9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 219 - AT - Income TaxExclusion of overseas travel and communication expenditure incurred in foreign currency from the total turnover for the purpose of deduction u/s 10B - Held that - This issue is squarely covered by the order of the Chennai Special Bench in the case of ITO vs Sak Soft Ltd, 2009 (3) TMI 243 - ITAT MADRAS-D wherein it was held that when any such amount is deducted from the export turnover from the numerator, the same shall also be deducted from the total turnover in the denominator while applying the formula (Profit X Export turnover Total turnover) as provided under the Act. Addition of disallowance under section 14A r.w. Rule 8D made by the Assessing Officer while computing the book profit u/s 115JB - Held that - We direct the Assessing Officer to adopt the book profits as per the Profit & Loss Account and do not make addition on account of disallowance worked out under section 14A of the Act, as such disallowance is computed under the normal provision of the Act, which are not applicable for determining book profits under section 115JB of the Act.
Issues:
1. Exclusion of overseas travel and communication expenditure from total turnover for deduction u/s 10B of the Act. 2. Addition of disallowance under section 14A r.w. Rule 8D while computing book profit u/s 115JB of the Act. Issue 1: Exclusion of overseas travel and communication expenditure The appeal by the Revenue and cross objection by the assessee were against the order of the Commissioner of Income-tax (Appeals)-6, Chennai, for the assessment year 2010-11. The Revenue's appeal focused on the exclusion of overseas travel and communication expenditure in foreign currency from the total turnover for the purpose of deduction u/s 10B of the Act. The Tribunal referred to the Chennai Special Bench's decision in the case of ITO vs Sak Soft Ltd, where it was held that such deductions from the export turnover should also be deducted from the total turnover while applying the formula (Profit X Export turnover : Total turnover) as per the Act. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the exclusion of the mentioned expenditure. Issue 2: Addition of disallowance under section 14A r.w. Rule 8D In the cross objection, the assessee challenged the addition of disallowance under section 14A r.w. Rule 8D made by the Assessing Officer while computing the book profit u/s 115JB of the Act. The Tribunal considered the issue in light of previous decisions. It referred to the case of Dy. CIT vs M/s Lanco Tanjore Power Co. Ltd. and observed the similarity between the provisions of c1. (f) of the Explanation to s. 115JA and sub-s. (1) of s. 14A of the Act. The Tribunal also cited decisions from the cases of Goetze (India) Ltd. v. CIT and Quippo Telecom Infrastructure Ltd. v. ACIT to support its conclusion that no addition to the book profit should be made for expenditure incurred to earn exempt income while computing income under section 115JB of the Act. The Tribunal further cited decisions from the Chandigarh Bench and Mumbai Bench, aligning with the above stance. Consequently, the Tribunal allowed the claim of the assessee in its cross objection, partly allowing the cross objection. In conclusion, the Tribunal upheld the exclusion of overseas travel and communication expenditure from the total turnover for deduction u/s 10B of the Act, dismissing the Revenue's appeal. Additionally, the Tribunal ruled against the addition of disallowance under section 14A while computing the book profit u/s 115JB of the Act, aligning with previous decisions and allowing the claim of the assessee in its cross objection.
|
