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TMI Blog2016 (11) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the assessee’s own case. Deduction u/s 10A computation - AO excluding the three items of expenses claimed by the assessee from 'Export turnover’ alone - Held that:- AO computed deduction u/s 10A by reducing the three expenses from the figure of 'Export turnover’ without correspondingly reducing such amounts from the figure of ‘total turnover’ in the formula given for computing the amount of deduction. This approach, in our considered opinion, is not right. When a particular amount is excluded from the numerator of 'Export turnover’, it has, naturally, to be excluded from the denominator of 'Total turnover’ as well in the computation of deduction u/s 10A. It is so for the reason that 'Total turnover’ always includes 'export turnover’ and if a particular item is not a part of export turnover, that cannot partake the character of total turnover as well. Excluding proportionate amount of interest income from the total profits in the re-computation of deduction u/s 10A - Held that:- The assessee furnished a calculation at the instance of the AO to bring home its point that no further reduction was warranted from the book profits in the computation of deduction u/s 10A, whos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ground no. 3 about the transfer pricing adjustment amounting to ₹ 9.30 crore in I.T. enabled service segment were not pressed by the ld. AR. The same, therefore, stand dismissed. 4. Ground nos. 4 and 6 are against the disallowance u/s 40(a)(i) of the Act of expenditure amounting to ₹ 21,32,49,648/- incurred by the assessee as Management services fees on the reason that the assessee failed to deduct tax at source in terms of section 195 of the Act. 5. Briefly stated, the facts of this ground are that the assessee incurred an expenditure of ₹ 21.33 crore as remuneration for Management services to Groupe Steria SCA (Steria France). No deduction of tax at source was made before making this payment. Invoking the provisions of Section 40(a)(i) read with section 195 of the Act, the AO disallowed this expenditure. In doing so, he noticed that the assessee s application filed before the Authority for Advance Ruling (AAR) was dismissed vide Ruling dated 2.5.2014 holding that the payment made by the assessee for the Management services provided by Groupe Steria SCA will be taxable as Fee for technical services and, accordingly, the assessee was liable to withhol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A by reducing the above referred three expenses from the figure of Export turnover without correspondingly reducing such amounts from the figure of Total turnover in the formula for computing the deduction. This approach, in our considered opinion, is not right. When a particular amount is excluded from the numerator of Export turnover , it has, naturally, to be excluded from the denominator of Total turnover as well in the computation of deduction u/s 10A. It is so for the reason that Total turnover always includes Export turnover and if a particular item is not a part of export turnover, that cannot constitute a part of Total turnover as well. The Hon ble Bombay High Court in CIT vs. Gemplast Jewellery India Ltd. (2011) 330 ITR 175 (Bom) has held to this extent. Similar view has been taken by the Delhi Bench of the Tribunal in assessee s own case for the A.Y. 2009-10, a copy of which order is available on record. Respectfully following the precedent, we direct that the total of the above referred three expenses be simultaneously excluded from the amount of Total turnover as well. 10. Ground no. 7 is against excluding proportionate amount of interest income fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d gains from business or profession at ₹ 84,18,14,748. Interest income of ₹ 31.49 crore has been separately shown under the head Income from other sources for computing gross total income of ₹ 80.87 crore. This shows that the interest income of ₹ 31.49 crore has not been considered as part of the business income, which also includes eligible income from Noida Unit-IV STP. 12. To be more specific, computation of deduction u/s 10A is available on pages 5 and 6 of the paper book. The assessee has also placed before us unit-wise profits, which is an Annexure to the computation of income. From this unit-wise Profit Loss Account, it can be seen that the assessee computed Profit before tax of Noida Unit IV at ₹ 3,15,998 (in ₹ 000). In computing such profit, the assessee included interest on bank deposits at ₹ 91 (in ₹ 000). While computing the amount of deduction u/s 10A as per the Annexure, the assessee started with this figure of ₹ 31,59,98,024/- as profit before tax as per the P L Account. Thereafter, interest income of ₹ 91,375/- was reduced as Income to be assessed separately. After making certain additions and d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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