2018 (12) TMI 1519 - HC - Income Tax

Deduction u/s 10A - Tribunal held that, expenditure incurred in foreign currency which are excluded from the export turnover should also be excluded from total turnover in order to grant relief under 10A - Held that - Substantial question of law framed for consideration has been answered by the Hon ble Supreme Court in CIT vs. HCL Technologies Ltd.(2018 (5) TMI 357 - SUPREME COURT), wherein held that definition of total turnover given under Sections 80HHC and 80HHE of the Act cannot be adopted for the purpose of Section 10A of the Act. The Revenue cannot dispute the above legal position, which has been settled by the Hon ble Supreme Court. In the light of the same, the appeal is dismissed and the substantial question of law is answered against the Revenue.

Summary

Issues:
Interpretation of the exclusion of expenditure in foreign currency from total turnover for relief under Section 10A of the Income Tax Act, 1961.

Analysis:
The High Court of Madras heard an appeal filed by the Revenue under Section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal Bench 'A' Chennai for the assessment year 2003-04. The substantial question of law raised was whether expenditure incurred in foreign currency, excluded from export turnover, should also be excluded from total turnover to grant relief under Section 10A of the Act. The learned counsel for the assessee cited a ruling by the Hon'ble Supreme Court in CIT vs. HCL Technologies Ltd., stating that the definition of total turnover under other sections cannot be applied to Section 10A. The court acknowledged this legal position settled by the Supreme Court and dismissed the appeal, ruling against the Revenue and not awarding any costs.

This judgment clarifies the application of the exclusion of expenditure in foreign currency from total turnover for claiming relief under Section 10A of the Income Tax Act, 1961. The court's decision aligns with the interpretation that the definition of total turnover under different sections cannot be directly applied to Section 10A. By referencing the Supreme Court ruling in a similar context, the court affirmed the settled legal position on this matter. The dismissal of the appeal and the answer against the Revenue indicate a consistent approach in line with established legal principles and precedents. The judgment provides clarity on the interpretation and application of relevant provisions for determining the eligibility for relief under Section 10A based on the treatment of foreign currency expenditure in the calculation of total turnover.