9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 1592 - AT - Income TaxEntitlement for deduction under section 10AA - whether CIT(A) has erred in directing the AO to reduce the expenditure incurred in foreign currency, both from the export turnover as well as total turnover for the purpose of computation of deduction u/s. 10AA and allowed deduction of ₹ 36,065,831/- as claimed by the assessee? - Held that - We are of the view that the arguments advanced by the ld. DR are contrary to the facts as recorded by the CIT(Appeals), about which there is no dispute. The arguments are also contrary to the principles laid down by the Hon ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd 2011 (8) TMI 782 - KARNATAKA HIGH COURT . We are therefore of the view that the order of the CIT(Appeals) is just and proper and calls for no interference. Accordingly the appeal by the Revenue is dismissed. - Decided in favour of assessee.
Issues:
1. Incorrect computation of deduction under section 10AA instead of section 10A. 2. Reduction of travel expenses from export turnover. 3. Reduction of telecommunication, freight, and insurance expenses from export turnover. 4. Adjustment of expenses from Total Turnover for computing deduction under section 10AA. 5. Discrepancy in treatment of expenses between Export Turnover and Total Turnover. Issue 1: The appeal pertains to the incorrect computation of deduction under section 10AA instead of section 10A by the Assessing Officer (AO). The assessee, engaged in the manufacture and export of tapered roller bearings, was wrongly considered to be in the business of software development and export. This led to the incorrect computation of the deduction under the applicable section. Issue 2: The AO reduced travel expenses incurred in foreign currency from the export turnover, alleging that the company was engaged in rendering technical services or delivering software services outside India. However, the assessee contended that it was involved in the manufacture and export of bearings, not software services. The reduction of travel expenses from the export turnover affected the deduction claimed under section 10AA. Issue 3: Further, the AO reduced telecommunication, freight, and insurance expenses from the export turnover, linking them to the delivery of software services outside India. The assessee argued that these expenses were not related to the delivery of articles outside India, emphasizing that they should not be deducted from the export turnover for computing the deduction under section 10AA. Issue 4: The assessee also requested that any adjustment made for the mentioned expenses from the Export Turnover should also reflect in the Total Turnover for computing the deduction under section 10AA. Citing the decision in the case of CIT Vs. Tata Elxsi, the assessee argued for parity in inclusions and exclusions between the numerator (Export Turnover) and denominator (Total Turnover) for calculating the deduction under section 10AA. Issue 5: The CIT(Appeals) supported the assessee's contentions, emphasizing that the AO's observations were erroneous. The CIT(Appeals highlighted that the expenses in question were not justified to be reduced from the export turnover. The tribunal upheld the order of the CIT(Appeals), dismissing the Revenue's appeal and affirming the correctness of the deduction computation under section 10AA as directed by the CIT(Appeals). In conclusion, the judgment addressed the incorrect computation of deduction under section 10AA, the disputed reduction of various expenses from the export turnover, and the need for consistency in treatment between Export Turnover and Total Turnover for computing deductions under section 10AA. The tribunal upheld the CIT(Appeals) decision, emphasizing the factual inaccuracies in the AO's observations and the applicability of relevant legal precedents in determining the correct deduction under section 10AA.
|
