1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 18TH DAY OF SEPTEMBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.57 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME TAX C.R. BUILDING, QUEENS ROAD BANGALORE. 2. ASST. COMMISSIONER OF INCOME TAX CIRCLE-11(5), C.R. BUILDING QUEENS ROAD, BANGALORE. ... APPELLANTS (BY SRI. K.V. ARAVIND, ADV.,) AND: M/S. L & T VALDEL ENGINEERING PVT. LTD., NO.19, SHRUTHA COMPLEX PRIMROSE ROAD, BANGALORE-560025. ... RESPONDENT (BY SRI. A. SHANKAR, SR. COUNSEL A/W SRI. M. LAVA, ADV.) --- THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 13.09.2012 PASSED IN ITA NO.1186/BANG/2011 FOR ASSESSMENT YEAR 2007-08, PRAYING THAT THIS HON BLE COURT MAY BE PLEASED TO: (I) FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. 2 (II) ALLOW APPEAL AND SET ASIDE ORDERS PASSED BY ITAT, BANGALORE IN ITA NO.1186/BANG/2011 DATED 13-09-2012 CONFIRMING ORDER OF APPELLATE COMMISSIONER AND CONFIRM ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-11(5), BANGALORE. THIS ITA COMING ON FOR FINAL HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT This appeal under Section 260A of Income Tax Act, 1961 (hereinafter referred to as Act for short) has been preferred by revenue. subject matter of appeal pertains to Assessment year 2007-08. appeal was admitted by bench of this Court vide order dated 03.06.2013 on following substantial question of law: (i) Whether Tribunal was correct in holding that assessee is entitled for deduction u/s.10A of Act, when new STP unit was not in existence and no activities are carried out from STP unit? (ii) Whether Appellate Authorities were correct in allowing 3 deduction u/s.10A of Act, when assessee is not new industrial undertaking in terms of section 10A(2) of Act?. 2. Facts leading to filing of appeal briefly stated are that assessee is Design Engineering Company. assessee filed its return of income for Assessment Year 2007-08 on 19.06.2008 and thereafter, filed revised return on 04.11.2008, in which total income of Rs.1,04,49,130/- was declared. return was processed under Section 143(2) of Act on 07.03.2009. case was selected for scrutiny and notice under Section 143(2) of Act was issued. Assessing Officer vide order dated 17.12.2009 inter alia held that though assessee has claimed deduction under Section 10A of Act, yet from statement filed by assessee, it is evident that changes have been made to existing unit and no new unit is set up. It was further held that even from perusal of assets, assessee has purchased few 4 computers for use of STPI unit and assessee has not purchased any land for use of STPI unit. Assessing Officer therefore, concluded that assessee has only split existing infrastructure and business already in existence and rejected claim of assessee for deduction under Section 10A of Act. assessee thereupon filed appeal before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) by order dated 16.09.2011 followed order of Tribunal in ITA No.616 to 618/2008 dated 18.02.2008 and held that assessee is entitled to deduction under Section 10A of Act. In result, appeal preferred by assessee was allowed. Being aggrieved, revenue filed appeal before Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short). Tribunal vide order dated 13.09.2012 dismissed appeal preferred by revenue. In aforesaid factual background, this appeal has been filed. 5 3. Learned counsel for revenue submitted that in order to claim benefit of deduction under Section 10A of Act, assessee is required to satisfy requirements mentioned in Section 10(2)(ii) & (iii) of Act. It is further submitted that eligibility of assessee has to be ascertained in first year itself and since, assessee has not set up new unit, it cannot claim benefit of deduction under Section 10A of Act. It is further submitted that Tribunal erred in proceeding on assumption that nature of business of assessee does not require any infrastructure. In support of aforesaid submission, reliance has been placed on decision of Supreme Court in DEPUTY COMMISSIONER OF INCOME TAX 11(1), BANGALORE VS. ACE MULTI AXES SYSTEMS LTD. , (2017) 88 TAXMANN.COM 69 (SC). 