ACIT 2(3), MUMBAI V. TECH MAHINDRA ( R & D SERVICES ) LTD ( NOW MERGED WITH TECH MAHINDRA LTD), MUMBAI

ITA 4568/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2263 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-05-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Question of law
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 THE ACIT - 2(3), ROOM NO. 556, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI- 400 020. VS. M/S. TECH MAHINDRA (R&D SERVICES) LTD. (NOW MERGED WITH TECH MAHINDRA LTD), GATEWAY BUILDING, APPOLLO BUNDER, MUMBAI- 400 001. PAN:- AAACM3484F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. NITIN WAGHMODE RESPONDENT BY : NONE DATE OF HEARING: 17/10 /2016 DATE OF PRONOUNCEMENT: 26/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAI NST ORDER DATED 28/03/2013 PASSED BY THE CIT(APPEALS)-III, BANGALORE, FOR THE ASST. YEAR 2004-05, WHEREBY THE LD. CIT(A) PARTLY ALLOWED THE APPEAL FILED BY T HE ASSESSEE AGAINST ORDER DATED 30/11/2011 PASSED BY THE ASSESSING OFFICER U/ S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AS PER THE REVISED AUTHORIZATION MEMO, THE REV ENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 2 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE ON FREIGHT, TELECOMMUN ICATION AND INSURANCE RELATING TO DELIVERY OF COMPUTER SOFTWARE OUTSIDE I NDIA SHOULD BE REDUCED FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 10A. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD.CIT(A) ERRED IN HOLDING THAT THE EXPENDITURE ON TRAVEL ATT RIBUTED TO PROVIDING TECHNICAL SERVICES OUTSIDE INDIA SHOULD BE REDUCED FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 10A. 3. THIS CASE WAS FIXED FOR HEARING FOR TODAY, HOWEV ER, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED WHEN THE CASE WAS CALLED FOR HEARING. EVEN THE REGISTRY DID NOT RECEIVE ANY REQU EST FOR ADJOURNMENT. FROM THE PERUSAL OF THE RECORD WE ARE SATISFIED THAT THE APPELLANT/ ASSESSEE HAS NOT APPEARED DESPITE THE KNOWLEDGE THAT THE CASE HAS BE EN FIXED FOR 17/10/2016 FOR HEARING. IT IS CLEARLY MENTIONED IN THE ORDER S HEET DATED 16/6/2016 THAT BOTH THE PARTIES WERE INFORMED ABOUT THE NEXT DATE OF HEARING. ACCORDINGLY, WE DECIDE TO PROCEED WITH THE CASE AND DISPOSE OF THE APPEAL ON MERIT AFTER HEARING THE RE VENUE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY ENGAGED IN THE BUSINESS OF DEVELOPMENT AND EXPORT OF COMPUTER SOFT WARE FILED ITS RETURN OF INCOME FOR THE A.Y. 2004-05 DECLARING THE TOTAL INC OME OF RS. 54,25,520/-, AFTER CLAIMING DEDUCTION OF RS. 15,96,13,810/- U/S 10A OF THE ACT. ACCORDINGLY, ASSESSMENT ORDER U/S 143(3) WAS PASSED . LATER ON THE CASE WAS REOPENED U/S 147 AND INCOME OF ASSESSEE WAS DETERMI NED AT RS. 2,20,67,520/- BY RE-COMPUTING THE DEDUCTION U/S 10A, EXCLUDING TH E EXPENSES INCURRED ON FREIGHT, TELECOMMUNICATION, INSURANCE ETC. FROM THE EXPORT TURNOVER. THE 3 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 ASSESSMENT ORDER WAS CHALLENGED BY THE A.O BEFORE T HE