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TMI Blog2014 (11) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... A of the Income Tax Act, 1961 (the Act), thereby reducing the quantum of deduction claimed u/s 10A of the Act. 3. The revenue is aggrieved by the decision of Ld CIT(A) in holding that the expenses incurred in foreign currency for providing technical services outside India is not required to be deducted from the amount of "Export turnover" while computing the deduction u/s 10A of the Act. 4. Facts relating to the above said issues are stated in brief. The assessee company is a technology oriented software services company providing solutions to clients to build software products. During the year under consideration, the assessee declared gross receipts of software charges at Rs. 11,98,48,073/-, which included export turnover of Rs. 11,68,40,798/-. The assessee also claimed deduction of Rs. 2,90,62,126/- u/s 10A of the Act from the business income. The AO noticed that the assessee had incurred travelling expenses of Rs. 56,33,408/- and Software Development charges of Rs. 29,83,459/- aggregating to Rs. 95,64,698/- in foreign currency, but did not deduct the same from the amount of export turnover, while computing deduction u/s 10A of the Act in terms of Explanation 2(iv) given u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) directed the AO not to exclude travelling expenses and software development charges incurred in foreign exchange from the amount of export turnover for the purpose of computing deduction u/s 10A of the Act. With regard to the rejection of claim of set off of unabsorbed depreciation brought forward from AY 2001-02, the ld. CIT(A) concurred the view taken by the AO. With regard to issue relating to set off of bought forward loss and unabsorbed depreciation of AY 2003-04 before allowing deduction u/s 10A also, the ld. CIT(A) concurred with the view taken by the AO. Hence, the Revenue is aggrieved by the decision of ld.CIT(A) with regard to non deduction of expenses incurred in foreign currency from "Export Turnover" for computing deduction u/s 10A of the Act. The assessee is aggrieved by the decision of ld. CIT(A) with regard to issues relating to rejection of claim of set off of loss/unabsorbed depreciation pertaining to AY 2001-02 and allowing set off of unabsorbed depreciation/loss pertaining to AY 2003-04 before allowing deduction u/s 10A of the Act. 8. With reference to the appeal filed by the revenue, the assessee has filed an additional ground, wherein it is submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the claim of the assessee for deduction of unabsorbed loss/unabsorbed depreciation pertaining to AY 2001-02. 10. The next issue relates to issue, viz., whether the unabsorbed depreciation and unabsorbed business loss are required to be deducted before or after allowing deduction u/s 10A of the Act. The Ld A.R placed reliance on the decision rendered by Hon'ble jurisdictional Bombay High Court in the case of CIT Vs. Black and Veatch Consulting Pvt Ltd (2012)(348 ITR 72) and submitted that the jurisdictional High Court has held that the brought forward unabsorbed depreciation and losses of the unit, the income of which is not eligible for deduction u/s 10A, cannot be set off against the current profits of the eligible unit for computing deduction u/s 10A of the Act. 11. On the contrary, the Ld D.R placed reliance on the decision rendered by Hon'ble Supreme Court in the case of Himatsingka Seide Ltd Vs. CIT (Civil Appeal No.1501 of 2008 dated September 19, 2013) wherein the Hon'ble Apex Court has dismissed the appeal filed by the assessee challenging the order passed by Hon'ble Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover also. Accordingly, by following the decision of jurisdictional High Court, we hold that the amount of travelling expenses and Software development charges incurred in foreign currency is required to be excluded both from Export turnover and Total turnover for the purpose of computing deduction u/s 10A of the Act. We order accordingly. 14. We shall now take up the appeal filed by the revenue for AY 2005-06. The only ground urged by the revenue relates to the exclusion of travelling expenses, professional charges and software development charges from the amount of Export turnover while computing deduction u/s 10A of the Act. In the immediately preceding year, we have held, by following the decision of jurisdictional High Court in the case of Gem Plus Jewellery India Ltd (supra), that the corresponding amount is required to be excluded from the total turnover also while computing deduction u/s 10A of the Act. Accordingly, by following the decision of jurisdictional High Court, we hold that the amount of travelling expenses, professional charges and Software development charges incurred in foreign currency is required to be excluded both from Export turnover and Total turnove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of the expenses incurred in foreign currency both from export turnover as well as total turnover, shall not survive since the Ld CIT(A) has allowed the said claim in his order dated 31.7.2013 passed u/s 154 of the Act. Accordingly the said ground is dismissed as infructuous. 19. The next ground relates to the validity of reducing unabsorbed depreciation of Rs. 20,53,430/- before allowing deduction u/s 10A of the Act. In the earlier years, by following the decision of Hon'ble Supreme Court, we have held that the brought forward unabsorbed depreciation shall form part of current year's depreciation in terms of sec. 32(2) of the Act and hence the same is required to be deducted before allowing deduction u/s 10A of the Act. Accordingly, we do not find any infirmity in the order of tax authorities on this issue. However, if the amount of unabsorbed depreciation undergoes any change in view of giving effect to our orders passed for the preceding years, the assessing officer shall deduct the recomputed amount of unabsorbed depreciation. 20. We shall now take up the appeal filed by the assessee for AY 2008-09. The assessee has filed concise grounds of appeal. At the time of he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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