THE COMMISSIONER OF INCOME TAX V. M/S SASKEN COMMUNICATION TECHNOLOGIES LTD

ITA/602/2007

AI Insights

This case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against M/s Sasken Communication Technologies Ltd concerning the interpretation and application of Section 10A of the Income Tax Act, 1961, related to the export of computer software. The appeal was rendered infructuous as the issues had been previously resolved, and the Tribunal's order was found to be ineffective concerning the substantial questions of law raised. The court did not delve into the merits but addressed the specific legal question regarding the treatment of interest earned on margin money and bank guarantee deposits as profits derived from exports under Section 10A.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 735918 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 28-01-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax and others V/S M/s. Motorola India Electronics Private Limited in ITA Nos. 428/2007 and 447/2007 decided on 11th December 2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: T SURYANARAYANA
• Assessee Lawyers: K V ARAVIND
• Keywords: Convertible foreign exchange; Export proceeds; Income Tax; Margin money; Domestic Turnover; Bank Guarantee Deposits
• Section: 10A; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 28TH DAY OF JANUARY 2014 PRESENT THE HON'BLE MR.JUSTICE DILIP B.BHOSALE AND THE HON'BLE MR.JUSTICE B.MANOHAR ITA NO.602/2007 BETWEEN: 1. THE COMMISSIONER OF INCOME TAX C.R.BUILDING, QUEENS ROAD BANGALORE. 2. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 12(2) C.R.BUILDING, QUEENS ROAD, BANGALORE. ... APPELLANTS (BY SRI K.V.ARAVIND, ADV ) AND M/S SASKEN COMMUNICATION TECHNOLOGIES LTD (FORMERLY SILICON AUTOMATION SYSTEMS LTD., NO.139/25, AMAR JYOTHI LAYOUT RING ROAD, DOMLUR P.O. 2 BANGALORE -560 071. ... RESPONDENT (BY SRI.T.SURYANARAYANA, ADVOCATE FOR M/S KING & PARTRIDGE) This ITA filed u/S.260-A of I.T.Act, 1961 arising out of Order dated 27-02-2007 passed in ITA No. 244/Bang/2005 for the Assessment Year 2001-02, 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 order passed by the ITAT, Bangalore in ITA No. 244/Bang/2005 dated 27-02-2007 & confirm the order of the Appellate Commissioner confirming the order passed by the Asst.Commissioner of Income Tax, Circle-12(2), Bangalore, in the interest of justice and equity. This appeal coming on for hearing this day, DILIP B. BHOSALE J., delivered the following: P.C. At the outset, Mr.T.Suryanarayana, learned counsel appearing for the respondent submits that even before the appeal, that was filed before the Income Tax Appellate Tribunal bearing ITA No.244/Bang/2005, was decided, the grievance of the appellant-assessee stood 3 redressed and therefore, this appeal has rendered infructuous. Even the order of the Tribunal dated 27-02-2007, he submits, has rendered ineffective, insofar as the following substantial questions of law are concerned: i. Whether the Tribunal was justified in law in relying on the third proviso to sub- Section (1) of Section 10A of the Act, when the conditions stipulated under sub-Section(3) of Section 10A of the Act the export proceeds in convertible foreign exchange is not realised without the stipulated time or within such extended time remained unsatisfied? ii. Whether the Tribunal committed an error in holding that a part of the export turnover in respect of which sale proceeds were not realized in convertible foreign exchange can be deemed as domestic turnover when the provision of Section 10A do not contain such deeming fiction? 2. Having confronted with this, Mr.K.V.Aravind, learned counsel appearing for the revenue does not dispute the submission made by the learned counsel for 4 the respondent. Hence, we do not enter into merits of the case and address the questions. 3. The revenue has also raised the following substantial question of law for our consideration which reads thus: Whether the Tribunal committed an error in holding that the interest earned by the assessee on margin money and bank guarantee deposits can be treated as profits and against as are derived by the assessee from the export of computer software within the meaning of Section 10A? 4. Mr.Suryanarayana, learned counsel appearing for the respondent, at the outset, submits that so far as this question is concerned, it is covered by the judgment of the Division Bench of this court in Commissioner of Income Tax and others V/S M/s. Motorola India Electronics Private Limited in ITA Nos. 428/2007 and 447/2007 decided on 11th December 2013. 5 5. Mr.Aravind, learned counsel appearing for the revenue could not and did not dispute the submissions made by the learned counsel for the respondent insofar as the third substantial question of law is concerned. In the circumstances, the third question is answered in favour of the assessee and against the revenue in terms of the order dated 11.12.2013 in ITA.Nos.428 and 447 of 2007. The appeal accordingly stands disposed of. Sd/- JUDGE Sd/- JUDGE mpk/-* "