CIT(A) AND LD. CIT(A) FOLLOWING THE DECISION OF HONBLE HIGH COURT OF KAR NATAKA IN THE CASE OF CIT VS. TATA ELXSI LTD. (349 ITR 98) PARTLY ALLOWED THE APP EAL OF THE ASSESSEE AND DIRECTED THE A.O TO REDUCE THE EXPENDITURE INCURRED ON FOREIGN CURRENCY FORM BOTH EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PUR POSE OF COMPUTATION OF DEDUCTION U/S 10A OF THE ACT. 5. AGGRIEVED BY THE IMPUGNED ORDER THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. BEFORE US THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) RELYING ON THE FINDINGS OF THE A.O SUBMITTED THAT THE LD. CIT HAS ERRED IN HOLDING THAT THE EXPENDITURE ON FREIGHT, TELECOMMUNICATION AND INSUR ANCE RELATING TO DELIVERY OF COMPUTER SOFTWARE OUTSIDE INDIA SHOULD BE REDUCED F ROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 10A AND FURTHER THE LD. CIT (A) ERRED IN HOLDING THAT THE EXPENDITURE ON TRAVEL ATTRIBUTED TO PROVIDING T ECHNICAL SERVICES OUTSIDE INDIA SHOULD BE REDUCED FROM THE TOTAL TURNOVER FOR COMPUTING DEDUCTION U/S 10A. 6. WE HAVE HEARD THE LD. DR AND ALSO PERUSED THE M ATERIAL PLACED ON RECORD. WE NOTICE THAT THE LD. CIT(A) HAS DECIDED T HE ISSUE IN QUESTION FOLLOWING THE DECISION OF HON,BLE HIGH COURT OF KAR NATAKA PASSED IN COMMISSIONER OF INCOME TAX VS TATA ELXSI LTD AND OT HERS ( 349 ITR 98), HOLDING AS UNDER:- 7.0 HOWEVER, I ALSO HAVE TO NOTE IN THIS CONNECTIO N THAT THE KARNATAKA HIGH COURT HAS CONFIRMED THE ITATS VIEWS IN THE CASE OF TATA ELXSI LTD., IN ITA NO. 70/2009 DATED 30/08/201 1 BY OBSERVING AS UNDER: THE BOMBAY HIGH COURT HAD AN OCCASION TO CONSIDER T HE MEANING OF THE WORD TOTAL TURNOVER IN THE CONTEXT OF SECTIO N 10A, IN THE CASE OF 4 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 COMMISSIONER OF INCOME TAX VS. GEM PLUS JEWELLERY I NDIA LTD. [2011 330 ITR P. 175(BOM)] = (2010-TIOL-456-HC-MUM- IT). INTERPRETING SUBSECTION(4) OF SECTION 10A, IT IS HE LD AS UNDER: UNDER SUB-SECTION(4) THE PROPORTION BETWEEN THE EX PORT TURNOVER IN RESPECT OF THE ARTICLES OR THINGS, OR AS THE CASE M AY BE COMPUTER SOFTWARE EXPORTED, TO THE TOTAL TURNOVER OF THE BU SINESS CARRIED OVER BY THE UNDER-TAKING IS APPLIED TO THE PROFITS OF TH E BUSINESS OF THE UNDERTAKING IN COMPUTING THE PROFITS OF THE BUSINES S OF THE UNDERTAKING IN COMPUTING THE PROFITS DERIVED FROM E XPORT. IN OTHER WORDS THE PROFITS OF THE BUSINESS OF THE UNDERTAKIN G ARE MULTIPLIED BY THE EXPORT TURNOVER IN RESPECT OF THE ARTICLES, THINGS OR, AS THE CASE MAY BE, COMPUTER SOFTWARE AND DIVIDED BY THE T OTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. THE FOR MULA WHICH IS PRESCRIBED BY SUB-SECTION (4) OF SECTION 10A IS AS FOLLOWS: PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE PROFITS OF THE BUSINESS OF THE UNDERTAKING EXPORT TURNOVER IN RESPECT OF THE ARTICLES OR THINGS OR COMPUTER SOFTWARE TOTAL TURNOVER OF THE BUS INESS CARRIED ON BY THE UNDERTA KING 5 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY TH E UNDERTAKING WOULD CONSIST OF THE TURNOVER FROM EXPORT AND