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TMI Blog2018 (7) TMI 2168X X X X Extracts X X X X X X X X Extracts X X X X ..... otal turnover is denominator, which sale also includes the effect of foreign exchange fluctuation. Therefore, such inclusion of foreign exchange fluctuation in the profits shall qualify for deduction U/s 10AA of the Act. Telecommunication expenses also be reduced from the total turnover for the purpose of computing deduction under section 10 AA - CIT A relying upon the decision of the Hon ble Delhi High Court in the case of Gen pact India [ 2011 (11) TMI 119 - DELHI HIGH COURT ] wherein it has been held that there should be Uniformity in the ingredients of both the numerator and denominator in the formula for computation of deduction under section 10 A of the income tax act. Therefore, he directed the AO to include the telecommunication expenses in the export turnover if it is included in the total turnover for computing deduction under section 10 AA of the act. As the Ld. CIT A has decided the issue following the decision of the Hon ble Delhi High Court we find no infirmity in his order. Further identical view has also been taken by the Hon ble Karnataka High Court in in case of Dell international services India private limited [ 2012 (5) TMI 388 - KARNATAKA HIGH COURT ] and Samsu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case the Ld. CIT (A)-44 has erred in allowing that the telecommunication expenses of ₹ 11,64,517/- should also be reduced from total turnover for the purpose of computing deduction u/s 10AA of the Income-tax Act. 3. On the facts and circumstances of the case the Ld. CIT (A)-44 has erred in allowing/reducing the migration/on the job training expenses of ₹ 9,76,13,893/- from the total turnover for the purpose of computing deduction u/s 10AA. 4. On the facts and circumstances of the case the Ld. CIT (A)-44 has erred in allowing interest at the rate of LIBOR + 1.5% instead of 16% rate of interest charged on the delayed payment from the associated enterprises. 3. The brief facts of the case shows that that assessee is a company engaged in the business of providing various business process outsourcing services including finance and accounting, collections , insurance, customer fulfillment, data modeling and analytic support, managed IT services, software solutions and elearning. The assessee filed its return of income on 29/9/2009 declaring total income of ₹ 20,785,431/ . The return was subsequently revised on 31/3/2011 declaring total income of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchange gain of ₹ 8 687 2722/ comprising of foreign exchange gain, forward contract loss, restatement gains on foreign exchange fluctuations etc. The claim of the assessee is that that provisions of section 10AA of the income tax act does not restrict profits derived from the business of the undertaking but is provided in accordance with formula wherein the concept of derived from has lost it significance. The Ld. AO rejected the above argument of the assessee that the gain has arisen because of the devaluation of the rupees which has nothing to do with the trade but the result of the devaluation was that the assessee became entitled to receive a larger price in terms of rupees for is goods and that is not directly in the course of the trade and constitutes a trading business profit as the same is due to the hedging activity and is not derived by the specified business activity of the assessee. The Ld. CIT A has allowed the claim of the assessee based on the order of the Commissioner of appeals in case of the assessee for assessment year 2002 03 wherein the question of the eligibility of foreign exchange and forward contract gains for deduction under section 10 A of the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia wherein it has been held that there should be Uniformity in the ingredients of both the numerator and denominator in the formula for computation of deduction under section 10 A of the income tax act. Therefore, he directed the AO to include the telecommunication expenses in the export turnover if it is included in the total turnover for computing deduction under section 10 AA of the act. As the Ld. CIT A has decided the issue following the decision of the Hon ble Delhi High Court we find no infirmity in his order. Further identical view has also been taken by the Hon ble Karnataka High Court. In the result ground No. 2 of the appeal of the revenue is dismissed. 10. Ground No. 3 of the appeal of the revenue is against the direction of the Ld. CIT A in allowing the migration/on the job training expenses of ₹ 9761393/ from the total turnover for the purpose of computing deduction under section 10 AA of the act. The brief issue is that assessee has spent an amount of ₹ 9 7, 613, 893 on account of migration/on the job training services in respect of its main activities to their client outside India in foreign currency. According to the assessing officer these are clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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