2011 (1) TMI 1482 - AT - Income Tax

Summary

Issues involved: Assessment under section 143(3) of the Income Tax Act, 1961; Erroneous assessment prejudicial to Revenue; Interpretation of total turnover for sections 10A and 10B.

Assessment under section 143(3): The Assessing Officer completed assessment under section 143(3) of the Income Tax Act, 1961, resulting in an income of &8377; 7,73,95,960. The learned CIT found the order erroneous as the assessee had deducted certain expenses for section 80HHE but not for section 10A/10B, leading to excess deduction under section 10A/10B.

Interpretation of total turnover: The assessee argued that telecommunication charges and foreign currency expenses should be reduced from total turnover, not just export turnover, for computing deductions under sections 10A and 10B. The CIT held that the Assessing Officer's failure to exclude these expenses from total turnover led to an erroneous assessment prejudicial to Revenue. The CIT set aside the assessment for recomputing the deduction after excluding these expenses.

Tribunal's decision: The Tribunal modified the CIT's order, directing the Assessing Officer to reduce the expenditure incurred in foreign exchange for services outside India from both export turnover and total turnover for calculating deductions under sections 10A and 10B, in line with a previous decision in the assessee's own case. The assessee's appeal was allowed, and the order was pronounced on 7th January, 2011.