TMI Blog2018 (8) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been to be added to the profits of the undertaking on which the Assessee would be entitled for deduction u/s. 10A of the Act. This view is fortified by the decision of Bombay High Court in the case of ‘Commissioner of Income Tax v. Gem Plus Jewellery India Ltd.,’ [2010 (6) TMI 65 - BOMBAY HIGH COURT ] - I.T.A.N o.228/2013 - - - Dated:- 11-7-2018 - VINEET KOTHARI AND S. SUJATHA, JJ. Mr. E.I. Sanmathi, Adv. for Appellants- Revenue Mr. T.V. Ajayan, Adv. For Mr. Rajesh Chandes Kumar, Adv. Respondent - Assessee JUDGMENT 1. The Appellants-Revenue have filed this appeal u/s.260A of the Income Tax Act, 1961, raising purportedly certain substantial questions of law arising from the order of the ITAT, Bangalore Bench A , Bangalore, dated 21.12.2012 passed in ITA No.1682/Chny/2011 (M/s.Mpact Technology Services Pvt. Ltd., vs. The Asst.Commissioner of Income-tax) for A.Y.2007-08. 2. The proposed substantial questions of law framed in the Memorandum of appeal by the Appellants-Revenue are quoted below for ready reference:- 1. Whether in the given facts and circumstances of the case, the Tribunal is correct in law in holding that assessing authority has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Hon ble Apex Court in the case of Commissioner of Income-tax, Central III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC). The relevant portion of the judgment of the Hon ble Supreme Court in the case of HCL Technologies Ltd. (supra), is quoted below for ready reference:- 17. The similar nature of controversy, akin this case, arose before the Karnataka High Court in CIT v. Tata Elxsi Ltd. [2012] 204 Taxman 321/17/taxman.com 100/349 ITR 98. The issue before the Karnataka High Court was whether the Tribunal was correct in holding that while computing relief under Section 10A of the IT Act, the amount of communication expenses should be excluded from the total turnover if the same are reduced from the export turnover? While giving the answer to the issue, the High Court, inter-alia, held that when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to it, the said ordinary meaning is to be in conformity with the context in which it is used. Hence, what is excluded from export turnover must also be excluded from total turnover , since one of the components of total turnover is export turnover. Any other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Graphics (cited Supra) at para 24 to 28 has held as under:.. xxxxxxxxxxxxxxxx 9. As facts and circumstances are similar in this case before us, the grounds against the restriction of eligible profit for deduction u/s 10A on the basis of transfer pricing order are allowed. 5. In so far as the substantial question of law Nos.5 and 6 are concerned, learned counsel for the Revenue submitted that the ITAT in its Order dated 21.12.2012 has recorded the findings, the relevant portion of which is extracted below for ready reference:- 14. Having heard both the parties and having considered their rival contentions, we find that the disallowance u/s 40a (ia) is to be made of the expenses incurred and claimed by the assessee but before the payment of which, the assessee has failed to deduct tax at source. The genuineness of the expenditure is not in dispute. The dispute is whether TDS was to be made before making the payment. Without going into the nature of the transaction, we are inclined to accept the alternate plea of the assessee that the disallowance of the expenditure would automatically enhance the taxable income of the assessee and the assessee is eligible for the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the due date for the filing of the return. The peculiar position, however, as it obtains in the present case arises out of the fact that the disallowance which was effected by the Assessing Officer has not, the Court is informed, been challenged by the assessee. As a matter of fact the question of law which is formulated by the Revenue proceeds on the basis that the assessed income was enhanced due to the disallowance of the employer's as well as the employees' contribution towards Provident Fund /ESIC and the only question which is canvassed on behalf of the Revenue is whether on that basis the Tribunal was justified in directing the Assessing Officer to grant the exemption under Section 10A. On this position, in the present case it cannot be disputed that the net consequence of the disallowance of the employer's and the employee's contribution is that the business profits have to that extent been enhanced. There was, as we have already noted, an add back by the Assessing Officer to the income. All profits of the unit of the assessee have been derived from manufacturing activity. The salaries paid by the assessee, it has not been disputed, relate to the manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. 57. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an Arm s Length Price in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere dissatisfaction with the findings of facts arrived at by the learned Tribunal is not at all a sufficient reason to invoke Section 260-A of the Act before this Court. 58. The appeals filed by the Revenue are therefore dismissed with no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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