2022 (11) TMI 1559 - HC - Income Tax

Profits derived u/s 10A - Tribunal allowing claim of assessee that income derived from rental income from Infosys BPO Ltd. and BSNL Chennai Ltd - HELD THAT - The first question is covered by the decision in INFOSYS LTD. 2023 (1) TMI 224 - KARNATAKA HIGH COURT Claim for foreign tax credit u/s 90 in respect of income exempt under Section 10A - Tribunal allowing claim of credit for state taxes paid outside Indi a - Questions No.2 and 3 are covered by the decision in Wipro Ltd. 2015 (10) TMI 826 - KARNATAKA HIGH COURT Setting aside re-computation of Section 10A - Question No.4 is covered by the decision in HCL Technologies Ltd. 2018 (5) TMI 357 - SUPREME COURT

Summary

The Karnataka High Court, in a bench comprising Hon'ble Justices P. S. Dinesh Kumar and T. G. Shivashankare Gowda, dismissed the Revenue's appeal challenging the Tribunal's rulings on four key questions relating to income tax claims under the Income Tax Act, 1961. The questions involved: (1) the classification of rental income from Infosys BPO Ltd. and BSNL Chennai Ltd. as profits under Section 10A; (2) the allowance of foreign tax credit under Section 90 for income exempt under Section 10A; (3) credit for state taxes paid outside India; and (4) the setting aside of re-computation under Section 10A by the Assessing Authority. The Court held that the first question was settled by a recent decision (ITA No.348/2018 dated November 22, 2022), questions two and three were governed by the Karnataka High Court's precedent in *Wipro Ltd. Vs. Deputy Commissioner of Income-tax* [2015] 62 taxmann.com 26, and the fourth question was controlled by the Supreme Court's ruling in *Commissioner of Income-tax Vs. HCL Technologies Ltd.* [2018] 93 taxmann.com 33. The Revenue did not oppose these submissions. Accordingly, the appeal was dismissed, with the Court explicitly stating that "questions of law are answered in favour of the assessee and against the Revenue." No costs were awarded.