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TMI Blog2008 (6) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal decision in the case of Tata Elxsi Ltd. vs. ACIT [ 2007 (10) TMI 630 - ITAT BANGLORE] and I-Gate Global Solutions Ltd. vs. ACIT [ 2007 (11) TMI 444 - ITAT BANGALORE] relied upon by the learned counsel were on similar facts and situation wherein it has been held that when there is no unabsorbed depreciation or unabsorbed loss in respect of STPI Unit and the profits and gains of the same would be exempt u/s 10A were to be without setting off of the loss of the other divisions or the setting off of carry forward losses of other divisions. The Tribunal held that the exemption u/s 10A to STPI unit and consequently to allow carry forward of such losses and depreciation of non-STPI Unit were separate - AO had taken recourse to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantifying the profits of the STPI Unit available under section 10A. In other words ground No. 2 stands dismissed and ground No. 3 stands allowed as covered by the decision of the ITAT, Bangalore Bench in cases mentioned above. Set off against the profit of the STPI Unit - HELD THAT:- As section 10A falls under Chapter III being income exempt from tax to be excluded in determining the total income and procedural computation of taxable income as provided in the I.T. Return Format requires income or loss from eligible business u/s 10A be excluded while computing the income from business. This method of computation should be followed consistently in accordance with the provisions of the I.T. Act and profits of the non-STPI Unit cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess losses and unabsorbed depreciation, as subsidiary issues. 3. The assessee company is in the business of software and information system and has Non-STPI Unit with its head office in Bangalore consisting of four foreign branches. The STPI unit is located in Bangalore in India. The assessee had filed its return of income for the impugned assessment year declaring a loss of ₹ 78,51,037. The Assessing Officer framed order under section 143(3) by computing taxable income in the hands of the assessee at ₹ 33,59,639 by setting off of loss of the Non-STPI unit with a profit of the STPI Unit prior to computing deduction under section 10A. He also considered various expenses amounting to ₹ 36,47,408 for reducing from the expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Software Solutions (India) Pvt. Ltd. (ITA No.1014/Bang/04) for the Assessment Year 2002-03 which again was similarly considered by the decision in the case of Yokogawa India Ltd. reported in 13 SOT 470 as well as 111 TTJ 548. The learned counsel has filed compilation thereof. 5. On the next issue, the learned counsel pointed out that the expenditure incurred in foreign currency on account of foreign travel and on lease line charges amounting to ₹ 10,96,247 and ₹ 11,56,651 respectively were considered by the learned CIT(A) as provided in sub-section 8 of Section 10A for the purpose of bringing out the definition of 'export turnover' in Explanation 2 sub section (iv). He also proceeded not to allow the same to be reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment for the computation of profit for deduction under section 10A and for brought forward business loss and unabsorbed depreciation for the Non-STPI Unit become infructuous to that extent. 6. The learned Departmental Representative supported the order of the learned CIT(A) and the Assessing Officer for his part of submissions. 7. We have considered the rival contentions and perused the material available on record. On the first issue agitated by the assessee, the learned CIT(A) appears to have misinterpreted the decision of jurisdictional High Court in the case of CIT vs. Himatsingike Seide Ltd. (286 ITR 255) by considering the issue under section 32 and under section 32A which do not apply to the facts of the assessee's c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, stands allowed as covered by the decision of the ITAT, Bangalore Bench on similar facts and circumstances. 8. With respect to the ground relating to expenditure reduced from the export turnover and the expenditure not to be reduced from the total turnover for the purpose of quantifying the deduction under section 10A on account of profits of the STPI Unit, the issue stands covered by the various decisions as relied upon by the learned counsel. The learned counsel did not argue the amount of expenditure on account of foreign travel and lease line charges as not pertaining to export of software as considered and definite in sub-clause (iv) to Expln. 2 to sub-section 8 of Section 10A. Therefore, this ground stands partly allowed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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