2014 (9) TMI 1210 - HC - Income Tax

Deduction u/s 10B - Whether the telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses and other expenses incurred in foreign exchange should not be excluded from the export turnover for the purpose of computing deduction under Section 10B of the Income Tax-Act, 1961? - If the said expenses are to be excluded from the export turnover, then the same should also be excluded from the total turnover for the purpose of computing deduction under Section JOB of the Income Tax Act, 1961? - Assessee contends that the assessee were entitled to the relief even on the alternative ground and if it is not considered, it is likely that the finding recorded by the Commissioner of Income Tax (Appeals) would stand, which may be held against them in future. HELD THAT - We deem it proper to remit these matters back to the Tribunal to record the findings on merit, even on the alternative ground also. We make it clear that while considering the said ground, it is open to the assessees to raise such additional grounds which they may choose so. Accordingly, these appeals are remitted back to the Tribunal for fresh consideration. All the contentions are kept open to be decided by the Tribunal. It is made clear that the tribunal shall also go into such other questions of law which may be raised by the assessees on such remand.

Summary

Issues:
1. Exclusion of specific expenses from export turnover for computing deduction under Section 10B of the Income Tax Act, 1961.
2. Whether excluded expenses should also be excluded from total turnover for computing deduction under Section 10B of the Income Tax Act, 1961.

Analysis:

Issue 1:
The assessees challenged the Tribunal's order, seeking exclusion of telecommunication expenses, insurance charges, personnel expenses, professional expenses, branch office expenses, and other foreign exchange expenses from the export turnover for deduction under Section 10B of the Income Tax Act, 1961. The Tribunal granted relief on this ground but did not address the alternative ground raised by the assessees. The learned Counsel argued that the assessees were entitled to relief even on the alternative ground. To ensure a comprehensive decision, the High Court remitted the matters back to the Tribunal to consider both grounds and any additional grounds the assessees may raise.

Issue 2:
The High Court emphasized that if the excluded expenses are to be excluded from the export turnover, they should also be excluded from the total turnover for computing the deduction under Section 10B of the Income Tax Act, 1961. The Court directed the Tribunal to reconsider the case, allowing the assessees to present additional grounds and ensuring that all contentions are open for the Tribunal's decision. The Tribunal was instructed to address any other legal questions raised by the assessees during the remand process, ensuring a comprehensive and fair consideration of the issues involved.

In conclusion, the High Court remitted the appeals back to the Tribunal for fresh consideration, emphasizing the need to address both the primary and alternative grounds raised by the assessees regarding the exclusion of specific expenses from export turnover for deduction under Section 10B of the Income Tax Act, 1961. The Court's directive aimed to ensure a thorough examination of all contentions and legal questions, allowing for a comprehensive decision on the matter.