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TMI Blog2016 (2) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... o disallow 5% of exempt income as the expenses attributable for earning exempt income in so far - HELD THAT:- CIT(A) estimated the expenditure at 5% of gross exempt income as the expenditure attributable to earning exempt income for assessment year 2005-06 and we find that this is quite reasonable - in the order of the Ld. CIT(A) in confirming he disallowance made u/s.14A r.w Rule 8D(2)(iii) of Income Tax Rules. Expenditure incurred in foreign exchange which has been specifically excluded from export turnover would also not form part of total turnover for the purpose of sec.10B. - I.T.A.No.1413/Mds./2015 And I.T.A. Nos. 1507 & 1508/Mds./2015 - - - Dated:- 19-2-2016 - Shri A. Mohan Alankamony, Accountant Member And Shri Challa Nagen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rected the AO to reduce such expenses from both the export turnover and total turnover by observing as under:- 6. The third issue is exclusion of ₹ 2134,02,740l- towards expenses Incurred in foreign currency from export turnover but not from total turnover for the purpose of computation of deduction u!s.IOB. During F.V. 2004-05 relevant to A.Y.05-06) the appellant had Incurred expenditure of ₹ 18,2993,186/- in the Chennal Unit-il and ₹ 3,04,09,544I- in the Bangalore Peoplesoft Unit, in foreign currency, for rendering technical service outside India. The AO has deducted the expenditure Incurred in foreign currency from export turnover, but no corresponding deduction was made from total turnover. The AO has relied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om export turnover Is uncalled for. When the Id.AR was asked to justify his stand how such expenditure was not Included In export turnover, he was unable to give a satisfactory explanation. Therefore, the argument of the ld.AR on the first Issue was discounted. However, with regard to alternate claim that when such expenditure incurred in foreign currency was reduced from export turnover it should also be reduced from total turnover to keep parity, the same Is accepted in view of decision in the case of Saksoft Ltd (supra). The Hon ble ITAT, Chennal in appellant s own case for AY 2003-04 vide order in ITA No. 414/Mds/2007 dated 18.3.2011, upheld the principle of parity and held that foreign currency expenditure excluded from export turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from total turnover to keep parity, I am of the opinion that if any expenditure is to be reduced from the export turnover as per the Explanation 2(W) of the section 10B of the Act, the same has to be reduced from the total turnover also. Similar decision had earlier been given by the Hon ble Special Bench of Chennal Tribunal in the case of ITO v. Sak Soft Ltd. 313 ITR (AT) 353(Chennal). Respectfully following the rulings of the Bombay High Court and jurisdiction Special Bench, It Is held that telecommunication expenditure should be reduced both from export turnover and the total turnover. This ground is allowed. We also find from the Co-ordinate Bench of the order in assessee's own case that similar issue has been agitated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2008- 09 by the Tribunal. He further submits that for assessment year 2002- 03 disallowance was restricted to 2% of the exempt income. Ld. D.R supports the order of the lower authorities. 7. We have heard both the parties and perused the orders of the lower authorities. The CIT(A) estimated the expenditure at 5% of gross exempt income as the expenditure attributable to earning exempt income for assessment year 2005-06 and we find that this is quite reasonable. In so far as assessment year 2009-10 is concerned, the CIT(A) held as under:- 7.2.3 As per the decision in the case of Godrej Boyce Mfg. Co. Ltd Vs. DCIT (328 ITR 81), the Bombay High Court has held that the provisions of the section 14A are constitution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mt. Leena Rarnachandrar, (2011) (339 ITR 293) (Kerala HC). 7.2.4 in view of the above discussion, 1 fully agree with the AO that limb(i) (ii) will not attract in the instant case but limb(iii) will attract and I also fully agree with the disallowance made under Iimb(iii) of Rule 8D(2). The ground is dismissed. On going through the order of the CIT(A), we do not find any infirmity in the order of the Ld. CIT(A) in confirming he disallowance made u/s.14A r.w Rule 8D(2)(iii) of Income Tax Rules. 8. The next issue in the appeals of the assessee is with regard to disallowance of expenditure incurred current repairs. The ld. A.R submits that the issue is decided against the assessee by the Coordinate Bench for assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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