IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No. 881/Bang/2023 Assessment Year: 2019-20 Infosys Limited Dy. Commissioner of Income Tax Plot 44, Konappana Agrahara Circle – 3(1)(1)

Hosur Road, Konappana BMTC Building, 80 Feet Road Bangalore – 560100 Vs. Koramangala, Bangalore – 560095 Karnataka Karnataka PAN: AAACI4798L APPELLANT RESPONDENT ITA No. 245/Bang/2024 Assessment Year: 2019-20 Jt. Commissioner of Income Tax (OSD) Infosys Limited Circle – 3(1)(1) Plot 44, Konappana Agrahara Room NO. 241, 2^nd Floor Hosur Road, Konappana BMTC Building, 80 Feet Road Vs. Bangalore – 560100

6th Block, Koramangala Karnataka Bangalore – 560095 Karnataka PAN: AAACI4798L APPELLANT RESPONDENT Assessee by : Sri Padam Chand Khincha – CA Department by : Smt. Srinandini Das – CIT - DR Date of Hearing : 09.05.2025 Date of Pronouncement : 06.08.2025

O R D E R

PER KESHAV DUBEY, JUDICIAL MEMBER:

These cross appeals are filed against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short “Ld. CIT(A)/NFAC] vide DIN & Order No. ITBA/NFAC/S/250/2023- 24/1056786183(1) dated 05.10.2023 passed u/s. 250 of the Income Tax Act, 1961 (in short “the Act”) for the A.Y.2019-20.

2. The assessee has raised the following grounds of appeal: -

“1. General Ground

1.1. The learned Commissioner of Income Tax (Appeals), Income Tax Department (hereinafter referred to as CIT (A) for short) has erred in passing the order under section 250 in the manner passed by him. The order so passed to the extent prejudicial to the appellant is bad in law and liable to be quashed.

2. Adjustment of loss and turnover (export turnover & total turnover)

of loss making 10AA unit with the profit making 10AA units:-

2.1. The learned NFAC has erred in adjusting the loss and turnover of 10AA unit (Hubballi) amounting to Rs 4,18,33,747 and Rs.17,94,717 respectively from the profit & turnover of 10AA-100% eligible units while computing deduction under section 10AA without specifying any reason in the show cause notice and order and the learned CIT(A) erred in confirming the same.

2.2. The learned CIT(A) has erred in relying on the Explanation to below subsection 1 of section 10AA without appreciating that the said Explanation is applicable only at the stage of allowing deduction under section 10AA from the total income and it is not applicable at the stage of computation of deduction under section 10AA in respect of profits of each SEZ unit.

2.3. On facts and circumstances of the case and law applicable, the losses and turnover of the loss making 10AA unit should not be adjusted with the profit making 10AA eligible units for the claim of deduction under section

10AA of the Act.

3. Ground relating to disallowance of deduction under section 10AA:

3.1. The learned NAC and the CIT(A) has erred in reducing the following incomes from profits of the business of SEZ units in computing deduction under section 10AA for the reason that the said incomes are not derived from the activity of software development and export.

i) Interest on non-convertible debentures (NCDs) amounting to Rs.

259,59,73,228 ii) Insurance claim received in respect of flood in Chennai during the FY

2016-17 amounting to Rs. 3,07,45,374 iii) Interest on loans to subsidiaries amounting to Rs.13,35,23,830 iv) Interest on Govt Securities amounting to Rs.4,34,11,632 v) Interest on debentures amounting to Rs.141,07,93,441 vi) Interest on tax refunds amounting to Rs.7,67,71,216 vii) Incentive from airlines amounting to Rs.7,63,88,054 viii) Rental income from BSNL amounting to Rs.12,000

3.2. On facts and circumstances of the case and law applicable, the appellant is entitled for the claim of deduction under section 10AA of the Act on the above incomes included in the profits of eligible SEZ units.

4. Foreign tax credit relating to income eligible for deduction under section 10AA and foreign tax credit in respect of forei