THE T URNOVER FROM LOCAL SALES. THE EXPORT TURNOVER CONSTITUTES THE NUMERATO R IN THE FORMULA PRESCRIBED BY SUB-SECTION(4). EXPORT TURNOVER ALSO FORMS A CONSTITUENT ELEMENT OF THE DENOMINATOR INASMUCH AS THE EXPORT TURNOVER IS A PART OF THE TOTAL TURNOVER. THE EXPORT TURNOVER, IN THE NUMERATOR MUST HAVE THE SAME MEANING AS THE EXPORT TURNOVER WHICH IS A CONSTITUENT ELEME NT OF THE TOTAL TURNOVER IN THE DENOMINATOR. THE LEGISLATURE HAS PR OVIDED A DEFINITION OF THE EXPRESSION 'EXPORT TURNOVER' IN E XPLANATION 2 TO SECTION 10A BY WHICH THE EXPRESSION IS DEFINED TO M EAN THE CONSIDERATION IN RESPECT OF EXPORT BY THE UNDERTAKI NG OF ARTICLES, THINGS OR COMPUTER SOFTWARE RECEIVED IN OR BROUGHT INTO INDIA BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE BUT SO AS NOT TO INCLUDE INTER ALIA FREIGHT, TELECOMMUNICATION CHARGES OR IN SURANCE ATTRIBUTABLE TO THE DELIVERY OF THE ARTICLES THINGS OR SOFTWARE OUTSIDE INDIA. THEREFORE IN COMPUTING THE EXPORT TURNOVER T HE LEGISLATURE HAS MADE A SPECIFIC EXCLUSION OF FREIGHT AND INSURANCE CHARGES. THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE RE VENUE IS THAT WHILE FREIGHT AND INSURANCE CHARGES ARE LIABLE TO H E EXCLUDED IN COMPUTING EXPORT TURNOVER A SIMILAR EXCLUSION HAS N OT BEEN PROVIDED IN REGARD TO TOTAL TURNOVER. THE SUBMISSION OF THE REVENUE, HOWEVER, MISSES THE POINT THAT THE EXPRESSION 'TOTAL TURNOVE R' HAS NOT BEEN DEFINED AT ALL BY PARLIAMENT FOR THE PURPOSES OF SE CTION 10A. HOWEVER, THE EXPRESSION 'EXPORT TURNOVER' HAS BEEN DEFINED. THE DEFINITION OF 'EXPORT TURNOVER' EXCLUDES FREIGHT AN D INSURANCE. SINCE EXPORT TURNOVER HAS BEEN DEFINED BY PARLIAMENT AND THERE IS A SPECIFIC EXCLUSION OF FREIGHT AND INSURANCE, THE EX PRESSION 'EXPORT 6 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 TURNOVER' CANNOT HAVE A DIFFERENT MEANING WHEN IT F ORMS A CONSTITUENT PART OF THE TOTAL TURNOVER FOR THE PURP OSES OF THE APPLICATION OF THE FORMULA. UNDOUBTEDLY, IT WAS OPE N TO PARLIAMENT TO MAKE A PROVISION TO THE CONTRARY. HOWEVER, NO SUCH PROVISIONS HAVING BEEN MADE, THE PRINCIPLE WHICH HAS BEEN ENUN CIATED EARLIER MUST PREVAIL AS A MATTER OR CORRECT STATUTORY INTER PRETATION. ANY OTHER INTERPRETATION WOULD LEAD TO AN ABSURDITY. IF THE CONTENTION OF THE REVENUE WERE TO HE ACCEPTED, THE SAME EXPRESSIO N VIZ: 'EXPORT TURNOVER' WOULD HAVE A DIFFERENT CONNOTATION IN THE APPLICATION OF THE SAME FORMULA. THE SUBMISSION OF THE REVENUE WOULD L EAD TO A SITUATION WHERE FREIGHT AND INSURANCE, THOUGH IT HA S BEEN SPECIFICALLY EXCLUDED FROM 'EXPORT TURNOVER' FOR TH E PURPOSES OF THE NUMERATOR WOULD BE BROUGHT IN AS PART OF THE 'EXPOR T TURNOVER' WHEN IT FORMS AN ELEMENT OF THE TOTAL TURNOVER AS A DENO MINATOR IN THE FORMULA. A CONSTRUCTION OF A STATUTORY PROVISION WH ICH WOULD LEAD TO AN ABSURDITY MUST BE AVOIDED. THE SPECIAL BENCH OF THE TRIBUNAL, IN THE CASE OF I NCOME TAX OFFICER VS. SAK SOFT LTD [(2009) 313 ITR (AT) 353 (CHENNAI) (SB)] = (2009- TIOL-187-ITAT-MAD-SB) ALSO HAD AN OCCASION TO CONSI