2016 (3) TMI 830 - HC - Income Tax

Exemption u/s 10A manner of computation Held that - The issue raised herein is stand concluded against the revenue by the decision of this Court in Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT) wherein held Freight and insurance do not have an element of turnover - these two items would have to be excluded from the total turnover particularly in the absence of a legislative prescription to the contrary - The plain consequence of the disallowance and the add back that has been made by the Assessing Officer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under Section 10A the addition made on account of the disallowance of the Provident Fund / ESIC payments ought to be ignored cannot be accepted. Also exemption u/s. 10A to be granted on foreign exchange gain earned (due to fluctuation of foreign exchange) on realization of export receipts in the year of export -Decided in favour of assessee

Summary

Issues:
1. Challenge to the Tribunal's order under Section 260A of the Income Tax Act, 1961 for Assessment Year 2004-05.
2. Exclusion of expenses for providing technical services and communication charges from "total turnover" under section 10A of the Income Tax Act, 1961.

Analysis:
1. The High Court considered the appeal filed by the Revenue challenging the Tribunal's order for Assessment Year 2004-05 under Section 260A of the Income Tax Act, 1961. The Revenue raised questions regarding the exclusion of expenses for providing technical services and communication charges from the "total turnover" while computing income exempt under section 10A of the Act. The Tribunal had relied on a decision by the Special Bench of the ITAT in the case of Sak Soft Ltd. and the decision of the Bombay High Court in the case of Gem Plus Jewellery India Ltd.

2. The High Court noted that the impugned order of the Tribunal had dismissed the Revenue's appeal by following the decision of the Bombay High Court in Gem Plus Jewellery India Ltd. The Revenue's counsel acknowledged that the issue raised was concluded against the Revenue by the decision in Gem Plus Jewellery India Ltd. However, he mentioned that the Revenue had appealed to the Apex Court from the order in Gem Plus Jewellery India Ltd. The High Court held that since the questions raised were already decided by the Bombay High Court and not stayed by the Apex Court, they did not give rise to any substantial question of law and thus were not entertained.

3. Consequently, the High Court dismissed the appeal, stating that the questions raised were concluded by the decision in Gem Plus Jewellery India Ltd. The court held that the questions did not merit further consideration, leading to the dismissal of the appeal without any order as to costs.