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TMI Blog2013 (11) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... s 10A of the Income Tax Act – Held that:- Reliance has been placed on the judgment in the case of CIT Vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - Held that the additions made to the income of the assessee by virtue of disallowance made u/s 43B of the Act, amounts to increase in the business profit of the assessee and therefore assessee is entitled to claim exemption u/s 10A with regard to the addition made on account of statutory disallowance – Also, disallowance made u/s 40(a)(ia) for non deduction of TDS would result in increase in business profit of the assessee, hence the assessee would be entitled to claim deduction u/s 10A with reference to such addition made on account of disallowance u/s 40(a)(ia) – Decided in favor of Assessee. - ITA No.775 of 2013 - - - Dated:- 13-9-2013 - Chandra Poojari And Saktijit Dey, JJ. For the Appellant : Shri MVR Prasad For the Respondent : Shri P Soma Sekhar Reddy ORDER:- PER : Saktijit Dey This appeal of the assessee is directed against the order dated 27-3-2013 passed u/s 263 of I.T. Act, 1961 by the CIT-2, Hyderabad pertaining to the assessment year 2006-07. 2. Briefly the facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esulted in increase of the adjusted profits for the purpose of section 10A . As the total disallowance of ₹ 19,48,02,907/- was already considered for computing the overall taxable income before allowable deduction under Chapter III and Chapter VIA of the Act. Therefore the additions made in the above mentioned STPI Units have resulted in arriving at higher adjusted profits of the undertaking thereby resulting in excess deduction u/s 10A of the Act. 3. Though the assessee objected to the proposed action of the CIT in revising the assessment order in the context of the issues raised in the show cause notice, the CIT however rejected the contention of the assessee and held that the consultancy charges of ₹ 12,48,79,067/- incurred in foreign currency relating to providing technical services outside India cannot be the part of export turnover as defined in clause(iv) of Explanation-2 of section 10A of the Act and accordingly directed the Assessing Officer to reduce the same from the export turnover while computing deduction u/s 10A of the Act. So far as second issue concerning excess allowance of deduction u/s 10A of the Act is concerned, the CIT held that the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,02,907/- disallowed under section 40(a)(i) of the Income tax Act and such other amounts are to be excluded from business profits for the purpose of working out the deduction under section 10A of the Income tax Act. i) He erred in relying solely on the decision of the Ahmedabad Bench of the Tribunal in the case of Sri Ramesh Bhai C Prajapati without even putting it to the Appellant and ignoring all the relevant arguments advanced by the Appellant and thus, violating all the canons of natural justice. ii) He ought to have noticed that the deduction under section 10A is to be given from the total Income which is defined in section 2(45) of the Income tax Act as income computed in the manner laid down in the Act and so the disallowance made under section 40(a)(i) constituted an integral part of total income and, as such, there is no statutory warrant for reducing the amount of 19,48,02,907/- or such other amounts from the business profits of the Appellant. iii) He ought to have realized that the stand taken by him goes contrary to the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s. Gem plus Jewellery India Ltd [330 ITR 175] and the ratio of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all included it in the export turnover while computing deduction u/s 10A of the Act. We therefore direct the Assessing Officer to verify this fact and if on verification it is found that the assessee has not included the said amount while computing the deduction u/s 10A then there is no question of reducing it from export turnover for the purpose of computing deduction u/s 10A of the Act. Even otherwise also, the alternative contention of the assessee is not without substance. When any amount being in the nature of freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India are to be excluded from the export turnover, then the same is also required to be excluded from the total turnover for the purpose of computing deduction u/s 10A of the Act. This view of ours gets support from the decision of Hon ble Bombay High Court in case of CIT Gem Plus Jewellery India Ltd. (330 ITR 175) and Income-tax Appellate Tribunal Chennai Bench in case of Sak Soft Ltd. (30 SOT 55). Hence this ground is allowed for statistical purposes. 8. In ground No.3, the assessee has assailed the action of the CIT in holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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