aside
• Section: 263; 143(3); 14A; 144C

Judgement Text

ITA No.147/Bang/2021 M/s. Sasken Technolgies Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA No.147/Bang/2021 Assessment Year: 2010-11 M/s. Sasken Technologies Ltd. No.139/25, Ring Road, Domlur Bangalore 560 071 PAN NO : AAECS6424R Vs. Deputy Commissioner of Income-tax Circle 6(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Shri Padamchand Khincha, A.R. Respondent by : Shri Pradeep Kumar, D.R. Date of Hearing : 02.12.2021 Date of Pronouncement : 03.12.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 13.11.2017 passed by Ld Principal CIT-1, Bengaluru u/s 263 of the Income-tax Act,1961 ['the Act' for short] for assessment year 2010- 11. The assessee is challenging the validity of the revision order so passed by Ld Principal CIT (PCIT). 2. The Ld PCIT noticed that the assessment order passed by the AO originally u/s 143(3) r.w.s 144C of the Act for the year under consideration was challenged by filing appeal before the ITAT. The ITAT restored certain issues to the file of the AO with the direction to examine them afresh. Accordingly, the AO was required to pass a ITA No.147/Bang/2021 M/s. Sasken Technolgies Ltd., Bangalore Page 2 of 5 fresh assessment order u/s 143(3) r.w.s 254 of the Act. However, the AO had passed an “Order Giving Effect” (OGE) on 13.11.2017 allowing full relief to the assessee on the following issues, which were actually restored by the Tribunal for fresh examination:- (a) Disallowance u/s 14A of the Act (b) Whether Royalty income is eligible for computing deduction u/s 10A/10AA of the Act. (c) Whether foreign currency expenses should be reduced from export turnover for computing deduction u/s 10A/10AA. The Ld PCIT took the view that allowing relief to the assessee in the OGE without conducting fresh examination as directed by AO and without passing fresh assessment order has rendered the OGE erroneous and prejudicial to the interests of revenue. Accordingly, the Ld PCIT initiated revision proceedings u/s 263 of the Act. After hearing the assessee, the Ld PCIT held that the OGE dated 13.11.2017 is erroneous and prejudicial to the interests of revenue. Accordingly, he set aside the OGE and directed the AO to pass a fresh assessment order in accordance with section 254 r.w.s 143(3) of the Act. 3. The assessee has filed this appeal challenging the revision order passed by Ld PCIT. 4. The Ld A.R submitted that the issue no.(b) and (c) mentioned in the revision order of Ld Pr. CIT has since been settled by Hon’ble High Court of Karnataka. He submitted that the revenue had filed appeal before Hon’ble High Court of Karnataka challenging the order passed by the Tribunal, even though the issues relating to computation of deduction u/s 10A/10AA were restored to the file of the AO by the Tribunal. Following questions of law were raised before the High Court:- ITA No.147/Bang/2021 M/s. Sasken Technolgies Ltd., Bangalore Page 3 of 5 “Substantial question of Laws 1. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law giving relief to assessee in respect of computation of deduction under section 10A by relying upon the decision of this Hon’ble Court in case of CIT V/s Tata Elxsi when said judgement has been challenged before Apex Court”? 2. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside the addition of Rs.16,43,07,085/- treated as royalty income by the assessee while computing the deduction under section 10A/10AA by following the decisions in the case of Wipro Ltd., and Motorola India Electronics Pvt. Ltd. even when the assessing authority rightly held that the same is not derived by the export business of the industrial undertakings and ingredients of sections 10A/10AA are not satisfied to claim such deduction”? 3. “Whether on the facts and in the circumstances of the case, the Tribunal is right in law in aside the re-computation of reduction in respect of 10A/10AA claim of the assessee with respect to telecommunication charges, insurance charges and foreign currency expenses by following the decisions of this Hon’ble High Court in the case of Emphasis Ltd., Motor Industries Company Limited and Kshema Technologies Limited even though the said decisions have not reached finality and assessing authority had rightly recomputed the deduction in accordance with the provisions of the Act”? The Ld A.R submitted that Hon’ble High Court has since passed the order on 05 th November, 2018 in ITA No.264 of 2017, wherein it has decided all the questions of law in favour of the assessee. Accordingly he submitted that the issue no.(b) and (c) (mentioned supra) pointed out by Ld PCIT shall become infructuous. 5. The Ld D.R, on the contrary, supported the order of Ld PCIT. 6. We heard rival contentions and perused the record. We notice that the Tribunal, vide its order dated21.10.2016 passed in IT(TP)A No.397/Bang/2015, has restored following three issues to the file of AO for examining them afresh:- (a) Disallowance u/s 14A of the Act (b) Whether Royalty income is eligible for computing deduction u/s 10A/10AA of the Act. ITA No.147/Bang/2021 M/s. Sasken Technolgies Ltd., Bangalore Page 4 of 5 (c) Whether foreign currency expenses should be reduced from export turnover for computing deduction u/s 10A/10AA. However, as observed by the Ld PCIT, the AO has failed to pass a fresh assessment order u/s 143(3) r.w.s. 254 of the Act. Instead, the AO has passed an OGE and granted relief to the assessee in respect of all the three issues mentioned above without examining them at all. Thus, granting to relief to the assessee without examining the issues as directed by ITAT and also failure to pass a fresh assessment order u/s 143(3) r.w.s 254 of the Act would definitely render the OGE erroneous and prejudicial to the interests of revenue. Hence we do not find any infirmity in the impugned revision order passed by Ld PCIT. 7. However, we make it clear that while giving effect to the revision order passed u/s 263 of the Act by PCIT, the AO is duty bound to follow the binding decision rendered by the Hon’ble jurisdictional Karnataka High Court for AY 2010-11. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 3 rd Dec, 2021 Sd/- (Beena Pillai) Judicial Member Sd/- (B.R. Baskaran) Accountant Member Bangalore, Dated 3 rd Dec, 2021. VG/SPS ITA No.147/Bang/2021 M/s. Sasken Technolgies Ltd., Bangalore Page 5 of 5 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.