Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 392/2022
PR. COMMISSIONER OF INCOME TAX BENGALURU-5,
BENGALURU ..... Appellant
Through: Mr.Zoheb Hossain, Sr.Standing
Counsel for the Revenue with
Mr.Vipul Agrawal and Mr.Parth
Semwal, Advocates.
versus
M/S NTT DATA GLOBAL DELIVERY SERVICES LTD.
..... Respondent
Through: None
th
Date of Decision: 12 October, 2022
CORAM:
HON’BLE MR. JUSTICE MANMOHAN
HON’BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
J U D G M E N T
MANMOHAN, J:
C.M.No.43994/2022
Keeping in view the averments in the application, the delay in re-
filing the appeal is condoned.
Accordingly, the application stands disposed of.
ITA No.392/2022
1. Present Income Tax Appeal has been filed challenging the order dated
th
20 December, 2018 passed by the Income Tax Appellate Tribunal
(‘ITAT’) in ITA No.5196/Del./2014 for the Assessment Year 2009-10.
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.10.2022
18:09:55
ITA No.392/2022 Page 1 of 4
2. Learned counsel for the Appellant states that the ITAT has erred in
holding that the incidental income of Rs.24,30,64,353/- of the assessee in
the form of interest income is eligible for deduction under Section 10A of
the Income Tax Act, 1961 (‘the Act’) without appreciating that as per the
provisions of Section 10(A)(1) of the Act, only profits derived from the
eligible undertaking will be entitled to deduction under Section 10A of the
Act.
3. He submits that the ITAT has erred in following the decision of the
Karnataka High Court in Commissioner of Income Tax vs Hewlett
Packard Global Soft Ltd 299 CTR 118 (Karnataka) (FB) without
considering that the Revenue has challenged the same before the Supreme
Court and the said issue is pending adjudication in Civil Appeal No.9175 of
2018.
4. Having heard learned counsel for the Appellant, this Court finds that
the issue raised in the present appeal is no longer res integra . In Principal
Commissioner of Income Tax-1 vs. American Express India Pvt. Ltd.,
ITA No.749/2016 , a Division Bench of this Court has held as under:-
1. The following question of law arises for consideration:
“Whether the ITAT erred in law in deleting the addition of
₹ 2.48 crores as Income from Other Sources and holding it
eligible for the purpose of calculation of deduction under
Sections 10A and 10B of the Income Tax Act, 1961?”
2. The facts necessary for deciding the case are that the assessee had
maintained, at the relevant time, i.e. AY 2005-06, a unit eligible for
the benefit of Section 10A of the Income Tax Act, 1961 [hereafter
“the 1961 Act”] and claimed `2.48 crores as income from other
sources, i.e. interest earned out of fixed deposits. These fixed deposits
were derived from export proceeds reported by the assessee to which
it was eligible for benefit under Section 10A of the 1961 Act. The
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.10.2022
18:09:55
ITA No.392/2022 Page 2 of 4
Assessing Officer (AO) ruled that the interest income so reported was
not entitled to deduction under Section 10A of the 1961 Act. CIT(A)
confirmed this view. The ITAT, however, reversed it. The question as
to whether incomes such as the one set to be taxed, i.e. interest
earned from the fixed deposits which in turn constituted the foreign
export business income, are entitled to deduction under Section 10A
was the subject of the judgment of this Court in Riviera Home
Furnishing v. ACIT 2016 (65) taxmann.com 287 (Del).
3. The Court then had the occasion to consider the prevalent ruling
of the Supreme Court on this issue in Liberty India v. CIT 2009 317
ITR 281.
4. This Court – in Riviera (supra) held as follows:
“15. In the considered view of the Court, the submissions
made on behalf of the Revenue proceed on the basic
misconception regarding the true purport of the provisions of
Chapter VIA of the Act and on an incorrect understanding of
Section 80A (4) of the Act. The opening words of Section 80A
(4) read “Notwithstanding anything to the contrary contained
in section 10A or section 10AA or section 10B or section
10BA or in any provisions of this Chapter.....”. What is sought
to be underscored, therefore, is that Section 80A, and the
other provisions in Chapter VIA, are independent of Sections
10A and 10B of the Act. It appears that the object of Section
80A (4) was to ensure that a unit which has availed of the
benefit under Section 10B will not be allowed to further claim
relief under Section 80IA or 80IB read with Section 80A (4).
The intention does not appear to be to deny relief under
Section 10B (1) read with Section 10B (4) or to whittle down
the ambit of those provisions as is sought to be suggested by
Mr. Manchanda. Also, he is not right in contending that the
decisions of the High Courts referred to above have not
noticed the decision of the Supreme Court in Liberty India.
The Karnataka High Court in CIT v. Motorola India
Electronics Pvt. Ltd. (supra) makes a reference to the said
decision. That decision of the Karnataka High Court has been
cited with approval by this Court in Hritnik Exports (supra)
and Universal Precision Screws (supra). In Hritnik Exports
(supra) the Court quoted with approval the observations of
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Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.10.2022
18:09:55
ITA No.392/2022 Page 3 of 4
the Special Bench of the ITAT in Maral Overseas Ltd. (supra)
that “Section 10A/10B of the Act is a complete code providing
the mechanism for computing the „profits of the business‟
eligible for deduction u/s 10B of the Act. Once an income
forms part of the business of the income of the eligible
undertaking of the assessee, the same cannot be excluded
from the eligible profits for the purpose of computing
deduction u/s 10B of the Act.”
5. In view of the above, with which this Court concurs, the
question of law has to be and is answered in favour of the assessee
and against the Revenue. The appeal is accordingly dismissed.”
(emphasis supplied)
5. In view of the aforesaid mandate of law, this Court is of the view that
no substantial question of law arises for consideration in the present appeal.
Accordingly, the same is dismissed.
MANMOHAN, J
MANMEET PRITAM SINGH ARORA, J
OCTOBER 12, 2022
KA
Signature Not Verified
Digitally Signed By:JASWANT
SINGH RAWAT
Signing Date:13.10.2022
18:09:55
ITA No.392/2022 Page 4 of 4