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TMI Blog2012 (7) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... 0A by assessee - Held that:- CIT Vs. Infosys Technologies Ltd. [2011 (11) TMI 443 - KARNATAKA HIGH COURT] wherein the Hon’ble Karnataka High Court confirmed that the fluctuation in the valuation of currency which has to be converted to foreign exchange currency has direct nexus to the export of software and can never be included as income from other sources - in favour of assessee. Inclusion of income in the nature of ‘interest income’ and ‘miscellaneous income’ in the profits of the undertaking as eligible for deduction u/s 10A - Held that:- The ‘interest income’ and ‘miscellaneous income’ for units 5 and 6 have been excluded from the profits and gains of the undertaking for computation u/s 10A and while making such adjustment in computation, inadvertently foreign exchange gain was also excluded from the profit of the business of the undertaking - thus to consider the actual bifurcation deem it fit and proper to remit the issue back to the file of the AO for reconsideration. Claim of assessee to include the income from recruitment fee as part of export turnover for the purpose of computing the deduction u/s 10A - assessee submitted the recruitment/human resource services re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not following the Honourable Tribunal's decisions in the appellant's own case for earlier years without appreciating the fact that the issues and facts covered under the present appeal are identical and similar with that of the earlier years. 6. The Learned CIT(A) has erred in law and on facts in stating that the Honourable Tribunal's decisions in the Appellant's own case for earlier years are not binding on the ground that the orders for the earlier years have been passed by Honourable Tribunal without discussing the basis or conclusion of AO for non-allowance of deduction under Section 10A to unit2, unit3, and unit 4. 7. The Learned CIT(A) has erred in law and on facts in confirming the AO's order without appreciating the fact that the earlier year orders of the Honourable Tribunal have discussed and deliberated at length the aspect of eligibility of claim of Section 10A deduction in respect of unit 2, unit 3 and unit 4. 8. The learned CIT(A) has erred in law and on facts in holding that income from human resource services is not eligible for deduction under Section 10A of the Act. 9. The learned CIT(A) has erred in law and on facts in not appreciating that income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that the assessee company has claimed deduction u/s 10A amounting to Rs.124,77,99,091/- in respect of its units situated at different places in Bangalore and Chennai. The assessee company was asked to furnish documents and details pertaining to the two new units, as the details regarding the old units were already considered in the earlier assessment years. After considering the details furnished by the assessee, the AO observed that one of the primary conditions stipulated in sec. 10A was that the undertaking should have been formed after registration with STP and that the units registered with STPI authorities should commence production only in the customs bonded area. He observed that the commencement of production started in unit 2, 3 and 4 much before obtaining the license for bonded warehouse and, therefore, the assessee is not entitled for the exemption of income u/s 10A of the Income-tax Act with regard to the income from the said units. He also observed that in the previous years, the issue has not become final and hence, the assesses s contention of exemption u/s 10A relating to these units is not acceptable. 5. Aggrieved, the assessee preferred an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mil Nadu for the manufacture of computer software. Such facilities and privileges were subject to the conditions stipulated in Annexure as well as mentioned in para 2 of that letter. As per para 2(ix) of the letter under reference, it was mentioned that the unit shall be custom bonded. It therefore means that in order to avail the facilities and privileges admissible under the STP scheme can be availed if the unit is custom bonded. The assessee has obtained clarification from STPI as per letter dated 20th April, 2004 from Director, STP. It is mentioned that if the assessee intend to avail any duty concession, then the assessee is required to approach custom for custom bonding. Hence, it cannot be read in the provisions of the Act that for availing deduction s/u lOA, the assessee should first obtain the custom bonding and then should commence production. So far as unit 2 and 3 are concerned, the custom bonding has been obtained in the earlier previous year and not in the previous year relevant to the asst. year under consideration. As already pointed out that condition in 10A(2)(i) is in the present tense and therefore, such condition is required to be satisfied in the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of computing deduction u/s 10A of the Income-tax Act, if any income is excluded from the export turnover, then the same has to be excluded from the total turnover also. 11. In view of the same, ground No.10 is rejected and ground nos. 11 and 12 are allowed. 12. As regards grounds No.13 and 14 are concerned, the brief facts of the case are that the AO observed that the assessee company has added an amount of Rs.11,60,328/- and Rs.1,33,52,,629/- for units 5 and 6 respectively as foreign exchange gain for the purpose of computing deduction u/s 10A of the Income-tax Act. He observed that the deduction u/s 10A is allowable only for the money derived directly from the export and not the foreign exchange gain. He, therefore, reduced the foreign exchange gain from the export turnover. 13. Aggrieved, the assessee preferred an appeal before the CIT(A) who confirmed the order of the AO and the assessee is in second appeal before us. 14. In support of assessee s contention, the learned counsel for the assessee submitted that the foreign exchange gain is out of the operational income of the assessee, and thus forms part of the export turnover. In support of this contention, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is necessary to consider the actual bifurcation of the interest income and miscellaneous income of units 5 and 6 respectively and then decide the issue in accordance with law. 21. The learned DR had no objection to the same thing but he placed reliance upon the orders of the authorities below: 22. Having heard both the parties and having considered the rival contentions, we deem it fit and proper to remit the issue back to the file of the AO for reconsideration of the issue in accordance with law and as per above observation. 23. This ground is accordingly allowed for statistical purposes. 24. Coming to the grounds No. 8 and 9, brief facts of the case are that the assessee claimed the income from recruitment fee as part of export turnover for the purpose of computing the deduction u/s 10A of the Income-tax Act. During the course of assessment proceedings, the AO asked the assessee to submit the master agreement, scope of work, copies of invoices raised by the assessee during the year etc., and from the details filed, it was noticed by him that some of the invoices had been raised by quoting a specific amount against the names of individuals. The assessee was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the CIT(A) who confirmed the order of the AO and the assessee is in second appeal before us. 26. The learned counsel for the assessee reiterated the submissions made by the assessee before the authorities below and has placed strong reliance upon the CBDT Notification dated 26.9.2000, wherein the IT enabled services are specified to include human resource services. He submitted that the meaning of the phrase human resource services mentioned in the notification had come up for consideration before various Benches of the Tribunal and the Tribunal has held that the human resource services include recruitment and training of I.T professionals on behalf of overseas customers. In support of his contention, he placed reliance upon the following decision: 1) ACIT Vs. Meridian Enterprises Computing Solutions Pvt. Ltd., reported in (2011) 5 TaxCrop (AT) 24096 (Mum). 2) M.L Outsourcing Services Pvt. Ltd. Vs. ITO in 1204/Del/2011 dated 27.5.2011 3) Third Member Bench in the case of ITO Vs. Accurum India Pvt. Ltd., reported in 126 ITD 69, Chennai. 27. The learned DR on the other hand supported the order of the authorities below and submitted that the assessee was only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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