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2020 (3) TMI 1082 - HC - Income TaxDeduction u/s 10A - Whether expenditure in foreign currency was not incurred for the purpose of export of software and therefore, should not be reduced from export turnover? - ITAT setting aside disallowance and held that the said amount has to be treated as part of export turnover - HELD THAT - From perusal of the order passed by the Tribunal, we find that the Tribunal has followed the decision of this court in the case of CIT VS. M/S HEWLETT PACKARD GLOBAL SOFT LTD. 2017 (11) TMI 205 - KARNATAKA HIGH COURT . Thus, the order passed by the Tribunal does not suffer from any infirmity. No substantial question of law.
Issues:
1. Interpretation of provisions under Section 10A of the Income Tax Act, 1961. 2. Treatment of other income in relation to business profits eligible for exemption. 3. Consideration of export turnover and related expenditures for computing benefits under Section 10A. 4. Disallowance of certain amounts and their treatment in export turnover. Analysis: Issue 1: Interpretation of provisions under Section 10A The case involved an appeal under Section 260A of the Income Tax Act, 1961, filed by the revenue against the order passed by the Income Tax Appellate Tribunal. The assessee, a company engaged in the distribution of computer systems, filed the return of income for the Assessment Year 2010-11. The Assessing Officer made various adjustments to the income declared by the assessee, including allowing exemption under Section 10A in respect of a specific unit and reducing certain amounts from the export turnover. Issue 2: Treatment of other income Upon being aggrieved, an appeal was made before the Commissioner of Income Tax (Appeals), who allowed the claim of 'other income' as part of business profits eligible for exemption under Section 10A. The Commissioner held that certain amounts were not realized within the prescribed time and should be considered as part of the export turnover for the current year. Additionally, the Commissioner addressed the treatment of insurance expenditure incurred in foreign currency in relation to export turnover and total turnover. Issue 3: Consideration of export turnover and related expenditures Both the assessee and the revenue filed appeals before the Income Tax Appellate Tribunal, which dismissed the revenue's appeal for the Assessment Years 2010-11 and 2011-12. The Tribunal allowed the cross-appeal by the assessee, setting aside a disallowance and treating the amount as part of the export turnover, following a previous decision of the court. Issue 4: Disallowance of certain amounts The High Court, upon hearing the arguments, found that the Tribunal's decision was in line with a previous court decision regarding the treatment of similar issues. As a result, the High Court concluded that no substantial question of law arose for consideration in the appeal, and therefore, dismissed the appeal filed by the revenue. In conclusion, the High Court upheld the Tribunal's decision, finding no merit in the revenue's appeal and dismissing it accordingly.
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