2016 (11) TMI 1672 - AT - Income Tax

Exemption u/s 10A - STP I unit and non-STP unit are using the same infrastructure, employees, etc - According to the D.R., STP I unit has not satisfied the condition stipulated u/s 10A - HELD THAT - Objection of the D.R. is that STP I unit and non-STP unit are using the same infrastructure, employees, etc as examined by this Tribunal in the assessee's own case, for the earlier assessment year, and this Tribunal found that the assessee is eligible for exemption under Section 10A of the Act. In view of the above order of this Tribunal, there is no reason to take a different view for the year under consideration. Therefore, by placing reliance on the order of this Tribunal for the earlier assessment year, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Exclusion of foreign currency expenditure from the export turnover - HELD THAT - Even though no argument was advanced from either side, this Tribunal finds that both denominator and numerator shall be the same. Therefore, once the expenditure incurred in foreign currency was excluded from total turnover, the same is also to be excluded from export turnover. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Appeal filed by the Revenue is dismissed.

Summary

Issues:
1. Exemption claimed under Section 10A of the Income-tax Act, 1961.
2. Exclusion of foreign currency expenditure from the export turnover.

Exemption claimed under Section 10A:
The appeal was against the Commissioner of Income Tax (Appeals) – 15, Chennai, for the assessment year 2009-10. The main issue was the exemption claimed by the assessee under Section 10A of the Income-tax Act, 1961. The Departmental Representative argued that the STP I unit did not meet the conditions under Section 10A as both STP I and STP II units shared employees, products, services, and infrastructure. However, the counsel for the assessee contended that a similar argument had been raised for the assessment year 2005-06, and the Tribunal had ruled in favor of the assessee. The Tribunal, after considering the submissions and previous orders, upheld the claim of the assessee for exemption under Section 10A, citing consistency with its earlier decision.

Exclusion of foreign currency expenditure from export turnover:
Another ground raised by the Revenue was the exclusion of foreign currency expenditure from the export turnover. Despite no arguments presented on this issue, the Tribunal noted that both the denominator and numerator should be the same. Consequently, if foreign currency expenditure was excluded from the total turnover, it should also be excluded from the export turnover. The Tribunal found no reason to interfere with the lower authority's decision on this matter and confirmed the same. As a result, the appeal filed by the Revenue was dismissed, and the order was pronounced on 23rd November 2016 in Chennai.