2021 (5) TMI 364 - HC - Income Tax

Computation of deduction u/s 10A - Tribunal not adjudicating on the Appellant's ground that communication expenses and expenses incurred in foreign currency ought not to be reduced from 'export turnover' while computing the deduction available under Section 10A, although the same were not required to be so reduced in terms of the said provision? - Whether Honourable DRP and the learned AO has erred in law and on facts in concluding that communication expenses and expenditure incurred in foreign currency are to be excluded from the export turnover for the purpose of computation of relief under the section 10A ? - HELD THAT - From the order passed by the Tribunal, it is evident that the Tribunal has not adjudicated the ground No.9 independently and has decided the ground Nos.9 and 10 on the ground that the same is covered by CIT vs. Tata ElxsiTata Elxsi 2011 (8) TMI 782 - KARNATAKA HIGH COURT Therefore, in the facts of the case, the impugned order dated 11.01.2017 passed by the Tribunal insofar as it pertains to ground No.9 is hereby quashed and the matter is remitted to the Tribunal for decision afresh on the ground No.9. It is, therefore, not necessary for us to answer the substantial question of law framed in this appeal.

Summary

Issues:
Appeal under Section 260A of the Income Tax Act, 1961 - Whether Tribunal correctly decided on the reduction of communication and foreign currency expenses from export turnover for deduction under Section 10A.

Analysis:
The appeal was filed against the Income Tax Appellate Tribunal's order dated 11.01.2017. The substantial question of law was whether the Tribunal was correct in not adjudicating on the Appellant's ground regarding the reduction of communication expenses and expenses incurred in foreign currency from 'export turnover' while computing the deduction under Section 10A. The assessee, engaged in software development and IT services, claimed deduction under Section 10A for the assessment year 2006-07. The Dispute Resolution Panel confirmed the reduction of communication and foreign currency expenses from export turnover, leading to the final assessment order by respondent No.1. The Tribunal partly allowed the appeal, prompting the current appeal.

The Tribunal's order was challenged based on grounds 9 and 10, arguing that the Tribunal erred in not independently adjudicating ground 9 and relying on a previous decision. The Tribunal did not independently decide ground 9 and grouped it with ground 10, citing a previous case. Consequently, the High Court quashed the Tribunal's decision on ground 9 and remitted the matter back to the Tribunal for a fresh decision. As a result, the High Court did not address the substantial question of law framed in the appeal, ultimately disposing of the appeal.

In conclusion, the High Court's judgment focused on the Tribunal's failure to independently address the issue of reducing communication and foreign currency expenses from export turnover for deduction under Section 10A. The High Court's decision to remit the matter back to the Tribunal for a fresh decision on this specific ground highlights the importance of thorough and independent adjudication of all relevant grounds in tax-related appeals.