DER THE MEANING OF THE WORD 'TOTAL TURNOVER'. AFTER REFERRI NG TO THE VARIOUS JUDGMENTS OF THE HIGH COURT AS WELL AS THE SUPREME COURT HELD AS UNDER: '53. FOR THE ABOVE REASONS, WE HOLD THAT FOR THE PU RPOSE OF APPLYING THE FORMULA UNDER SUB-SECTION (4) OF SECTION 10-B, THE FREIGHT, TELECOM CHARGES OR INSURANCE ATTRIBUTABLE TO THE DELIVERY O F ARTICLES OR THINGS COMPUTER SOFTWARE OUTSIDE INDIA OR THE EXPENSES, IF ANY, INCURRED IN FOREIGN EXCHANGE IN PROVIDING THE TECHNICAL SERVICE S OUTSIDE INDIA 7 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 ARE TO BE EXCLUDED, BOTH FROM THE EXPERT TURNOVER A ND FROM THE TOTAL TURNOVER, WHICH ARE THE NUMERATOR AND THE DENOMINAT OR RESPECTIVELY IN THE FORMULA. ' THE FORMULA FOR COMPUTATION OF THE DEDUCTION UNDER SECTION 10-A WOULD BE AS UNDER: PROFITS OF THE BUSINESS X EXPORT TURNOVER TOTAL TURNOVER FROM THE AFORESAID JUDGMENTS, WHAT EMERGES IS THAT, THERE SHOULD BE UNIFORMITY IN THE INGREDIENTS OF BOTH THE NUMERA TOR AND THE DENOMINATOR OF THE FORMULA, SINCE OTHERWISE IT WOUL D PRODUCE ANOMALIES OR ABSURD RESULTS. SECTION 10-A IS A BENE FICIAL SECTION. IT IS INTENDED TO PROVIDE INCENTIVES TO PROMOTE EXPORTS. THE INCENTIVE IS TO EXEMPT PROFITS RELATABLE TO EXPORTS. IN THE CASE OF COMBINED BUSINESS OF AN ASSESSEE, HAVING EXPORT BUSINESS AND DOMESTIC BUSINESS, THE LEGISLATURE INTENDED TO HAVE A FORMULA TO ASCERTAIN THE PROFITS FROM EXPORT BUSINESS BY APPORTIONING THE TOTAL PROFITS O F THE BUSINESS ON THE BASIS OF TURNOVERS. APPORTIONMENT OF PROFITS ON THE BASIS OF TURNOVER WAS ACCEPTED AS A METHOD OF ARRIVING AT EX PORT PROFITS. IN THE CASE OF SECTION 80HHC, THE EXPORT PROFIT IS TO BE DERIVED FROM THE TOTAL BUSINESS INCOME OF THE ASSESSEE, WHEREAS IN S ECTION 10-A, THE EXPORT PROFIT IS TO BE DERIVED FROM THE TOTAL BUSIN ESS OF THE UNDERTAKING. EVEN IN THE CASE OF BUSINESS OF AN UND ERTAKING, IT MAY INCLUDE EXPORT BUSINESS AND DOMESTIC TURNOVER. THE EXPORT TURNOVER WOULD BE A COMPONENT OR PART OF A DENOMINATOR, THE OTHER COMPONENT BEING THE DOMESTIC TURNOVER. IN OTHER WORDS, TO TH E EXTENT OF EXPORT 8 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 TURNOVER, THERE WOULD BE A COMMONALITY BETWEEN THE NUMERATOR AND THE DENOMINATOR OF THE FORMULA. IN VIEW OF THE COMM ONALITY, THE UNDERSTANDING SHOULD ALSO BE THE SAME. IN OTHER WOR DS, IF THE EXPORT TURNOVER IN THE NUMERATOR IS TO BE ARRIVED AT AFTER EXCLUDING CERTAIN EXPENSES, THE SAME SHOULD ALSO BE EXCLUDED IN COMPU TING THE EXPORT TURNOVER AS A COMPONENT OF TOTAL TURNOVER IN THE DE NOMINATOR. THE REASON BEING THE TOTAL TURNOVER INCLUDES EXPORT TUR NOVER. 