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TMI Blog2009 (8) TMI 1179X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred in foreign currency on travel reduced from the export turnover, has to be reduced from the total turnover also for the purpose of computing deduction u/s 10A 2. The learned CIT(A) ought to have appreciated that there is no provision in section 10A which requires the concerned expenses, which are required to be reduced from the export turnover as per clause (iv) of the Explanation to Section 10A, to be reduced from the total turnover also. 3. The learned CIT(A) was not justified in directing the AO to allow exemption u/s 10A without setting off the loss of the non-STPI Unit at Madurai and also directing the AO to carry forward the loss of the non 10A unit. 3. The first issue is with regards to reduction of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure incurred on foreign travel for delivery of software should be reduced from the export turnover and corresponding reduction should also be made from the total turnover, while computing the deduction u/s 10A in view of the decisions of the AP High Court in CIT Vs Dredging Corporation of India (1988) 174 ITR 682 and the decision of the ITAT, Chennai Bench in the case of M/s Neyveli Lignite Corporation Ltd., Vs ACIT (2004) 93 TTJ 685 This view is fortified by the decision of ITAT, Bangalore Bench in case of M/s Tata Elxsi Ltd., Vs ACIT, in ITA No.315(B)/2006 dated 16-10-2007, wherein the Tribunal held that the formula prescribed for computing deduction u/s 10A of the Act is the same as prescribed in section 80HHE of the IT Act. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denominator of the formula. In view of the commonality, the understanding should also be the same. In case export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the 'total turnover' in the denominator. So in case some expenses, for any reason are excluded in arriving at 'export turnover' the same should be reduced from the 'total turnover' also. The ITAT Bangalore Bench, in case of ACIT Vs M/s Infosys Technologies Ltd., Bangalore in ITA Nos.653 969(B)/2006 dated 17-10-2007 has also taken a similar view. Facts being same, so following the same reasoning, we are not inclined to interfere with the findings of CIT(A) who has directed the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal held that the business income of an STPI Unit cannot be set off against the loss of a non-STPI Unit for allowing exemption u/s 10A and accordingly, directed the AO to allow exemption u/s 10A without set off of loss of STP Unit. Similar view was taken by the ITAT in the case of ACIT Vs M/s Yokogawa India Ltd.,(2007) 111 TTJ 548: 13 SOT 470. 6. According to us, Section 10A was placed under Chapter III which only relates to Incomes which do not form part of total income and Chapter heading is indicative of the drift of the section and throws light on the intention of the legislature. In M/s Yokogawa's case (supra), the Hon'ble ITAT observed that sec.10A specifically states that a deduction is to be given in respect of profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of the total income for consideration in the spirit of the legislation has to be considered when the assessee has been able to establish the income of the STPI Unit as was available to the AO remains undisputed. In view of the above, the CIT(A) was justified in directing the AO to allow exemption u/s 10A without setting off of loss of non-STPI Unit and consequently, allow the carry forward of such losses of non-STPI Unit. The same is upheld. 7. In the result, the appeal of the revenue is dismissed. ITA No.345(B)/2009 8. The only issue in this appeal is with regards to the expenditure incurred in foreign currency on travel and communication reduced from the export turnover as well as total turnover. 9. Since we have decided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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