2018 (1) TMI 1078 - HC - Income Tax

Computation of exemption u/s 10A - sight consultancy services expenses, Telecommunication expenses, travel expenses, expenses borne by the customers of the Assessee Company on behalf of the Assessee Company need to be reduced from Total Turnover while computing exemption - ITAT allowed the claim as relying on HC decision against which there is a pending of Special Leave Petition before the Apex Court - Held that - Appellate Tribunal while dismissing the Appeal preferred by the Appellant-Revenue first relied upon a decision of this Court 2011 (6) TMI 769 - BOMBAY HIGH COURT and while deciding the said case, relied upon a decision in the case of CIT vs. Gemplus Jewellery Ltd. 2010 (6) TMI 65 - BOMBAY HIGH COURT wherein held what is excluded from export turnover must also be excluded from the total turnover Referring to Appeal preferred by the Appellant Revenue against the decision of this Court in the case of Gemplus Jewellery Ltd.(supra) is pending before the Apex Court, the law is very well settled. So long as the decision of the Coordinate Bench of this Court is not set aside by the higher Court, all Coordinate Benches of this Court continue to be bound by the said decision. Even if a judgment of the Coordinate bench is stayed by the higher Court, as far as this Court is concerned, it continues to be bound by the judgment. No substantial question of law arises Not allowing set off of the loss incurred by the Assessee Company from the Non-STPI Unit with the profit of the STPI Unit to arrive at the profits of the business eligible for exemption u/s 10A - Held that - Appellate Tribunal has followed the decision of Karnataka High Court dated 9th August, 2011 in the case of CIT vs Yokogawa India Ltd. 2011 (8) TMI 845 - Karnataka High Court also confirmed by Apex court 2016 (12) TMI 881 - SUPREME COURT

Summary

Issues:
1. Whether certain expenses should be reduced from Total Turnover while computing exemption u/s 10A of the Income Tax Act?
2. Whether the set off of the loss incurred by the Assessee Company from the Non-STPI Unit with the profit of the STPI Unit is allowable to arrive at the profits eligible for exemption u/s 10A of the Income Tax Act?

Analysis:

Issue 1:
The Appellant challenged the Tribunal's decision regarding the reduction of expenses from Total Turnover for computing exemption u/s 10A of the Income Tax Act. The Court referred to previous judgments, including one related to Gemplus Jewellery Ltd., and noted that the decisions were against the Appellant Revenue. The Appellant's argument regarding a pending Appeal before the Apex Court was dismissed, emphasizing that until a decision is set aside by a higher Court, all Coordinate Benches are bound by it. Citing the Division Bench's ruling in the case of Desai Bros. Ltd., the Court reiterated that the pendency of a Special Leave Petition before the Apex Court does not affect the binding nature of the Court's decision. Consequently, the Court found no substantial question of law and dismissed the Appeal.

Issue 2:
Regarding the second issue, the Appellate Tribunal's decision was based on the judgment of the Karnataka High Court in the case of CIT vs Yokogawa India Ltd., which was affirmed by the Supreme Court. The Court also mentioned a similar decision in the case of Hindustan Unilever Ltd vs. Deputy Commissioner of Income-tax. The Appellant's submission about a pending Appeal before the Apex Court was not considered relevant, as the Court reiterated the principle that until a decision is set aside, it remains binding. Therefore, the Court found no merit in the Appellant's arguments and dismissed the Appeal without costs.

In conclusion, the High Court of Bombay dismissed the Appeal, emphasizing the binding nature of previous decisions until set aside by a higher Court. The judgment provided a detailed analysis of the issues raised by the Appellant Revenue, referencing relevant legal precedents and highlighting the principle that the Court must abide by its own decisions until overturned.