M/S. NTT DATA GLOBAL DELIVERY SERVICES LTD., V. ASST. COMMISSIONER OF INCOME TAX

ITA/526/2017

AI Insights

The case involves M/s. NTT Data Global Delivery Services Ltd., the appellant, who contested the decision of the Income Tax Appellate Tribunal regarding the denial of deduction under Section 10A of the Income Tax Act, 1961 for the Assessment Year 2005-06. The primary issue was the Tribunal's dismissal of ground No.16 of the appellant's appeal, which was deemed academic without substantive adjudication. The High Court found that the Tribunal failed to address the merits of the case and thus remitted the matter back for a fresh decision on the specific ground.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 697573 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 19-11-2020
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: NAGESWAR RAO
• Keywords: Deduction Denial; Income Tax; Section 10A; STPI scheme; Tribunal order; Recruitment fee
• Section: 10A; 260-A

Judgement Text

"1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF NOVEMBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.526 OF 2017 BETWEEN: M/S. NTT DATA GLOBAL DELIVERY SERIVES LTD. NO.17, SOUTH END ROAD BASAVANAGUDI, BENGALURU-560001 PAN:AAACI4797E. ... APPELLANT (BY SRI. NAGESWAR RAO, ADV., FOR SRI. MALLAHA RAO K, ADV.,) AND: ASST. COMMISSIONER OF INCOME TAX CIRCLE 11(5), BENGALURU. ... RESPONDENT (BY SRI. K.V. ARAVIND, ADV.) - - - THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 03-03-2017 PASSED IN IT(TP)A NO.1487/BANG/2013, FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO: I. ADMIT THE INSTANT APPEAL TO ANSWER THE SUBSTANTIAL QUESTIONS OF LAW SET OUT IN PARA 20 ABOVE. 2 II. SET ASIDE THE IMPUGNED ORDER AT ANNEXURE-'A' PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL IN IT(TP)A NOS.1487/BANG/2013 RELATING ASSESSMENT YEAR 2005-06 VIDE ANNEXURE-A, TO THE EXTENT CHALLENGED IN PRESENT APPEAL AND PASS SUCH FURTHER AND OTHER ORDERS IN FAVOUR OF THE APPELLANT AS THIS HON'BLE COURT MAY DEEM FIT TO GRANT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN THE INTERESTS OF JUSTICE AND EQUITY. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) has been preferred by the assessee. The dispute in the appeal pertains to the Assessment Year 2005-06. The appeal was admitted by a Bench of this Court vide order dated 19.06.2019 on the following substantial questions of law: i. Whether impugned order passed by learned Tribunal, to the extent it dismissed ground No.16 of Appellant's appeal, without considering written/oral submissions of Appellant and other material facts available on record, is perverse and not in accordance with law. 3 ii. Whether impugned order of Tribunal dismissing ground No.16 of Appellant's appeal without following its earlier order dated 21-06-2013 for AY 2007-08 in Appellant's own case is contrary to settled legal principles and judicial propriety. 2. Facts giving rise to the filing of the appeal briefly stated are that the assessee is engaged in the business of providing software development services and professional services. The assessee filed return of income for the Assessment Year 2005-06 and declared total income of Rs.71,53,080/-. The Assessing Officer, by an order dated 31.12.2008, inter alia denied the benefit of deduction under Section 10A of the Act to some of the units of the assessee on the ground that they were not set up in accordance with STPI scheme. It was further held that even if the assessee is found eligible for the benefit of deduction of Section 10A of the Act, the income earned by the assessee in the nature of recruitment fee should be excluded from the eligible 4 profits of the business of the assessee. The assessee thereupon approached the Commissioner of Income Tax (Appeals) by filing an appeal, who by an order dated 30.08.2013 partially allowed the relief to the assessee. However, the relief in respect of the recruitment fee was denied on the ground that such activity has no nexus with the activity of export of computer software. The assessee thereupon approached the Income Tax Appellate Tribunal by filing an appeal. The Tribunal, by an order dated 03.03.2017, did not decide the grounds raised by the assessee and held that the same are academic. In the aforesaid factual background, this appeal has been filed. 3. Learned counsel for the assessee submitted that the Tribunal ought to have adjudicated the grounds raised by the assessee on merits inspite of holding the same as academic. On the other hand, learned counsel for the revenue has supported the order passed by the Tribunal. 5 4. We have considered the submissions made on both sides and have perused the record. From perusal of the grounds raised by the assessee before the Tribunal as well as the order passed by the Tribunal, it is evident that the grounds raised by the assessee has not been adjudicated by the Tribunal and the Tribunal has held the same to be academic. The Tribunal ought to have adjudicated the grounds raised by the assessee on merits instead of holding the grounds to be academic and not deciding the same. 5. In view of preceding analysis, the order passed by the Tribunal dated 03.03.2017 insofar as it pertains to ground No.16 raised by the assessee, is hereby quashed and the matter is remitted to the Tribunal to adjudicate ground No.16 afresh in accordance with law. 6 6. For the aforementioned reasons, it is not necessary for us to answer the substantial questions of law framed in this appeal. In the result, the appeal is disposed of. Sd/- JUDGE Sd/- JUDGE RV "