9911796707
TMI Blog2013 (9) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing grounds in this appeal:- "1. The order of the Deputy Commissioner of Income Tax, Company Circle-V(2), Chennai passed pursuant to the order of the Dispute Resolution Panel to the to the extent prejudicial to the appellant is erroneous, bad in law and contract to facts and circumstances of the case. 2. Reduction of expenditure incurred in foreign currency from export turnover: 2.1 The DPO & Assessing Officer has erred in reducing the expenditure incurred in foreign currency from export turnover while computing the deduction under section 10A when such expenditure has not been included in export turnover in the first place. 2.2 Without prejudice to 2.1 above, the DRP & Assessing Officer has erred in excluding the expenditure incurred in foreign currency from export turnover by stating that the foreign currency expenditure has been incurred for rendering technical services outside India. 2.3 Without prejudice to the above, the DRP and Assessing Officer having excluded the expenditure incurred in foreign currency from export turnover should have excluded the same from total turnover as well for the purpose of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re should not be excluded from the export turnover as the expenditure was not incurred towards providing any technical services. This contention of the assessee was rejected by the DRP upholding the action of the Assessing Officer in excluding the expenditure incurred in foreign currency from export turnover. 5. The counsel for the assessee contends before us that this expenditure was not incurred for rendering any technical services and therefore, the said expenditure should not be excluded from export turnover. Referring to page 18 of the DRP order, the counsel submits that the expenditures were incurred towards project, travel, communication expenses, overseas project direct expenses, salary and software development. In the alternative, the counsel submits that the expenditure has to be excluded from total turnover also for the purpose of computing deduction under section 10A of the Act, in view of the decision of the Special Bench in the case of ITO Vs. Sak Soft Ltd., [313 ITR (Trib) 353 (Chennai) (SB)] = (2010-TII-44-ITAT-BANG-TP). 6. The Departmental Representative supported the orders of the lower authorities. 7. Heard both sides. Perused the orders of the lower authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into India within the time stipulated from export turnover for the purpose of computing relief under section 10A of the Act. The Departmental Representative submits that the statute itself makes it clear that unrealized exports turnover which was not brought into India within the time stipulated has to be excluded from export turnover as per the definition. 11. Heard both sides. Perused the orders of the lower authorities and the case law relied on by the parties. The Assessing Officer and the DRP have excluded the export proceeds not brought into India within the prescribed time limit from the export turnover for the purpose of computing deduction under section 10A of the Act. The Hon'ble Kerala High Court while deciding the appeal filed by the Revenue in the context of deduction under section 80HHC held that export sale proceeds which could not be brought into India, in convertible foreign exchange within six months as provided in sub-section (2) of section 80HHC cannot be considered for allowing deduction under section 80HHC of the Act. However, at the same time, it was held that such export sale proceeds which were not brought into India in convertible foreign exchange have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n amount of Rs. 1,21,97,449/-as dividend and claimed the entire dividend as exempt under section 10(34). The assessee claimed that no expenditure was incurred on earning exempt income. However, the Assessing Officer in the draft order proposed to disallow the expenditure by invoking the provisions of section 14A(2) read with rule 8D. The assessee contended before the DRP that he had not incurred any expenditure in earning exempt income. The DRP directed the Assessing Officer to verify the contention of the assessee and see whether any part of the expenditure was incurred towards earning exempt income. The Assessing Officer while passing the order observed that the assessee did not satisfactorily prove its contention that no expenditure was incurred in earning the exempt income invoking the provisions of section 14A read with rule 8D and made disallowance of expenditure attributable for earning income. Though the counsel for the assessee submits that during this year there were no borrowings and all the investments were made out of own funds, therefore, the provisions of section 14A cannot be invoked as it becomes academic, in view of the alternative ground of the assessee that dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 The Assessing Officer has erred in excluding expenditure incurred in foreign currency from the export turnover since the assessee is only involved in software development activities and software development does not amount to rendering of technical services. 2.3 Without prejudice to the above, the Assessing Officer having excluded the expenditure incurred in foreign currency from export turnover, has erred in not excluding the same from total turnover for the purpose of computing the deduction under section 10A of the Income tax Act, 1961. 3. Exclusion of export proceeds not realized in time from export turnover 3.1 The Assessing Officer has erred in excluding export proceeds not realized in time from the export turnover alone and not excluding the same from total turnover also for the purpose of computing the deduction under section 10A of the Act. 3.2 The Assessing Officer has erred in not maintaining the parity of reasoning between the numerator and denominator. 4. Disallowance of expenditure under section 14A by attributing the same towards earning of dividend income. 4.1 The As ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