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 EXCLUD ED FROM THE NUMERATOR THAT IS EXPORT TURNOVER WOULD NEVERTHELES S FORM PART OF THE DENOMINATOR. THOUGH WHEN A PARTICULAR WORD IS N OT DEFINED BY THE LEGISLATURE AND AN ORDINARY MEANING IS TO BE AT TRIBUTED 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 US ED. WHEN THE STATUTE PRESCRIBES A FORMULA AND IN THE SAID FORMUL A, '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 TH E MEANING OF THE TOTAL TURNOVER, WHEN THE TOTAL TURNOVER INCLUDES EX PORT TURNOVER. IF WHAT IS EXCLUDED IN COMPUTING THE EXPORT TURNOVER I S INCLUDED WHILE ARRIVING AT THE TOTAL 'TURNOVER, WHEN THE EXPORT TU RNOVER 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 EXPRE SSLY STATED SO. IF THEY HAVE NOT CHOSEN TO EXPRESSLY DEFINE WHAT THE T OTAL TURNOVER MEANS, THEN, WHEN THE TOTAL TURNOVER INCLUDES EXPOR T TURNOVER, THE MEANING ASSIGNED BY THE LEGISLATURE TO THE EXPORT T URNOVER IS TO BE 9 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 RESPECTED AND GIVEN EFFECT TO, WHILE INTERPRETING T HE TOTAL TURNOVER WHICH IS INCLUSIVE OF THE EXPORT TURNOVER. THEREFOR E THE FORMULA FOR COMPUTATION OF THE DEDUCTION UNDER SECTION 10-A, WO ULD BE AS UNDER: PROFITS OF THE BUSINESS OF THE UNDERTAKING X EXPORT TURNOVER (EXPORT TURN OVER +DOMESTIC TU RNOVER) T OTAL TURN OVER 11. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY E RROR COMMITTED BY THE TRIBUNAL IN FOLLOWING THE JUDGMENTS RENDERED IN THE CONTEXT OF SECTION 80HHC IN INTERPRETING SECTION 10-A WHEN THE PRINCIPLE UNDERLYING BOTH THESE PROVISIONS IS ONE AND THE SAM E. THEREFORE, WE DO NOT SEE ANY MERIT IN THESE APPEALS. THE SUBSTANT IAL QUESTION OF LAW FRAMED IS ANSWERED IN FAVOUR OF THE ASSESSEE AN D AGAINST THE REVENUE. 12. THE OTHER SUBSTANTIAL QUESTION OF LAW RAISED FO R CONSIDERATION IN ITA NOS. 1099 OF 2008, 12, 125, 190, 484, 740, 743, 820, 822 AND 823 OF 2009 IS AS UNDER : WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT U NABSORBED DEPRECIATION, AND BROUGHT FORWARD LOSSES SHOULD BE ADJUSTED AND ONLY THEREAFTER DEDUCTION UNDER SECTION 10-A OF THE ACT SHOULD BE ALLOWED? THIS QUESTION IS ALSO ANSWERED BY THIS COURT IN ITA NO. 78/2011 DECIDED ON 9 TH AUGUST 2011. ACCORDINGLY THAT ISSUE IS ALSO ANSWER ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 7.1. RESPECTFULLY FOLLOWING THE ABOVE MENTIONED DEC ISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TA TA ELXSI LTD 349 ITR 98, WHICH HAS SETTLED THE LAW ON THE ISSUE, I DIREC T THE AO TO REDUCE THE EXPENDITURE INCURRED ON FOREIGN CURRENCY FROM B OTH EXPORT TURNOVER AND TOTAL TURNOVER FOR THE PURPOSE OF COMP UTATION OF DEDUCTION UNDER SECTION 10 OF THE ACT. THEREFORE TH E GROUND RAISED BY THE APPELLANT IS ALLOWED. 7. SINCE THE LD. CIT(A) HAS DECIDED THE ISSUE IN Q UESTION IN FAVOUR OF THE ASSESSEE IN ACCORDANCE WITH THE LAW LAID DOWN BY TH E HONBLE KARNATAKA HIGH COURT, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER P ASSED BY THE LD. CIT(A). WE, THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT(A) AN D DISMISSED THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 8. IN THE RESULT APPEAL FILED BY THE REVENUE FOR A.Y. 2004-05 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016 SD/- SD/- ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 26/10/2016 11 ITA NO 4568/MUM/2013 ASSESSMENT YEAR: 2004-05 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA