2012 (9) TMI 59 - AT - Income Tax

Deduction u/s. 10B of the Income-tax Act - whether when computing the relief under Section 10-A of the Income-tax Act, 1961 the amount of communication expenses/freight, insurance, telecommunication expenses and expenses incurred in foreign currency should be excluded from the total turnover for the same are reduced from export turnover - Held that - While computing the consideration received from such export turnover, the expenses incurred towards freight, telecommunication charges, or insurance attributable to the delivery of the articles or things of computer software outside India, or expenses if any incurred in foreign exchange in providing the technical service outside India should not be included - in favour of the assessee

Summary

Issues:
Appeal against order reducing freight charges from export turnover only for deduction u/s. 10B of Income-tax Act, 1961.

Analysis:
The appellant contested the reduction of freight charges from export turnover only, not from total turnover, for deduction u/s. 10B of the Income-tax Act, 1961. The Assessing Officer noted the deduction discrepancy during scrutiny, leading to the dispute. The CIT(A) upheld the AO's decision, citing the legislative intention behind the amendment from exemption to deduction under Section 10B. The appellant argued citing a High Court judgment favoring their stance, which the DR did not refute. The Tribunal referenced a similar High Court judgment, ruling in favor of the assessee, emphasizing exclusion of certain expenses from total turnover for computing relief under Section 10-A. Consequently, the Tribunal set aside the CIT(A)'s order and allowed the assessee's claim based on the precedent judgment.

In summary, the Tribunal's decision favored the appellant by aligning with the High Court's interpretation regarding the exclusion of specific expenses from total turnover for computing deductions under the Income-tax Act, 1961. The judgment highlighted the importance of consistent application of legal principles and precedent rulings in tax matters, ultimately leading to the allowance of the assessee's appeal against the reduction of freight charges solely from export turnover for deduction purposes under Section 10B.