The Commissioner of Income Tax, C.R. Building, Queens Road, Bangalore and The Asst. Commissioner of Income Tax, Central Circle-12(1), C.R. Building, Queens Road, Bangalore V. Motor Industries Co., Ltd., Hosur Road, Adugodi, Bangalore-560 030

ITA/215/2009

AI Insights

The case involves an appeal by the Commissioner of Income Tax and the Assistant Commissioner of Income Tax against Motor Industries Co., Ltd. concerning deductions under Sections 80HHC and 80HHE of the Income Tax Act, 1961 for the assessment year 1995-96. The primary issues were whether certain fees and expenditures should be deducted from business profits and export turnover respectively for the purpose of computing deductions under the specified sections. The High Court of Karnataka, referencing previous judgments, ruled in favor of the assessee, affirming the decisions of the lower appellate authorities.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 794089 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 02-12-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax and Another vs Motor Industries Co. Ltd., [2011] 331 ITR 79 (Kar), ITA No. 776/2007 and connected matters, disposed of on 2014-06-13
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: TANMAYEE RAJKUMAR
• Assessee Lawyers: K V ARAVIND
• Keywords: Business Profits; Deduction; Export Turnover; Foreign currency expenditure; Income tax appeal
• Section: 80HHC; 80HHE; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 2nd DAY OF DECEMBER, 2014 PRESENT THE HON' BLE MR. JUSTICE N.KUMAR AND THE HON' BLE MR. JUSTICE B. MANOHAR INCOME TAX APPEAL No. 219/2009 BETWEEN: 1. The Commissioner of Income Tax, C.R. Building, Queens Road, Bangalore. 2. The Asst. Commissioner of Income Tax, Central Circle-12(1), C.R. Building, Queens Road, Bangalore. ... APPELLANTS (BY SRI K V ARAVIND, ADVOCATE) AND: Motor Industries Co., Ltd., Hosur Road, Adugodi, Bangalore-560 030. … RESPONDENT (BY SRI TANMAYEE RAJKUMAR, ADVOCATE FOR M/S. KING & PARTRIDGE) … This ITA is filed under Section 260-A of the Income Tax Act, 1961 arising out of Order dated 2 12.12.2008 passed in ITA No. 543/Bang/2008, for the assessment year 1995-96 praying to formulate the substantial questions of law stated therein and to allow the appeal and set aside the order passed by the ITAT Bangalore in ITA No. 543/Bang/2008, dated 12.12.2008 confirming the order of the Appellate Commissioner and confirm the order passed by the Assistant Commissioner of Income Tax, Circle-12(1), Bangalore in the interest of justice and equity. This Income Tax Appeal coming on for Orders this day, N. Kumar J., delivered the following: JUDGMENT The revenue has preferred this appeal against the order passed by the Tribunal. The two substantial questions of law which arise for our consideration are as under: (a) Whether the Appellate Authorities were correct in holding that 90% of the fees received from Robert Bosch, Germany towards development work carried out for them need not be reduced from the business profits for the purpose of deduction under Section 80HHC of the Act? (b) Whether the Appellate Authorities were correct in holding that expenditure incurred in foreign currency in connection with 3 execution of software project need not be reduced from the export turnover for the purpose of computing deduction under Section 80HHE of the Act by ignoring Clause (c) of Explanation to Section 80HHE(5) of the Act? 2. In so far as the first substantial question of law is concerned, the same was the subject matter of appeal in the assessee’s case itself in the case of Commissioner of Income-Tax and Another – vs- Motor Industries Co. Ltd., reported in [2011] 331 ITR 79 (Kar) where the said question was held in favour of the assessee and against the revenue. Following the said judgment, the first substantial question of law is answered in favour of the assessee and against the revenue. 3. In so far as the second substantial question of law is concerned, the same was the subject matter of an appeal in the assessee’s case itself before this Court in ITA No. 776/2007 and connected matters which was disposed of on 4 13.6.2014 answering the said substantial question of law in favour of the assessee. Following the said judgment, the second substantial question of law is also answered in favour of the assessee and against the revenue. 4. In that view, we do not see any merit in this appeal. Accordingly, the appeal is dismissed. Sd/- Judge Sd/- Judge Nsu/- "