Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (6) TMI AT This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2020 (6) TMI 167 - AT - Income Tax


Issues Involved:
1. Exclusion of expenses incurred in foreign currency from total turnover for computing deduction under section 10A.
2. Restriction of deduction under section 10A due to non-realization of export sales.
3. Exclusion of expenses incurred in foreign currency from export sales.
4. Exclusion of profits from trading of third-party software from eligible business profits for deduction under section 10A.
5. Disallowance of payments due to non-deduction of tax.
6. Allowance of deduction under section 10A on returned income rather than assessed income.
7. Levy of interest under section 234B.

Detailed Analysis:

1. Exclusion of Expenses Incurred in Foreign Currency from Total Turnover for Computing Deduction Under Section 10A:
The Revenue's appeal for Assessment Year 2008-09 contested the CIT(A)'s direction to exclude foreign currency expenses from the total turnover. The Tribunal upheld the CIT(A)'s decision, referencing the Karnataka High Court's judgment in Tata Elxsi Ltd., which clarified that if an amount is reduced from export turnover, the total turnover must also decrease by the same amount. Consequently, the Revenue's appeal was dismissed.

2. Restriction of Deduction Under Section 10A Due to Non-Realization of Export Sales:
The assessee's appeal for Assessment Year 2008-09 challenged the CIT(A)'s decision to uphold the AO's restriction of deduction under section 10A due to non-realization of export sales. The Tribunal noted that in previous years, similar issues were resolved in favor of the assessee if the foreign exchange remittances were eventually received. However, in this case, the export proceeds were not realized within the prescribed time, and thus, the Tribunal upheld the CIT(A)'s decision, rejecting the assessee's ground.

3. Exclusion of Expenses Incurred in Foreign Currency from Export Sales:
The assessee argued that certain expenses incurred in foreign currency should not be excluded from export sales for computing deduction under section 10A. The Tribunal referred to a prior decision where similar claims were dismissed due to lack of detailed evidence. Consequently, the Tribunal upheld the CIT(A)'s decision, rejecting the assessee's ground.

4. Exclusion of Profits from Trading of Third-Party Software from Eligible Business Profits for Deduction Under Section 10A:
The assessee contended that profits from trading third-party software, which had undergone value addition, should be eligible for deduction under section 10A. The Tribunal noted the need to verify whether the assessee was a 100% Export Oriented Unit (EOU), as per the Karnataka High Court's judgment in Hewlett Packard Global Soft Ltd. The matter was remanded back to the CIT(A) for fresh examination, allowing the assessee's ground for statistical purposes.

5. Disallowance of Payments Due to Non-Deduction of Tax:
The assessee's appeal for Assessment Year 2008-09 included multiple grounds related to disallowance of payments due to non-deduction of tax. The Tribunal found that the CIT(A) had relied on the previous year's order, which detailed the assessee's failure to show that the income of foreign agents was not taxable in India. However, referencing a Tribunal decision in the assessee's favor for subsequent years, the Tribunal decided in favor of the assessee, allowing the ground.

6. Allowance of Deduction Under Section 10A on Returned Income Rather Than Assessed Income:
The assessee argued that the deduction under section 10A should be allowed on the assessed income rather than the returned income. The Tribunal dismissed this ground, noting that it did not arise from the CIT(A)'s order and was not raised as an additional ground.

7. Levy of Interest Under Section 234B:
The assessee contested the levy of interest under section 234B. The Tribunal dismissed this ground for the same reason as the previous one, as it did not arise from the CIT(A)'s order and was not raised as an additional ground.

Appeal for Assessment Year 2009-10:
The Tribunal noted that the issues and facts for Assessment Year 2009-10 were similar to those in Assessment Year 2008-09. Accordingly, the Tribunal decided the appeal for Assessment Year 2009-10 on similar lines, resulting in a partial allowance for statistical purposes.

Conclusion:
The Revenue's appeal for Assessment Year 2008-09 was dismissed, while the assessee's appeals for Assessment Years 2008-09 and 2009-10 were partly allowed for statistical purposes.

 

 

 

 

Quick Updates:Latest Updates