M/s Teleradiology Solutions Pvt Ltd V. Dy. Commr. Of Income Tax \\u2013 Circle 12(4) and Commissioner of Income Tax VII and Commr. Of Income Tax (Appeals) - 7 and Joint Commr. Of Income Tax (OSD) Circle 12(4) and Asst. Commr. Of Income Tax, Circle 12(4)

WP/26370/2015

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The case involves M/s Teleradiology Solutions Pvt Ltd, which challenged the interlocutory order passed by the Commissioner of Income Tax (Appeals) that rejected their stay application regarding a demand raised by the Assessing Authority. The demand was related to the denial of deduction of income under Section 10A of the Income Tax Act, 1961, concerning income from exporting medical transcriptions of diagnostic images. The assessee argued that the Commissioner of Income Tax (Appeals) had not decided their appeals for over a year, and sought a directive for a speedy resolution. The Revenue contended that the assessee should comply with the conditions of the CBDT's recent instructions, which included paying 15% of the disputed demand.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 671367 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-04-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN J NEERALGI
• Assessee Lawyers: M V SESHACHALA; ARAVIND V CHAVAN
• Keywords: Deduction Denial; Export of Services; Income Tax; Medical transcription; Stay Application
• Section: 10A

Judgement Text

" IN THE HIGH COURT OF KARNATAKA AT BENGALURU Dated this the 18th day of April, 2016 Before THE HON’BLE DR JUSTICE VINEET KOTHARI Writ Petitions 26370 c/w 26371 c/w 26369 c/w 26368 / 2015 (T) Between M/s Teleradiology Solutions Pvt Ltd # 7G1m Vishveshwaraiah Industrial Area ITPL Road, Opp: Graphite India Bangalore 48 - by its Managing Director Common Dr Arjun Kalyanpur Petitioner (By Sri M V Seshachala, Sr. Counsel For Sri Aravind V Chavan, Adv.) And In WP 26370/2015 1 Dy. Commr. Of Income Tax – Circle 12(4) # 14/3, 4th Floor, Rashtrothana Bhavan Nrupathunga Road, Bengaluru 2 Commissioner of Income Tax VII C R Building, Queens Road Bengaluru 3 Commr. Of Income Tax (Appeals) - 7 C R Building, Queens Road Bengaluru Respondents 2 In WP 26371/2015 & 26369/2015 1 Joint Commr. Of Income Tax (OSD) Circle 12(4), # 14/3, 4th Floor Rashtrothana Bhavan Nrupathunga Road, Bengaluru 2 Commissioner of Income Tax VII C R Building, Queens Road Bengaluru 3 Commr. Of Income Tax (Appeals) - 7 C R Building, Queens Road Bengaluru 4 Asst. Commr. Of Income Tax, Circle 12(4) # 14/3, 4th Floor, Rashtrothana Bhavan Nrupathunga Road, Bengaluru Respondents In WP 26368/15 1 Joint Commr. Of Income Tax (OSD) Circle 12(4), # 14/3, 4th Floor Rashtrothana Bhavan Nrupathunga Road, Bengaluru 2 Commissioner of Income Tax VII C R Building, Queens Road Bengaluru 3 Commr. Of Income Tax (Appeals) - 7 C R Building, Queens Road Bengaluru Respondents (By Sri Jeevan J Neeralgi, CGSC) Petitions are filed under Art.226 / 227 of the Constitution of India praying to quash the order dated 10.6.2015 – annexure E passed by 3rd respondent in all these cases, etc. 3 The Petitions coming on for Preliminary hearing this day, Court made the following: ORDER In these four cases the challenge is laid to the interlocutory order passed by the Commissioner of Income Tax (Appeals) rejecting the stay application filed by the assessee. The impugned demand raised against the assessee was rejected by the Assessing Authority denying it the deduction of income under S.10A of the Income Tax Act, 1961 read with Explanation (ii) defining the term ‘computer software’. 2 The assessee carries on the business of rendering medical transcription of the diagnostic images taken of various patients with the help of advanced equipments and machineries of the various patients. Such medical transcriptions are exported outside the country and the assessee claims deduction in respect of the said income for these assessment years, which was denied by the Assessing Authority and aggrieved with which, the assessee filed regular appeals before the Commissioner of 4 Income Tax (Appeals) for these four assessment years. By the impugned order passed on 10.6.2015, the learned Commissioner of Income Tax (Appeals) rejected the stay applications and aggrieved by the same, assessee has approached this Court by filing the present writ petitions. 3 During the course of arguments, learned Senior counsel Mr M V Seshachala brought to the notice of the Court that in view of the recent Office Memorandum of Central Board of Direct Taxes (CBDT) dated 29.2.2016, in partial modification of Instruction 1914 dated 21.3.2016 which provides for guidelines of the stay of demand at the first appellate stage, CBDT has directed that in cases where the outstanding demand is disputed before the Commissioner of Income Tax (Appeals), the Assessing Officer shall grant stay of demand till disposal of the first appeal on payment of 15% of the disputed demand, unless the case was in the exception category of para B of such Circular. 5 4 Learned counsel for the petitioners/assessee urged that since the impugned order was passed by the Commissioner of Income Tax (Appeals) way back on 10.6.2015 and despite lapse of more than one year, since the learned Commissioner of Income Tax has not decided the appeals finally, he may be directed to decide such pending appeals before him expeditiously and the writ petitions may be disposed of with appropriate directions. 5 On the other hand, learned counsel for the Revenue submitted that even while the Commissioner of Income Tax (Appeals) is directed to decide the pending appeals, the assesssee should be directed to comply with the conditions of the recent Instructions of CBDT dated 29.2.2016. The assessee company should be directed to pay at least 15% of the disputed demand of Rs.24.16 crores in terms of the recent Instructions of the CBDT. 6 I have heard learned counsel on both sides and perused the record. 6 7 The prayer made by learned counsel for petitioners appears to be justified and deserves acceptance. Though there was no interim stay granted by this Court against the proceedings and hearing of appeals pending before the Commissioner of Income Tax (Appeals) and he could have decided the pending appeals before him on merits by now, but in view of the admitted position that these appeals having not been decided for the last more than one year or so, it appears appropriate and expedient to dispose of these writ petitions with a direction to the Commissioner of Income Tax (Appeals) to decide the pending appeals expeditiously preferably within a period of six months from today. 8 The assessee or its authorised representative may appear in the first instance before the Commissioner of Income Tax (Appeals) on 17th May, 2016. The petitioner shall deposit 15% of the total disputed demand under the impugned assessment orders within a period of one month from today and the Commissioner of Income Tax (Appeals) may thereafter, decide the appeals in accordance with law 7 on merits within the aforesaid stipulated period. The assesee will be free to raise all contentions on merits before the Commissioner of Income Tax (Appeals). 9 With the above observations, these writ petitions are disposed of. No costs. Copy of the order be sent to the parties forthwith. Sd/- Judge an "