9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (8) TMI 163 - AT - Income TaxComputation of deduction u/s. 10A - excluding the telecommunication charges and expenses incurred in foreign currency from the export turnover and total turnover - According to the Revenue, the aforesaid expenses should be excluded only from the export turnover and not from the total turnover - Held that - As of today, law declared in Tata Elxsi Ltd., 2011 (8) TMI 782 - KARNATAKA HIGH COURT in which it was held that whatever is excluded from the export turnover, should also be excluded from the total turnover which is the jurisdictional High Court is binding on us. We therefore hold that the order of CIT(A) does not call for any interference and accordingly the same is confirmed. - Decided against revenue. Brought forward unabsorbed losses of earlier years - Whether should be set off against the profits of the 10A unit and deduction u/s. 10A should be allowed only after such set off? - Held that - The Hon ble Karnataka High Court in the case of Yokogawa (2011 (8) TMI 845 - Karnataka High Court ) was concerned with similar situation as set out above. In view of the aforesaid decision of the Hon ble Karnataka High Court, we are of the view that the claim as made by the Assessee for carry forward of loss of the non-eligible unit had to be allowed without set off of profits of the 10A/10B unit. - Decided against revenue.
Issues Involved:
1. Exclusion of telecommunication charges and foreign currency expenses from export turnover and total turnover while computing deduction under Section 10A of the Income Tax Act. 2. Set off of brought forward unabsorbed losses against profits of the 10A unit before allowing deduction under Section 10A. 3. Set off of losses of STPI units against other income. Issue-wise Detailed Analysis: 1. Exclusion of Telecommunication Charges and Foreign Currency Expenses: The Revenue contested the exclusion of telecommunication charges and foreign currency expenses from both export turnover and total turnover while computing deduction under Section 10A of the Income Tax Act. The Revenue argued that these expenses should only be excluded from the export turnover and not from the total turnover. However, the Tribunal upheld the decision of the CIT(A) based on the precedent set by the Karnataka High Court in Tata Elxsi Ltd., which mandates that whatever is excluded from the export turnover should also be excluded from the total turnover. The Tribunal noted that the law declared by the jurisdictional High Court is binding and confirmed the CIT(A)'s order. 2. Set Off of Brought Forward Unabsorbed Losses: The Revenue's grievance was that brought forward unabsorbed losses of earlier years should be set off against the profits of the 10A unit before allowing the deduction under Section 10A. The Tribunal referred to the Karnataka High Court's judgment in Yokogawa India Ltd., which held that Section 10A is an exemption provision and thus, set off of brought forward unabsorbed losses should not be made before allowing the deduction. The Tribunal also considered the CBDT Circular No. 7/2003, which viewed Section 10A as a deduction provision, but concluded that the High Court's decision in Yokogawa India Ltd. prevails. The Tribunal reiterated that the profits of the 10A unit should be allowed deduction without setting off the losses of non-10A units, thereby dismissing the Revenue's grounds. 3. Set Off of Losses of STPI Units Against Other Income: The assessee appealed against the CIT(A)'s conclusion that losses of STPI units cannot be set off against other income. The Tribunal noted that the CIT(A)'s observations were factually incorrect as the assessee had not claimed such set off. The Tribunal reviewed the profit & loss account and the computation of total income, confirming that the assessee's STPI units had profits and there was no set off of losses against other income. Consequently, the Tribunal quashed the CIT(A)'s order on this issue and allowed the assessee's appeal. Conclusion: In summary, the Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal. The Tribunal confirmed that telecommunication charges and foreign currency expenses should be excluded from both export and total turnover, upheld that brought forward unabsorbed losses should not be set off against 10A unit profits before allowing deduction, and quashed the CIT(A)'s incorrect conclusion regarding the set off of STPI unit losses against other income.
|
