Sasken Communication Technologies Ltd. and Mindtree Ltd. and Tata Elxsi Ltd. and Subex Limited V. The Deputy Commissioner of Income Tax Circle 12(3) and The Assistant Commissioner of Income Tax, Large Tax Unit, Circle \\u2013 12(1)

ITA/40/2014

AI Insights

The case involves multiple income tax appeals filed by various companies against the orders of the Income Tax Appellate Tribunal, Bangalore. The primary issue in these appeals was the exclusion of certain expenses from the export turnover while computing deductions under Section 10B of the Income Tax Act, 1961. The companies argued that expenses such as telecommunication, insurance, personnel, professional, and branch office expenses incurred in foreign exchange should be excluded from the export turnover and consequently from the total turnover for the purpose of computing deductions. The Tribunal had previously granted some relief but did not address all the grounds raised by the assessees. The High Court, upon hearing the appeals, decided to remit the matter back to the Tribunal to ensure a comprehensive examination of all the grounds, including the alternative ones.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 812375 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-09-2014
• 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: CHYTHANYA
• Keywords: Deduction; Export Turnover; Foreign Exchange; Income tax appeal; Insurance charges; Professional expenses; Telecommunication expenses; Personnel Expenses; Branch Office Expenses
• Section: 10B; 260-A

