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2016 (3) TMI 597 - HC - Income TaxComputing deduction u/s.10A - Interpretation of Total Turnover & Export Turnover under 10A - Held that - Any expenditure which is excluded from the export turnover will have to be excluded from the total turnover as well for computing deduction u/s.10A of the Act. See CIT vs. Tata Elxsi Ltd 2011 (8) TMI 782 - KARNATAKA HIGH COURT
Issues:
1. Interpretation of exclusion of lease line charges and other expenses in foreign currency for software delivery from total turnover and export turnover for deduction u/s. 10A of the IT Act. Analysis: The High Court of Karnataka addressed the appeal filed by the Appellants-Revenue concerning the exclusion of lease line charges and other expenses in foreign currency for software delivery from total turnover and export turnover for the computation of deduction under section 10A of the Income Tax Act. The substantial question of law raised was whether the Tribunal was justified in excluding these expenses from both total turnover and export turnover. The Tribunal, in its order, referred to a previous decision of the jurisdictional High Court in the case of CIT vs. Tata Elxsi Ltd., where it was held that any expenditure excluded from export turnover should also be excluded from total turnover for the purpose of computing deduction under section 10A. The Tribunal upheld the decision of the CIT(A) based on this precedent, leading to the rejection of grounds 3 and 4 of the appeal. The Appellants' counsel argued that the decision in the Tata Elxsi Ltd. case is pending before the Supreme Court and, therefore, the issue should not be considered concluded. However, the High Court noted that the Tribunal's decision was based on the existing precedent and, as of the current date, the appeal stands dismissed in line with the prevailing legal position. The High Court emphasized that if the Apex Court rules differently in the future, the revenue authorities can pursue appropriate actions as per the law. Ultimately, the High Court dismissed the appeal, subject to the observations made regarding the potential impact of any future decision by the Supreme Court on the matter.
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