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TMI Blog2021 (9) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; Bench, Chennai for the assessment year 2009-10, which was admitted on 23.07.2015, on the following substantial questions of law:- "i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in directing the Assessing Officer to recompute the income in the light of the decision of the Special Bench in the case of Sak Soft by excluding the freight and insurance expenses both from the Export turnover and also from the Total turnover while computing deduction under Section 10A of the Income Tax Act? and ii) Is not the finding of the Tribunal bad, especially when Explanation 2(iv) to Section 10A defines the word "Export Turnover" whereby it had been clearly stated that it would not include freight, tel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out fulfilling the conditions laid down in Sec.10(A)(2)(ii) and Sect.10A(2)(iii)." 3.Heard Ms.R.Hemalatha, learned Senior Standing Counsel for the appellant/Revenue and Mr.R.Sivaraman, learned counsel for the respondent/assessee. 4.Identical substantial questions of law, though worded slightly in a different form, were considered by us in T.C.A.Nos.466 to 469 of 2015 and the appeals filed by the Revenue were dismissed on 03.08.2021. The operative portion of the judgment reads as follows:- "4.It is not disputed before us that all the substantial questions of law, which have been framed for consideration in these appeals, have been considered by the Division Bench of this Court in the case of CIT vs. SRA Systems Ltd., [T.C.A.No.975 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - III Vs. HCL Technologies Ltd.] "... 19.In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. 20.Even in the common parlance, when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise any other interpretation makes the formula unworkable and absu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently, the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment on account of the assessee Company being ineligible for deduction under Section 10A. Subsequently, a notice dated 22.03.2007 was issued under Section 148 and after giving an opportunity of hearing, the scrutiny assessment order was passed on 17.12.2007, disallowing the entire claim of deduction under Section 10B. Further, the expenditure incurred for the renovation and repairs of the rented premises of the assessee Company was disallowed by the Assessing Officer on the ground that such expenses were in the nature of capital expenditure. The Assessing Officer in his re-assessment order noted that in terms of Section 10B(ii) an under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) of Sub Clause (2) to Section 10A of the Income Tax Act." 7.The order passed by the Income Tax Appellate Tribunal was challenged by the Department in T.C.A.No.1916 of 2008 and the Hon'ble Division Bench of this Court by its judgment dated 26.10.2018 confirmed the order of the Income Tax Appellate Tribunal dated 16.05.2008 made in I.T.A.No.2255/Mds/06 for the Assessment Year 2002- 03 and dismissed the appeal. In view of the judgment of the Hon'ble Division Bench of this Court, it is clear that the applicability of Clauses (ii) and (iii) of Sub Clause (2) to Section 10B of the Act, the impugned order passed by the Income Tax Appellate Tribunal is proper. In view of the order passed by the Income Tax Appellate Tribunal dated 16.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward the depreciation allowance of the earlier Assessment years and set off the unabsorbed depreciation first and making the return Nil, thereby leaving the Assessee in a position where it could not claim an deduction under Section 10B as there was no income after set off of carry forward depreciation and unabsorbed depreciation from earlier years. 29.This method of computing the income in the present case made by the Revenue is totally against the said law as has been declared by te Hon'ble Apex Court in the aforesaid decision in Commissioner of Income-tax v. Yokogawa India Ltd., (cited supra). 30.Therefore we have no hesitation to hold that, the decision of the ITAT, which is impugned herein, would not stand in the legal scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X
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