ITTA/588/2017 of COMMISSIONER OF INCOME TAX-2 Vs PATNI TELECOM SOLUTIONS PVT., LTD., on 22 December 2025

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

MONDAY, THE TWENTYSECOND DAY OF DECEMBER

TWO THOUSAND AND TWENTY FWE

PRESENT

THE HONOURABLE SRIJUSTICE P.SAM KOSHY

AND

THE HONOURABLE SRIJUSTICE SUDDALA CHALAPATHI RAO

lncome Tax Tribunal Aooeal No.588 of 2Ol7

lncome tax Appeal filed under Section 260A of the hrcome Tax Act, 1961

aggrieved by the order dated 16.11.2016 passed in ITA No.2040/Hyd/2011. on rhe file of the Lrcome Tax Appellate Tribunal Hyderabad Benches'A', Hyderabad.

Between:

Pr. Comrnissioner of Income Tax-2, Hyderabad.

...Appellant/ Appellant.

AND

M/s. Patrri Telecom Solutions Pvt., LTD., (Now known as M/s. IGATE Information Services P. Ltd.,) 5Q4A1, V Floor, Hi Tech City, Hyderabad-580081.

... Respondent/ Respondent.

Counsel for the Appeltant Ms. J.Sunitha (Sr SC for Income Tax)

Counsel for the Respondent Mr. M.Naga Deepak.

The Court made the following: JTIDGMENT

IN THE HIGH COURT FOR THE STATE OF TEI- \NGANA

AT HYDERABAD

THE HONOURABLE SRI JUSTICE P.SAM T:I ISHY

AND

THE HONOURABLE SRI JUSTICE SUDDAI-A CHAI., \PATHI RAO

INCOME TAX TRIBUNAL APPEAL No.58a <t 2OL7

DATE OF JUDGMENT: 22.12.2025

Between:

Pr. Commissioner of Income Tax-2,

Hyderabad.

Appellant

AND

M/s. Patni Telecom Solutions P Ltd.,

(now known as M/s. IGATE Information Services P. Lt( ), 5Q4A1, V Floor, Hi Tech City, Hyderabad 580 081.

Respondent

JUDGMENT: (per Lhe Honble

'ri

lustice P.Sam Koshy)

Heard Ms. J.Sunitha, learned Senior Standir t Income Tax Department appearing on behalf of the i Mr. M.Naga Deepak, learned counsel for the responde:r

2.

The instant appeal has been filed by the F.r Section 26O-4 of the Income Tax Act, 1961 (for st assailing the order dated 16.11.2016, in I.T.A.No.2l)

\!b

Counsel for

ppellant; and

t / assessee.

venue under

:rt 'the Act')

to/Hydl2011,

passed by the Income Tax Appellate Tribunal, Hyderabad Bench 'A', Hyderabad (for short the'ITAT'), for the assessment year 2OO7-O8.

3.

The question of law involved in the instant appeal is "whether the expenses specifically excluded from export turnover under explanation 2(iv) of Section 10A of the Act are also to bb excluded from total turnover under Section 10A of the Act?"

4.

The aforesaid question of law fell for consideration before the Hon'ble Supreme Court in Commissioner of Income Tax, Central-flf vs. HCL Technologies Ltd.l, wherein the Hon'ble Supreme Court has emphatically settled the issue holding that such expenses so incurred have to be excluded from part of the export tu rnover or total turnover.

5.

Today when the matter is taken up for hearing, the learned counsel appearing on either side have produced before the Bench the Circular issued by the CBDT i.e. Circular No.4 of 2018, dated 14.08.2018, whereby the CBDT itself in the light of the judgment of the Hon'ble Supreme Court in HCL Technologaes Ltd. (supra)

have decided not to contest any appeals where the aforesaid ' 2or8 6 scc zo9

question of law is involved. For ready reference, par;r, raph Nos'5, 6

and 7 of the Circular No.4 of 2018 are reproduced ht: r:under, viz., \

'5.

The issue has been examined by the Boar(l clarified that freight, telecommunication cha;1

insurance expenses are to be excluded both fron turnover" and "total turnover", while working out <

admissible under section 10A of the Act to the e(

are afiributable to the delivery of articles or I

computer outside India.

7.

Accordingly, henceforth, appeals may not be the Department on the above settled issue, zr already filed may be withdrawn/not pressed upon.'

6.

Similarly, expenses incurred in foreign exct'. tnge for providing the technical services outside India zt,:t to be excluded from both "expott turnover" and "total r rrnover"

while computing deduction admissible under secti) 10A of the Act.

Thus, all charges/expenses specified in E;:, lanation 2(iv) to section 10A of the Act, are liable to be ':xcluded from total turnover also for the purpose of compt ation of deduction u/s 10A of the Act.

and it is

es and

"export

eduction

:nt they

,ings or

filed by

:1 those

\

II

6.

In the teeth of the said observations made by he CBDL the learned Senior Standing Counsel for Income Tz; Department submits that the question of law involved in the instr it appeal also

being squarely covered by the judgment of the Hon,ble Supreme Court in HCL Technologies Ltd. (supra) and also the Circular dated 14.08.2018, nothing further survives to be adjudicated.

7.

Accordingly, the instant appeal stands disposed of. The question of law stands answered in favour of the assessee and against the Revenue.

8.

As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.

sd/-K. SFTYLESHT

JOINT REGISTRAR

\

,a;

To,

/ /TRUECOPY/ /

SECTION OFFICER

1. The Income Tax Appellate Tribunal Hyderabad Benches'A', Hyderabad

2. The Commissioner of [ncome Tax (Appeals)-V, Hyderabad.

3. Income Tax Officer, Wud-1,6Q), Hyderabad.

4. One CC to Ms. ].Sunitha (Sr SC for lncome Tax) [OPUC]

5. One CC to Mr. M.Naga Deepak, Advocate [OPUC]

6. Two CD Copies.

ICKIBA

o

e

tt

HIGHCOURT

DATED:Z2/12/2025