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TMI Blog2017 (10) TMI 1517X X X X Extracts X X X X X X X X Extracts X X X X ..... Exports [ 2014 (10) TMI 1017 - KARNATAKA HIGH COURT ] . The Hon'ble Kolkata High Court in the case of Hindustan Gum Chemicals Ltd. ( 2016 (7) TMI 920 - CALCUTTA HIGH COURT ) has also taken a similar view by following the decision in the case of Motorola India Electronics Pvt. Ltd. ( 2014 (1) TMI 1235 - KARNATAKA HIGH COURT ) . In view of the binding precedent of Hon'ble jurisdictional High Court on the issue, we do not find any error or illegality in the impugned directions of DRP qua this issue. These grounds of revenue are dismissed. Expenditure incurred on telecommunication expenses to be excluded from the export turnover as well as from total turnover for computing the deduction under Section 10A - HELD THAT:- We find that the issue of expenditure incurred towards telecommunication charges is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduction under section 10A of the Act, is covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in the case of CIT v. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] . The decision of Hon'ble jurisdictional Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not empowered to set aside the issue in terms of section 144C(8) of the Act. 3. The DRP erred in directing the TPO to apply 75% Export Earning filter uniformly for ITES segment and to exclude M/s. ICRA online M/s. Sundaram Business Services Ltd. from comparables of ITES segment without appreciating that the directions to the AO amounts to setting aside the issue which is outside the purview of the DRP under the provision of section 144C as the DRP is not empowered to set aside the issue in terms of section 144C(8) of the Act. 4. The DRP erred in directing the AO to exclude M/s. Accropetal Technologies Ltd., M/s. Eclerx Services ltd., M/s. Infosys BPO Ltd. from the fist of comparables in ITES segment as being functionally, different without appreciating the fact that the companies qualify all the qualitative and quantitative filters applied by the TPO. 5. The DRP erred in directing the AO to exclude M/s. ICRA Techno Analytics Ltd., M/s. Persistent Systems Ltd., M/s. Tata Elxsi Ltd., from the list of comparables in Software development segment as being Functionally different without appreciating the fact that these companies qualify all the qualitative and quantitative filt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been accepted by the department and an appal has been filed before the Hon'ble Supreme Court. 12. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the DRP be reversed and that of the Assessing Officer be restored. 13. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. 5. Ground No.l is general in nature and does not require any specific adjudication. 6. Ground Nos. 2 to 8 are regarding TP issues on which the DRP granted relief to the assessee. In view of the resolution of the TP issues under MAP as stated in the foregoing paragraphs the Ground Nos. 2 to 8 of the revenue's grounds become infructuous and accordingly dismissed. 7. Ground No.9 is regarding deduction under section 10A allowed in respect of the interest earned on Fixed Deposits. 8. The Ld. DR has submitted that the DRP while allowing the claim of deduction under section 10A on the interest income has followed the decision of Hon'ble jurisdictional High Court in the case of CIT v. Motorola India Electronics (P.) Ltd. [2014] 46 taxmann.c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est from the eligible income whereas no such exclusion is provided under Section 10A of the Act. He has further contended that the Assessing Officer has assessed the interest income as business income and therefore for the purpose of deduction under section 10A of the Act it cannot be given a different treatment. 10. We have considered the rival submissions as well as the relevant material on record. It is not in dispute that the interest income has been assessed by the Assessing Officer as business income of the assessee. The Hon'ble jurisdictional High Court in the case of Motorola India Electronics (P.) Ltd. (supra) while considering an identical issue has held in paras 7 8 as under: ' 7. Relying on these judgments, it was contended that the interest received or the consideration received from sale of import entitlement has no direct nexus with the profits and gains derived from the export of software and therefore, the assessee is not eligible for exemption. All the judgments were rendered prior to the amendment in the year 2001 and therefore, there cannot be any quarrel with the law laid down in these cases. All the judgments are rendered in the context of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt sub-section (4) is substituted in the place of old sub-section (4). No doubt sub-section (10)(B) speaks about deduction of such profits and gains as derived from 100% EOU from the export of articles or things or computer software. Therefore, it excludes profit and gains from export of articles. But sub-section (4) explains what is the profit derived from export of articles as mentioned in sub-section (1). The substituted sub-section (4) says that profits derived from export of articles or things or computer software shall be the account which bares to the profits of the business of the undertaking and not the profits and gains from export of articles. Therefore, profits and gains derived from export of articles is different from the income derived from the profits of the business of the undertaking. The profits of the business of the undertaking includes the profits and gains from export of the articles as well as all other incidental incomes derived from the business of the undertaking. It is interesting to note that similar provisions are not there while dealing with computation of income under Section 80HHC. On the contrary there is specific provisions like Section 80HHB whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of section 10B/10A the benefit of exemption was held to be available to the interest income. A similar view has been taken by the Hon'ble jurisdictional High Court in other cases viz. Caritor India (P.) Ltd (supra) as well as in the case of Rajesh Exports (supra). The Hon'ble Kolkata High Court in the case of Hindustan Gum Chemicals Ltd. (supra) has also taken a similar view by following the decision in the case of Motorola India Electronics Pvt. Ltd. (supra). In view of the binding precedent of Hon'ble jurisdictional High Court on the issue, we do not find any error or illegality in the impugned directions of DRP qua this issue. These grounds of revenue are dismissed. 11. Ground Nos.10 11 are regarding the expenditure incurred on telecommunication expenses to be excluded from the export turnover as well as from total turnover for computing the deduction under Section 10A of the Act. 12. Having considered the rival submissions as well as the material on record, we find that the issue of expenditure incurred towards telecommunication charges is reduced from export turnover an equal amount should also be reduced from total turnover while computing the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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