WIPRO LIMITED V. DEPUTY COMMISSIONER OF INCOME TAX

ITA/82/2023

AI Insights

Wipro Limited filed an Income Tax Appeal (ITA No. 82 of 2023) against the order of the Income Tax Appellate Tribunal (ITAT) which had not considered the appellant's claim for deduction of taxes paid to foreign governments from its business income. The appellant argued that these taxes were paid on income that was not taxable in India and were incurred wholly and exclusively for business purposes, thus eligible for deduction under Section 37 of the Income Tax Act. The ITAT had previously rejected this claim, and the appellant's subsequent Miscellaneous Petition was also dismissed. The High Court of Karnataka, referencing a similar case (Reliance Infrastructure Ltd. Vs. Commissioner of Income Tax, City-VI, Mumbai), directed the ITAT to reconsider the matter.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 756659 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-01-2024
• Assessment Year: misc
• Other Referred Cases: Reliance Infrastructure Ltd. Vs. Commissioner of Income Tax, City-VI, Mumbai
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: SANDEEP HUILGOL
• Keywords: Business income; Deduction; Foreign Tax Credit; Income tax appeal; ITAT
• Section: 90; 37; 91; 260-A

Judgement Text

"- 1 - NC: 2024:KHC:1244-DB ITA No. 82 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9TH DAY OF JANUARY, 2024 PRESENT THE HON'BLE MR JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR JUSTICE T.G. SHIVASHANKARE GOWDA INCOME TAX APPEAL NO. 82 OF 2023 BETWEEN: WIPRO LIMITED 76P AND 80P, DODDAKANNELLI SARJAPUR ROAD BENGALURU-560 035. REPRESENTED HEREIN BY ITS GENERAL MANAGER - FINANCE MR. VENKATRAMAN .E PAN: AAACW0387R …APPELLANT (BY SHRI. SANDEEP HUILGOL, ADVOCATE) AND: 1. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-7(1)(2) BANGALORE NO.14/3, R.P. BHAVAN NRUPATHUNGA ROAD BENGALURU-560 001. 2. PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE BMTC BUILDING, 6TH BLOCK KORAMANGALA BENGALURU-560 095. …RESPONDENTS (BY SHRI. E.I. SANMATHI, STANDING COUNSEL) Digitally signed by ANUSHA V Location: High Court of Karnataka - 2 - NC: 2024:KHC:1244-DB ITA No. 82 of 2023 THIS ITA IS FILED UNDER SEC.260-A OF THE INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTION OF LAW STATED ABOVE, ALLOW THE APPEAL AND SET ASIDE, TO THE EXTENT QUESTIONED HEREIN, THE IMPUGNED ORDER DATED 05/10/2020 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, ‘C’ BENCH, BANGALORE, IN IT(TP)A NO. 398/BANG/2015, ASSESSMENT YEAR 2010-2011 VIDE (ANNEXURE-A) AND PASS SUCH OTHER OR FURTHER ORDERS AS THIS HONBLE COURT DEEMS FIT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN THE INTERESTS OF JUSTICE AND EQUITY. THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the assessee challenging the order dated 05.10.2020 in IT (TP)A No.398/Bang/2015 for the assessment year 2010-11 passed by the ITAT, ‘C’ Bench, Bengaluru, has been admitted to consider the following question of law: “Whether, on the facts and circumstances of the case and on the grounds raised, the taxes paid by the Appellant to foreign Governments and authorities, in respect of which credit has not been given under Sections 90 and 91 of the Act read with the Applicable DTAAs, should be allowed as a deduction from the business income of the Appellant given that is unquestionable expenditure which has been incurred by the Appellant wholly and exclusively for the purposes of its business and is, therefore, eligible for deduction under Section 37 of the Act? - 3 - NC: 2024:KHC:1244-DB ITA No. 82 of 2023 2. Heard Shri Sandeep Huilgol, learned advocate for the appellant and Shri E.I.Sanmathi, learned Standing Counsel for the Revenue. 3. Undisputed facts of the case are, appellant is a resident of India and liable to pay tax on the global income for the assessment years 2009-10 to 2014-15. The assessee had received certain income outside the country and paid tax on the same as per the extant law in that country. According to the assessee, the same is not taxable in India. Consequently, he has claimed deduction of tax paid in foreign countries under Section 37(1) of the Act1. The A.O.2 and the DRP3 have rejected the same. On appeal, the ITAT has not considered this question. The assessee filed a Misc. Petition for reconsideration of this ground and the same has also been rejected. Hence, this appeal. 1 Income Tax Act, 1961 2 Assessing Officer 3 Dispute Resolution Panel - 4 - NC: 2024:KHC:1244-DB ITA No. 82 of 2023 4. Shri Huilgol submitted that the income in the relevant assessment year was taxable in foreign countries and said tax has been paid. The A.O, DRT as also ITAT have not considered this aspect and the Misc. Petition filed before the ITAT has also been dismissed. Shri Huilgol further submitted that the Bombay High Court, in identical circumstances, in Reliance Infrastructure Ltd. Vs. Commissioner of Income Tax, City-VI, Mumbai4, has granted the relief and the said order has been accepted by the Department and followed by the ITAT in assessee’s own case for the assessment years 2015-16 to 2017-18. Therefore, assessee is entitled for reconsideration of the matter in the hands of the ITAT. 5. Shri Sanmathi, in his usual fairness, does not dispute the said submission and submitted that the ITAT may be directed to reconsider the matter and all questions may be kept open for the revenue to urge. 4 2016 SCC OnLine Bom10018 - 5 - NC: 2024:KHC:1244-DB ITA No. 82 of 2023 6. In view of the above, the following: ORDER i) Appeal is allowed; ii) Order dated 05.10.2020 in IT(TP)A No.398/Bang/2015 passed by the ITAT, ‘C’ Bench, Bengaluru, is set aside and the matter is remitted to the file of ITAT for reconsideration in accordance with law; and iii) All contentions of both parties are kept open. No costs. Sd/- JUDGE Sd/- JUDGE YN List No.: 1 Sl No.: 43 "