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TMI Blog2014 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... come declaring income at Rs. 17,04,510/-. The assessment was completed at an income of Rs. 7,42,24,760/- as under: "Thus, the above section provides that deduction allowable u/s 10A(4) shall be computed as under: Net profit of the business X Export Turnover of the undertaking Total Turnover 6141401 X 36535607 113655767 Deduction u/s 10A = 19,74,205/-." 2.1. Ld. CIT(A) while partly allowing the assessee's appeal, directed the assessing officer to allow deduction u/s 10A of Rs. 61,41,401/- as against the deduction allowed by assessing officer of Rs. 19,74,205/-. Being aggrieved from the order of ld. CIT(A), the department is in appeal before us and has taken following grounds of appeal: "1. On the facts and circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end the grounds of appeal before or at the time of hearing of appeal." 3. The main issue is regarding allowability of deduction u/s 10A. The assessee company had taken approval from the STPI Authority, Noida, to engage in development/ manufacture of computer software/ IT enabled services. The assessee company had claimed deduction u/s 10A of Rs. 61,41,401/-. In course of assessment proceedings, the assessing officer required the assessee to furnish details of gross receipts/ sales, along with bills raised by the assessee company. From the perusal of sales ledger and bills, the assessing officer noticed that an amount of Rs. 6,83,53,049/- had been received by the assessee company as corporate subsidy. The assessee explained that the corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-export turnover of Rs. 6,83,53,049/- from the total turnover at Rs. 11,36,55,767/-. The assessing officer computed the allowable deduction u/s 10A(4) as under: "Thus, the above section provides that deduction allowable u/s 10A(4) shall be computed as under: Net profit of the business X Export Turnover of the undertaking Total Turnover 6141401 X 36535607 113655767 Deduction u/s 10A = 19,74,205/-." 3.2. Thus, he included the non-export turnover in the total turnover of assessee. 4. Before ld. CIT(A) it was, inter alia, submitted that if an item is reduced from export turnover, the same is also to be reduced from total turnover. 4.1. Ld. CIT(A) upheld the AO's contention that since the amount received by the assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rency on lease lines had to be reduced from export turnover. However, he agreed with the assessee's contention that while reducing the expenditure incurred in foreign currency from the export turnover, identical deduction should be allowed from the total turnover. 4.4. Ld. CIT(A) relied on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Lakshmi Machine Works 290 ITR 667, wherein principle of parity has been recognized between export turnover and total turnover for the purpose of section 80HHC. 4.5. Ld. CIT(A) also relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Genpact India 203 Taxman 632, wherein it has been held that communication charges are to be excluded from total turnover for computing el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reduced from the export turnover in terms of clause (iv) of explanation -2. Hence, the export turnover in the instant case works out to Rs. 7,61,90,909/-. As regards total turnover, in addition to the amount of Rs.38,08,386/- being expenditure incurred in foreign currency on lease line charges, the amount\of Rs.336,56,472/- being the amount received from Sun Life Ireland as reimbursement of expenses during the preoperative period till October 2006 On cost to cost basis shall also not form part of total turnover as this receipt does not bore any element of profit; following the decision of Hon'ble Supreme Court in the case of CIT vs. Laxmi Machine Works 210 CTR 1 (SC) and the rationale laid down in the decision by the Hon'ble Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any merit in this ground raised by department because ld. CIT(A) deleted the addition on the ground of double addition which finding has not been controverted by department. We, therefore, dismiss ground no. 1 raised by department. 8. As far as ground nos. 2 & 3 are concerned, we do not find any reason to interfere with the order of ld. CIT(A) because the issue is no more resintegra as it has been held by Hon'ble Supreme Court in the case of CIT Vs. Lakshmi Macahine Works 290 ITR 667 that any receipt which does not have an element of turnover cannot find a place either in the export turnover or the total turnover. Reimbursement of expenses, accordingly, has to be excluded from both export turnover and total turnover. Accordingly, ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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