Processor Systems India Pvt. Ltd.,, ... vs Department Of Income Tax

The Deputy Commissioner Vs. Processor Systems India Pvt. Ltd., of Income Tax, 24. Classic Building, Circle 12(3), Richmond Road, Bangalore. Bangalore - 560 025. PAN : AAACP 8635M APPELLANT RESPONDENT

Appellant by : Shri P. Dhivahar, Jt. CIT(DR) Respondent by : Shri P. Dinesh, Advocate

Date of hearing : 10.02.2015 Date of Pronouncement : 20.02.2015

ORDER

Per N.V. Vasudevan, Judicial Member

This appeal by the Revenue is against the order dated 17.2.2014 of

the CIT(Appeals)-IV, Bangalore relating to assessment year 2005-06.

2. The two issues that arise for consideration in this appeal are as to

whether the CIT(A) was justified in directing the AO to exclude

reimbursement of certain expenses both from the export turnover as well ITA No.678/Bang/2014 Page 2 of 3

as the total turnover for the purpose of computation of deduction u/s. 10A

of the Act; and as to whether the CIT(A) was justified in directing the AO to

compute deduction u/s. 10A of the Act on the profits of the 10A unit without

setting off loss pertaining to non-10A unit against the profits of 10A units.

3. In respect of the first issue, the CIT(A) , following the decision of the

Hon'ble High Court of Karnataka in CIT v. Tata Elxsi Ltd., 349 ITR 98

(Kar), held that whatever is excluded from the export turnover, has also to

be excluded from the total turnover while computing deduction u/s. 10A of

the Act and allowed the claim of the assessee.

4. In so far as the second issue is concerned, the CIT(A) followed the

decision of Hon'ble High Court of Karnataka in Yokogawa India Ltd.,

345 ITR 385 (Kar), wherein it was held that section 10A is an exemption

provision and therefore losses of non-10A units cannot be set off against

profits of 10A units which are eligible for deduction u/s. 10A.

5. Aggrieved by the order of CIT(A), the Revenue has preferred the

present appeal before the Tribunal.

6. We have heard the submissions of the ld. DR, whose only stand

was that both the decisions of Hon'ble High Court of Karnataka have not

been accepted by the Revenue and SLPs have been filed before the

Hon'ble Supreme Court. We are of the view that pendency of SLP before

the Hon'ble Supreme Court will not be a ground, not to follow the decisions ITA No.678/Bang/2014 Page 3 of 3

of the jurisdictional High Court. In the circumstances, we are of the view

that the appeal by the Revenue is without any merit. Consequently, the

same is dismissed.

Pronounced in the open court on this 20th day of February, 2015.

Sd/- Sd/-

( ABRAHAM P. GEORGE ) ( N.V. VASUDEVAN ) Accountant Member Judicial Member

Bangalore, Dated, the 20th February, 2015.

/D S/

Copy to:

1. Appellant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file

By order

Assistant Registrar / Senior Private Secretary ITAT, Bangalore.