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TMI Blog2013 (10) TMI 1395X X X X Extracts X X X X X X X X Extracts X X X X ..... and direct the AO to allow benefit u/s. 10A of the Act to the Chennai Unit. Amount of statutory disallowance has to be considered as business profit eligible for deduction u/s. 10A of the Act. Communication charges, insurance charges and reimbursement of expenses attributable to the delivery of computer software outside India, are to be reduced from the export turnover then the same should as well be reduced from total turnover while computing deduction u/s. 10A of the Act. - ITA No. 16/Hyd/2013 - - - Dated:- 9-10-2013 - Chandra Poojari (Accountant Member) And Saktijit Dey (Judicial Member) For the Petitioner : Ravi Bhardwaj For the Respondent : D. Sudhakar Rao ORDER Chandra Poojari (Accountant Member) Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of ₹ 3,98,51,957 paid to Ingram Micro India Private Limited under section 40(a)(ia) of the Income-tax Act, 1961 ('the Act') on the ground that the payment is in the nature of royalty liable to tax deduction at source under section 194J of the Act. 4. Without prejudice to ground 3 above, assuming but not admitting that, payment made towards annual software license fees is considered as royalty under section 194J of the Act: (a) Failed to appreciate that the Appellant did not deducted tax at source based on the law as existed at the time of payment/ credit to Ingram Micro India Private Limited. The Explanation 4 to section 9(1)(vi) of the Act was inserted by the Finance Act 2012 with retrospective effect from June 1, 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a letter dated 8th October, 2013 informing that ground Nos. 3, 4(a) and 9, 5, 8 are not pressed. Accordingly, these grounds are dismissed as not pressed. 4. Now, we take ground Nos. 1 and 2 for adjudication which read as follows: 1. Contending that the Chennai unit is formed by splitting up of the Hyderabad unit for the subject assessment year. Whereas on the identical set of facts, the learned AO for assessment year 2006- 07 and 2007-08 held that the Chennai unit is formed by reconstruction of the Hyderabad unit. The approach adopted by the learned AO for framing the assessment for different assessment years on identical set of facts clearly indicates an inconsistency in approach and lack of proper application of mind. 2. Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of statutory disallowances as business profits eligible for deduction under section 10A of the Act. 8. After hearing both the parties, we are of the opinion that this issue is squarely covered by the judgement of ITO vs. Keval Construction (354 ITR 13) (Guj) wherein held that ultimate profit of the assessee as computed even after making disallowance u/s. 40(a)(ia) would qualify for deduction as provided under section 80IB. Further same view was taken in the case of Bartronics India Ltd. vs. Assistant Commissioner of Income-tax (52 SOT 188) (Hyd) wherein held as under: 10. We have heard the rival submissions and perused the materials on record. It is the well established fact that as per the provisions of section 10B recompute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a settled proposition that when the assessee is claiming exemption under section 10A and assessee's profit from eligible business by the AO is recomputed the deduction under section 10A is also to be allowed on the recomputed profit under section 10A. (c) Delhi Tribunal in the case of M/s. International Gold Co. Ltd. vs. Income tax officer 2010-TIOL-652-ITATMUM) held that even if the disallowance is sustained, it will only go to increase the business profits of the assessee which is exempt under section 10A as per the decision of the Hon'ble Bombay High Court in the case of Gemplus Jewellery India Ltd and allowed the assessee's appeal. (d) Hon'ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... providing technical services outside India and deducting the same from the export turnover for the computation of deduction under section 10A of the Act. 11. This issue is covered by the order of the Tribunal in the case of Sak Soft (313 ITR (AT) 353) and also by the judgement of Bombay High Court in the case of Gem Plus Jewellery (330 ITR 175) (SB) wherein held that if communication charges, insurance charges and reimbursement of expenses attributable to the delivery of computer software outside India, are to be reduced from the export turnover then the same should as well be reduced from total turnover while computing deduction u/s. 10A of the Act. Therefore, following the aforesaid ratio laid down in the said decisions, we direct the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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