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2020 (9) TMI 969 - HC - Income TaxComputation of deduction u/s 10B - Whether expenditure towards telecommunication charges and expenditure incurred in foreign currency reduced from export turnover has to be reduced from total turnover for computing deduction? - ITAT held that the expenditure excluded from the export turnover has to be excluded from total turnover. It was further held that the other income included in the total turnover has to be included in export turnover - HELD THAT - The issue involved in this appeal, is covered by a decision of the Supreme Court in COMMISSIONER OF INCOME-TAX, CENTRAL-III Vs. HCL TECHNOLOGIES LTD. 2018 (5) TMI 357 - SUPREME COURT . The aforesaid contention cannot be reputed by the learned counsel for the revenue. Therefore, the first substantial question of law is answered against the revenue and in favour of the assessee. Income received by the assessee by way of notice pay from its employees leaving the service contrary to agreement - whether to be included in export turnover when such income is not derived from the activity of export and recorded a perverse finding?. - HELD THAT - Second substantial question of law is covered by a decision of the Supreme Court in COMMMISSIONER OF INCOME-TAX Vs. PUNJAB STAINLESS STEEL INDUSTRIES 2014 (5) TMI 238 - SUPREME COURT . Order passed by the Income Tax Appellate Tribunal is modified and it is directed that the income received by the assessee by way of notice pay from its employees leaving the service contrary to the agreement, can neither be included in the total turnover nor the same be included in the export turnover.
Issues:
1. Whether telecommunication charges and foreign currency expenditure should be reduced from total turnover for computing deduction under Section 10B of the Income Tax Act. 2. Whether income received as notice pay from employees should be included in export turnover. Analysis: Issue 1: The appeal was filed by the revenue challenging the decision regarding the computation of deduction under Section 10B of the Income Tax Act. The assessee had not reduced telecommunication charges and foreign currency expenditure from export turnover while computing the deduction. The Assessing Officer recalculated the deduction by excluding these expenses from export turnover. The Commissioner of Income-Tax affirmed the Assessing Officer's order. The Income Tax Appellate Tribunal held that the excluded expenses should also be excluded from total turnover. The revenue's appeal was based on the absence of specific provisions in Section 10B requiring these expenses to be reduced from total turnover. However, the court referred to a Supreme Court decision in 'COMMISSIONER OF INCOME-TAX, CENTRAL-III Vs. HCL TECHNOLOGIES LTD.' and ruled against the revenue, in favor of the assessee. Thus, the first substantial question of law was answered in favor of the assessee. Issue 2: Regarding the second substantial question of law, the income received by the assessee as notice pay from employees who left their job contrary to the agreement was in dispute. The Assessing Officer had included this income in the total turnover for computing the deduction under Section 10B of the Act. However, the Income Tax Appellate Tribunal held that this income should not be part of the total turnover. The revenue contended that this issue was covered by a Supreme Court decision in 'COMMMISSIONER OF INCOME-TAX Vs. PUNJAB STAINLESS STEEL INDUSTRIES.' The court agreed with the revenue's submission that this income should neither be included in the total turnover nor in the export turnover. Consequently, the order of the Tribunal was modified, and the second substantial question of law was answered in favor of the revenue. As a result, the appeal was disposed of based on these findings.
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