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 16TH DAY OF SEPTEMBER, 2014 PRESENT THE HON’BLE MR.JUSTICE N.KUMAR AND THE HON’BLE MRS.JUSTICE RATHNAKALA INCOME TAX APPEAL NOS.40-42 OF 2014 C/W INCOME TAX APPEAL NO.10 OF 2013 INCOME TAX APPEAL NO. 11 OF 2013 INCOME TAX APPEAL NO.403 OF 2013 INCOME TAX APPEAL NO.400 OF 2013 INCOME TAX APPEAL NO.69 OF 2013 INCOME TAX APPEAL NO.149 OF 2014 I.T.A NOS.40-42/2014 BETWEEN: M/S.SASKEN COMMUNICATION TECHNOLOGIES LTD., # 139/25, AMARJYOTHI LAYOUT, DOMLUR RING ROAD, BANGALORE – 560 071 (REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR, SRI RAJIV C.MODY, S/O SRI.CHANDRAKANT J MODY, AGED ABOUT 54 YEARS) …APPELLANTS (BY SRI CHYTHANYA K.K., ADV.) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(3), NO.14/3-A, - 2 - RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE – 560 001 ...RESPONDENT (BY SRI. K.V.ARAVIND, ADV.) THESE INCOME TAX APPEALS ARE FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 11/10/2013 PASSED IN CO NO.72/BANG/2013 (IN ITA NO.176/BANG/2013) FOR THE AY 2004-2005, ITA NO.1645/BANG/2012 FOR THE AY 2006-2007, ITA NO.1646/BANG/2012 FOR THE AY 2008-2009, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE. II. ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER (TO THE EXTENT PREJUDICIAL TO THE APPELLANT) OF THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE ‘C’ BENCH, IN CO NO.72/BANG/2013 (IN ITA NO. 176/BANG/2013) FOR THE AY 2004-2005, ITA NO.1645/BANG/2012 FOR THE AY 2006-2007, ITA NO.1646/BANG/2012 FOR THE AY 2008-2009, DATED:11/10/2013. I.T.A NO.10/2013 BETWEEN: M/S.MINDTREE LTD., (FORMERLY MINDTREE CONSULTING PVT. LTD.), GLOBAL VILLAGE, RVCE POST, MYLASANDRA, MYSORE ROAD, BENGALURU – 560 059 …APPELLANT (BY SRI CHYTHANYA K.K., ADV.) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAX UNIT, CIRCLE – 12(1), - 3 - JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI 3RD STAGE, BENGALURU – 560 085 …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961, ARISING OUT OF ORDER DATED 31- 10-2012 PASSED IN ITA NO.1328/BANG/2011, FOR THE ASSESSMENT YEAR 2004-2005, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER (TO THE EXTENT PREJUDICIAL TO THE APPELLANT) OF THE ITAT, BENGALURU, ‘B’ BENCH BEARING ITA NO.1328/BANG/2011 DATED 31/10/2012. I.T.A NO.11/2013 BETWEEN: M/S.MINDTREE LTD., (FORMERLY MINDTREE CONSULTING PVT. LTD.), GLOBAL VILLAGE, RVCE POST, MYLASANDRA, MYSORE ROAD, BENGALURU – 560 059 …APPELLANT (BY SRI CHYTHANYA K.K, ADV.) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX, LARGE TAX UNIT, CIRCLE – 12(1), JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI 3RD STAGE, BENGALURU – 560 085 …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) - 4 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961, ARISING OUT OF ORDER DATED 31- 10-2012 PASSED IN ITA NO.1347/BANG/2011, FOR THE ASSESSMENT YEAR 2006-2007, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDERS (TO THE EXTENT PREJUDICIAL TO THE APPELLANT) OF THE ITAT, BENGALURU, ‘B’ BENCH BEARING ITA NO.1347/BANG/2011 DATED 31/10/2012. I.T.A NO.403/2013 BETWEEN: M/S.TATA ELXSI LTD., ITPB ROAD, HOODY WHITEFIELD ROAD BENGALURU – 560 048 (REPRESENTED BY ITS MANAGING DIRECTOR, SRI.MADHUKAR DEV, AGED ABOUT 58 YEARS, S/O RAJENDRA DEV) …APPELLANT (BY SRI CHYTHANYA K.K., ADV.) AND: THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE – 12(4) 14/3, 4TH FLOOR, RASHTROTHANA BHAVAN NRUPATHUNGA ROAD BANGALORE – 560 001 …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) - 5 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 05-07-2013 PASSED IN ITA NO.1410/BANG/2012, FOR THE ASSESSMENT YEAR 2008-2009, PRAYING THIS HON'BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE ORDER (TO THE EXTENT PREJUDICIAL TO THE APPELLANT) OF THE ITAT, BANGALORE, ‘B’ BENCH IN ITA NO.1410/BANG/2012 DATED 05/07/2013. I.T.A. NO.400/2013 BETWEEN: M/S. TATA ELXSI LTD., ITPB ROAD, HOODY WHITEFIELD ROAD BENGALURU – 560 048 (REPRESENTED BY ITS MANAGING DIRECTOR SRI MADHUKAR DEV, AGED ABOUT 58 YEARS S/O RAJENDRA DEV) …APPELLANT (BY SRI CHYTHANYA K.K., ADV.) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE – 12(4) 14/3, 4TH FLOOR, RASHTROTHANA BHAVAN, BENGALURU – 560 001 …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) - 6 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 12/06/2013 PASSED IN ITA NO.1074/BANG/2012, FOR THE ASSESSMENT YEAR 2007-2008, PRAYING THIS HON'BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER (TO THE EXTENT PREJUDICIAL TO THE APPELLANT) OF THE ITAT, BENGALURU ‘A’ BENCH BEARING ITA NO.1074/BANG/2012 DATED 12/06/2013. I.T.A. NO.69 OF 2013 BETWEEN: M/S. TATA ELXSI LTD., ITPB ROAD, HOODY WHITEFIELD ROAD BENGALURU – 560 048 (REPRESENTED BY ITS MANAGING DIRECTOR, SRI MADHUKAR DEV, AGED ABOUT 58 YEARS S/O RAJENDRA DEV) …APPELLANT (BY SRI CHYTHANYA K.K., ADV.) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE – 12(4) 14/3, 4TH FLOOR, RASHTROTHANA BHAVAN, BANGALORE – 560 001 …RESPONDENT (BY SRI JEEVAN J.NEERALGI, ADV.) - 7 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 04/12/2012 PASSED IN ITA NO.398/BANG/2012, FOR THE ASSESSMENT YEAR 2006-2007, PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: I. FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, II. ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE ITAT, BENGALURU, ‘B’ BENCH BEARING ITA NO.398/BANG/2012 DATED 04/12/2012, IN THE INTEREST OF JUSTICE AND EQUITY. I.T.A. NO.149 OF 2014 BETWEEN: M/S.SUBEX LIMITED ADARSH TECH PARK, OUTER RING ROAD, DEVARABEESANAHALLI, BENGALURU – 560 037 (REPRESENTED BY ITS GLOBAL HEAD – FINANCE, LEGAL & COMPANY SECRETARY, SRI GANESH K.V., AGED ABOUT 52 YEARS, S/O LATE SUNDARM VENKATARAMANAN KANGEYAM) …APPELLANT (BY SRI CHYTHANYA K.K., ADV.) AND: THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE – 12(3), 14/3, 4TH FLOOR, RASHTROTHANA BHAVAN, NRUPATUNGA ROAD, BANGALORE – 560 001 …RESPONDENT (BY SRI K.V.ARAVIND, ADV.) - 8 - THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 13/11/2013 PASSED IN ITA NO.1430/BANG/2010, FOR THE ASSESSMENT YEAR 2006-2007, PRAYING THAT THIS HON'BLE COURT TO: I. FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE. II. ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU ‘C’ BENCH BEARING IN ITA NO.1430/BANG/2010 DATED: 13/11/2013. THESE IT APPEALS COMING ON FOR ADMISSION THIS DAY, N.KUMAR J., DELIVERED THE FOLLOWING: J U D G M E N T These appeals are preferred by the assessees, challenging the order passed by the Tribunal. Though the Tribunal gave them relief, they have preferred these appeals challenging the other grounds which was not considered by the Tribunal. 2. In all these cases, the assessees putforth two grounds, they are as follows: a. Whether the telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign - 9 - exchange should not be excluded from the export turnover for the purpose of computing deduction under Section 10B of the Income Tax Act, 1961? b. If the said expenses are to be excluded from the export turnover, then the same should also be excluded from the total turnover for the purpose of computing deduction under Section 10B of the Income Tax Act, 1961? 3. The tribunal has granted the relief upholding the contention of the assessees but did not consider the alternative ground. 4. Now the learned Counsel for the assessees contends that the assessees were entitled to the relief even on the alternative ground and if it is not considered, it is likely that the finding recorded by the Commissioner of Income Tax (Appeals) would stand, which may be held against them in future. - 10 - 5. In this circumstance, we deem it proper to remit these matters back to the Tribunal to record the findings on merit, even on the alternative ground also. We make it clear that while considering the said ground, it is open to the assessees to raise such additional grounds which they may choose so. 6. Accordingly, these appeals are remitted back to the Tribunal for fresh consideration. All the contentions are kept open to be decided by the Tribunal. It is made clear that the tribunal shall also go into such other questions of law which may be raised by the assessees on such remand. Sd/- JUDGE Sd/- JUDGE nvj "