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2012 (8) TMI 641 - AT - Income TaxDisallowance of employees contributions to Provident Fund paid after the due date - non eligible for deduction u/s. 10A - Held that - As decided in CIT Versus M/s. Alom Extrusions Limited 2009 (11) TMI 27 - SUPREME COURT if the assessee has deposited the contribution before due date of filing of return under the I.T. Act, and the date of payment was after the due date under the Employees Provident Fund Act would not be denied deduction - as the assessee contended that the employees contribution to PF was made before the due date of filing of the return but no details regarding the date of payment were furnished by assessee the matter is remitted back to the file of the Assessing Officer to examine this issue afresh. Direction to the Assessing Officer to grant exemption under section 10A on the assessed income, which was enhanced due to disallowance of the employer s as well as employees contribution towards PF/ESIC. Exclusion of expenditure on Internet Service Provider from export turnover - Held that - As the assessee received consideration against software i.e., goods & the agreement, invoices and the turnover clearly show that the assessee did not recover any such expenditure. Therefore, there is no scope for any exclusion from export turnover on account at such expenses. If at all on presumption, it is to be excluded for the purpose of export turnover then on the some assumption, reason and analogy it should be excluded from total turnover also as elimination should be from both the denominator and the numerator to give a schematic interpretation to the formula - in favour of assessee.
Issues Involved:
1. Disallowance of employees' contributions to Provident Fund paid after the due date. 2. Eligibility for deduction under section 10A. 3. Treatment of disallowed amount as part of business income for exemption under section 10A. 4. Expenditure incurred in foreign exchange for providing technical services. 5. Internet charges on delivery of software. Analysis: Issue 1: Disallowance of employees' contributions to Provident Fund paid after the due date The Assessing Officer treated the late payment of employees' contribution to Provident Fund as deemed income of the assessee under section 36(1)(va) of the Income Tax Act. The CIT(A) upheld this treatment based on a previous Tribunal order. The AR argued that the payment was made before the due date of filing the return, citing a Supreme Court judgment. The ITAT remanded the matter to the Assessing Officer for further examination, emphasizing that if the actual payment was made before the due date, it should be allowed as a business expenditure under section 43B. Issue 2: Eligibility for deduction under section 10A The assessee contended that even if the amount was disallowed, it should be considered part of the business income for exemption under section 10A. The ITAT referred to a Bombay High Court judgment supporting this argument and allowed the ground raised by the assessee, granting the exemption under section 10A. Issue 3: Treatment of disallowed amount as part of business income for exemption under section 10A The ITAT, following the Bombay High Court judgment, held that the disallowed amount, including the employer's and employees' contributions towards provident fund and ESIC, should be considered as part of the business income for the purpose of exemption under section 10A. Issue 4: Expenditure incurred in foreign exchange for providing technical services The Revenue raised concerns regarding expenditure in foreign exchange for providing technical services. The ITAT relied on a previous Tribunal order and dismissed the Revenue's grounds, citing that the expenses were necessary for providing technical services and were not to be excluded from consideration in foreign exchange. Issue 5: Internet charges on delivery of software The ITAT, following the Tribunal's earlier order, held that the expenses related to the internet service provider for transmitting data (software) did not fall under telecommunication charges for exclusion under section 10A. The ITAT dismissed the Revenue's grounds on this issue. In conclusion, the ITAT partly allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the treatment of the disallowed amount for exemption under section 10A and the eligibility of certain expenditures for deduction.
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