4. On other hand, learned counsel for assessee submitted that assessee is registered as STPL and was granted approval on 14.09.2001. It is 6 further submitted that concurrent findings of fact have been recorded by Commissioner of Income Tax (Appeals) as well as Tribunal with regard to eligibility of assessee to claim benefit of deduction under Section 10A of Act, which have not been challenged as perverse. It is further submitted that assessee was engaged on site development of software program and programs were delivered at premises of clients at work site in South Korea and therefore, there was no need of full fledged infrastructure facility and assessee has therefore, rightly been held entitled to deduction under Section 10A of Act. It is further submitted that newly established undertaking does not mean new company or partnership but means undertaking independent of all undertakings of assessee. In support of aforesaid submissions, reliance has been placed on decisions in CIT VS. WIPRO GE MEDICAL SYSTEM LTD. , 50 TAXMANN.COM 181 (KAR), CIT VS. 7 EXPERT OUTSOURCE PVT LTD , 358 ITR 518 (KAR), CIT VS. QUEST INFORMATICS PVT LTD , 372 BITR 526 (KAR) and PCIT VS. MACQUARIE GLOBAL SERVICES PVT LTD , 102 TAXMANN.COM 272 (DEL). 5. We have considered submissions made by learned counsel for parties and have perused record. Section 10A has been subject matter of interpretation by this court as well as Delhi High Court. It has been held that in order to claim deduction under Section 10A of Act, pre test is not whether new industrial undertaking connotes expansion of existing business of assessee but, whether it is all same and new identifiable undertaking separate and distinct from existing business. It has further been held that new activity may produce same commodities of old business or it may produce some other distinct marketable products. It has also been held that newly established undertaking is undertaking of 8 assessee independent of all undertakings that he is already possessing. In instant case, assessee was engaged on site development of software program. programs were delivered at premises of client at work site in South Korea. activities of assessee finally culminated at work site of clients at South Korea and there was no need for full fledged infrastructure facilities in India. Thus, industrial undertaking of assessee was independent of all undertakings which it was already possessing. Therefore, assessee has rightly been held entitled to deduction under Section 10A of Act by Commissioner of Income Tax (Appeals) as well as Tribunal. aforesaid concurrent findings of fact by no stretch of imagination can be said to be perverse. 6. It is cardinal principle of law that tribunal is fact finding authority and decision on facts on tribunal can be gone into by High Court only if question has been referred to it, which says finding 9 of tribunal is perverse. [SEE: SUDARSHAN SILKS & SAREES VS. CIT , 300 ITR 205 SCC @ 211 and MANGALORE GANESH BEEDI WORKS VS. CIT , 378 ITR 640 (SC) @ 648]. three judge bench of Supreme Court in SANTOSH HAZARI VS. PURSHOTTAM TIWARI , (2001) 3 SCC 179 while dealing with expression to be question of law involving in case held that to be question of law involving in case , there must be first foundation for it laid in pleadings and questions emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for just and proper decision of case. It has been held that entirely new point raised for first time before High Court is not question involved in case unless, it goes to root of matter. In HERO VINOTH (MINOR) VS. SESHAMMAL , (2006) 5 SCC 545 while dealing with scope of Section 260A of Act, it was held that this court will not interfere with 10 findings of court, unless courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying law erroneously or decision is based on no evidence. aforesaid decisions were referred to with approval in VIJAY KUMAR TALWAR supra as well as in UNION OF INDIA V. IBRAHIM UDDIN , (2012) 8 SCC 148 and has been followed by division bench of this court in CIT VS. SOFT BRANDS (P.) LTD., (2018) 406 ITR 513. 7. findings of fact have not been assailed as perverse. It is also pertinent to mention that even in memo of appeal neither any grounds have been urged nor any material has been placed on record to demonstrate that concurrent findings of fact recorded by Commissioner of Income Tax (Appeals) and Tribunal are perverse. In view of preceding analysis, we find that matter 11 stands concluded by findings of fact and revenue has not been able to either plead or place on record material to show that findings of fact recorded by Tribunal are perverse. Thus, we hold that non substantial questions of law. arise for consideration in this appeal. In result, appeal is dismissed. Sd/- JUDGE Sd/- JUDGE ss Commissioner of Income-tax, Bangalore / Asst. Commissioner of Income-tax Circle-11(5), Bangalore v. L & T Valdel Engineering Pvt. Ltd