2021 (11) TMI 536 - HC - Income Tax

Court upholds Tribunal decision on disallowance of income from other sources.

The Court dismissed the appeal filed by the Revenue, upholding the Tribunal's decision related to the disallowance of certain amounts treated as income ... Characterization of receipts - income from other sources as against claim of assessee treating the same as export turnover - HELD THAT:- Substantial question of law No.1 is directly covered by the decision of the Coordinate bench of this Court in Principal Commissioner of Income Tax and another vs. M/s. Tata Elxsi Ltd. [2020 (3) TMI 1082 - KARNATAKA HIGH COURT] arising out of the common order passed by the Tribunal. This Court has dismissed the appeal filed by the Revenue placing reliance on the ruling of the full bench of this Court in the case of CIT vs. M/s. Hewlett Packard Global Soft Ltd., [2017 (11) TMI 205 - KARNATAKA HIGH COURT] observing that the order of the Tribunal does not suffer from any perversity and infirmity, as such no substantial question of law arises for consideration in the appeal. Deduction u/s 10A - HELD THAT:- As perused the judgment of the Coordinate bench of this Court in Wipro Ltd., supra, wherein their lordships have categorically observed that after the period of six months, if foreign exchange remittances are received and credited to the assessee’s account through the Reserve Bank of India and in this context, merely because the written approval of extension was not passed by the Reserve Bank of India, the assessee could not be denied benefit of Section 10A. This finding of the Co-ordinate Bench decision would certainly assist the assessee. The Tribunal has rightly dismissed the appeal of the Revenue placing reliance on this judgment. The arguments of the learned counsel for the Revenue inasmuch as no evidence is unsustainable. We do not find any infirmity or perversity in the order impugned herein. Hence, we answer substantial question of law No.2 in favour of the assessee Issues:1. Disallowance of income treated as export turnover.2. Disallowance of amount not realized in foreign currency before the due date of filing the return of income.Analysis:1. The appeal was filed by the Revenue challenging the order passed by the Income Tax Appellate Tribunal related to the assessment year 2010-11. The substantial questions of law considered were whether the Tribunal was correct in setting aside the disallowance of certain amounts treated as income from other sources and whether those amounts could be considered as part of export turnover. The decision relied on previous cases and the Tribunal's order was upheld based on those precedents.2. The first substantial question of law was found to be directly covered by a decision of the Coordinate bench of the Court in a different case, where the appeal filed by the Revenue was dismissed. The Tribunal's order was considered to be in line with the ruling of the full bench of the Court, and no substantial question of law arose for consideration in the appeal. Therefore, the first issue was decided in favor of the assessee and against the Revenue.3. Moving on to the second substantial question of law, the Revenue attempted to distinguish a judgment relied upon by the Tribunal in another case. The Assessing Officer noted the lack of evidence regarding RBI's permission for realizing the amount in foreign exchange after the due date of filing the return of income. The assessee, however, relied on a previous decision of the Court which stated that the benefit of Section 10A could not be denied solely based on the absence of RBI's written approval of extension. The Tribunal's decision was upheld, emphasizing that the Revenue's argument of lack of evidence was unsustainable. Consequently, the second issue was also decided in favor of the assessee and against the Revenue.4. In conclusion, the Court dismissed the appeal, upholding the Tribunal's decision on both substantial questions of law. The judgment provided detailed analysis and reasoning based on precedents and legal interpretations, ultimately ruling in favor of the assessee in both issues raised by the Revenue.