Tata Elxsi Limited V. The Assistant Commissioner of Income Tax, Circle 12(3) Bangalore

ITA/142/2008

AI Insights

This case involves Tata Elxsi Limited appealing against the order of the Income Tax Appellate Tribunal, which had implications on the assessee's export turnover and the benefits under Section 10A of the Income Tax Act, 1961. The primary legal issues revolved around whether the technical services rendered outside India and marketing expenses incurred abroad should be included in the export turnover for the purpose of calculating deductions under Section 10A. The High Court of Karnataka examined these issues in light of previous judgments and the specific circumstances of the case, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 821410 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-10-2014
• Assessment Year: misc
• Other Referred Cases: The Commissioner of Income Tax & another v/s. Motor Industries Co. Ltd., M/s.Infosys Technologies Ltd. in ITA No.1022 & 1130/Bang/2003
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: CHYTHANYA K
• Keywords: Computer software; Export Turnover; Income tax appellate tribunal; Substantial questions of law; Technical Services
• Section: 10A; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 20TH DAY OF OCTOBER, 2014 PRESENT THE HON’BLE MR.JUSTICE N KUMAR AND THE HON’BLE MR.JUSTICE B MANOHAR INCOME TAX APPEAL NO.142 OF 2008 BETWEEN: M/S TATA ELXSI LIMITED ITPL ROAD, WHITEFIELD BANGALORE REP BY RAMADAS KAMATH K, CORPORATE MANAGER – FINANCE. ...APPELLANT (BY SRI: CHYTHANYA K K, ADVOCATE) AND: THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(3) BANGALORE. ...RESPONDENT (BY SRI: JEEVAN J NEERALGI, ADVOCATE) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 16.10.2007 PASSED IN ITA NO.315/BANG/2006 FOR THE ASSESSMENT YEAR 2002-03 PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND TO ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE, IN ITA NO.315/BANG/2006 DATED 16.10.2007 RELATING TO THE ASSESSMENT YEAR 2002-2003 IN THE INTEREST OF JUSTICE AND EQUITY. THIS INCOME TAX APPEAL COMING ON FOR FINAL HEARING THIS DAY, N.KUMAR, J. DELIVERED THE FOLLOWING: 2 J U D G M E N T This appeal is by the assessee challenging the order passed by the Tribunal. 2. The substantial questions of law that are raised in this appeal are, “i) On the facts and circumstances of the case whether the Appellate Tribunal is right in holding that the appellant is rendering ‘technical services’ outside India in connection with the export of computer software? ii) On the facts and circumstances of the case whether the Appellate Tribunal erred in confirming the order of the Assessing Authority that the marketing expenses incurred by the appellant outside India to prospect its business also form part of ‘export turnover’ within the meaning of Explanation 2 to Section 10A of the Income Tax Act, 1961? iii) On the facts and circumstances of the case whether the Appellate Tribunal is right in holding that the computer software sales to M/s.Texas Instruments India Ltd. do not fall under the expression ‘export turnover’ for the purpose of 3 deduction under Section 10A of the Income Tax Act, 1961? iv) Whether on the facts and circumstances of the case the Tribunal erred in holding that the order of the Tribunal in the case of M/s.Infosys Technologies Ltd. in ITA No.1022 & 1130/Bang/2003 dated 7.4.2006 is not applicable to the appellant’s case?” 3. Insofar as substantial questions of law 1, 2 and 4 are concerned, they are interconnected. This Court had an occassion to consider the substantial questions of law in the case of The Commissioner of Income Tax & another v/s. Motor Industries Co. Ltd. in I.T.A.No.776/2007 and connected matters decided on 13.6.2014, wherein it was held that if the technical services rendered by the assessee’s engineers is in connection with the export of computer software, such expenses cannot be excluded in computing the export turnover, as it forms part of the export turnover. Following the said judgment, in the case of the assessee itself, for the assessment year 2001-02, in I.T.A.No.660/2008 decided on 16.9.2014, we have answered the said substantial questions of law in favour of the assessee and against the revenue. 4 Accordingly, substantial questions 1, 2 and 4 are answered in favour of the assessee and against the revenue. 4. Insofar as the third substantial question of law is concerned, today, in the case of the assessee itself, in I.T.A.No.411/2008, we have answered the similar substantial question in favour of the assessee and against the revenue. Accordingly, the said substantial question is also answered in favour of the assessee and against the revenue. 5. Hence, we pass the following order. The appeal is allowed. Impugned orders passed by the authorities are hereby set aside. The assessee is entitled to the benefit under Section 10A of the Income Tax Act. Sd/- JUDGE Sd/- JUDGE KM "