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TMI Blog2022 (11) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... om profit or total turnover, and after considering relevant submissions held that the assessee could not furnish necessary evidences before the AO to prove that the RBI has permitted extension of time for remitting sale proceeds in foreign currency in India in order to allow the assessee to get the benefit. We are of the considered view that there is no error in the reasons given by the CIT(A) to sustain the additions made by the AO and thus, we reject the ground taken by the assessee. Non-exclusion of unrealized sale proceeds from export turnover as well as total turnover - HELD THAT:- The issue of exclusion of expenditure including foreign currency loss or unrealized sale proceeds from export turnover and also from total turnover, is no longer res integra . In the case of HCL Technologies Ltd.. [ 2018 (5) TMI 357 - SUPREME COURT] had considered an identical issue and held that expenses incurred in foreign currency, excluded from total turnover also needs to be excluded from total turnover. In the case of CIT v. Abad Fisheries [ 2002 (8) TMI 95 - KERALA HIGH COURT] held that unrealized sale proceeds have to be excluded from export turnover as well as total turnover. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld.CIT(A) in re-computing deduction u/s.10A and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. Unrealized sale proceeds from total turnover - HELD THAT:- We find that this issue is covered in favour of the assessee by the decision of in the case of HCL Technologies Ltd. [ 2018 (5) TMI 357 - SUPREME COURT] where it has been clearly held that expenditure excluded from export turnover, also needs to be excluded from total turnover. Therefore, by respectfully following the decision in the case of HCL Technologies Ltd. (supra), we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to exclude unrealized sale proceeds from total turnover and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. - ITA No.1158/Chny/2011 And ITA No.1248/Chny/2011 - - - Dated:- 16-11-2022 - Shri Mahavir Singh, Hon ble Vice President And Shri G. Manjunatha, Hon ble Accountant Member For the Assessee : Mr.I. Dinesh, Adv. For the Department : Dr.S.Palanikumar, CIT ORDER PER G. MANJUNATHA, AM: These two cross-appeals filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details, it is difficult to accept the contentions of the assessee that it should be derived from business activity. Therefore, we are of the considered view that there is no error in the reasons given by the authorities below to assess a sum of Rs.33,37,093/- under the head income from other sources and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the assessee. 4. The next issue that came up for our consideration from Ground No.2 of the assessee s appeal is allowing unrealized sale proceeds of Rs.24,32,35,200/- from profits as well as from the total turnover. The Ld.Counsel for the assessee fairly agreed that this issue is held against the assessee by the Hon ble Madras High Court in Tax Case (Appeal) Nos.1135 1196 of 2008 dated 25.11.2013 for the AYs 2001-02 2002-03. Therefore, the same is to be decided in accordance with law. 4.1 The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that this issue has been decided against the assessee by the Hon ble Madras High Court. 4.2 We have heard both the parties, perused the materials available on record and gone through orders of the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of HCL Technologies Ltd. (supra). 5.2 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The issue of exclusion of expenditure including foreign currency loss or unrealized sale proceeds from export turnover and also from total turnover, is no longer res integra . The Hon ble Supreme Court in the case of HCL Technologies Ltd.(supra), had considered an identical issue and held that expenses incurred in foreign currency, excluded from total turnover also needs to be excluded from total turnover. The Hon ble Kerala High Court in the case of CIT v. Abad Fisheries reported in [2002] 258 ITR 0641 (Ker.), held that unrealized sale proceeds have to be excluded from export turnover as well as total turnover. Therefore, considering the facts and circumstances of the case and also by following the decision of the Hon ble Supreme Court in the case of HCL Technologies Ltd.(supra), we direct the AO to re-compute deduction u/s.10A of the Act, by excluding unrealized sale proceeds from export turnover as well as total turnover. 6. In the result, the appeal filed by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added back as depreciation as per Companies Act- non STP. Out of this Rs.104,82,56,327 was claimed as deduction of depreciation as per Income tax act. The company also claimed deduction of Rs132,18,47,053 as deduction of profit exempted u/s 10A- STP profit. The company had furnished the net profit calculation for STPI unit and non STPI unit separately to the AO. The details are enclosed as annexure-3 4. In this statement, the company disclosed depreciation ofRs.45,58,41382 as depreciation for STP division and Rs.43,61,77,801 for non-STP division. This means they ought to have maintained separate fixed asset register for both the units i.e. STPI and non STPI units. Without having that basic details, they cannot claim the said depreciation. It is seen from the assessment records, the AO had called for the evidences of fixed asset addition vide notice dated 05/02/2014 at question no.6 and the copy of this notice is enclosed as annexure-5. As the appellant could not furnish the evidences, she had allowed depreciation as per Companies Act as against the IT Rules. During the course of appeal this was one of the grounds and it was discussed by CIT(A) at paragraph 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the impugned assessment year. The Ld.CIT(A) after considering relevant facts has rightly allowed the claim of the assessee and their orders should be upheld. 8.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The assessee has debited depreciation of Rs.59,19,14,117/- for the year ending 31.03.2001 in the audited P L A/c. as per Companies Act. The assessee claimed that out of Rs.59,19,14,117/-, depreciation pertains to non-STPI Units was at Rs.43,61,77,801/- and the same has been added back in the statement of total income. The assessee has claimed depreciation as per Income Tax Act, 1961 at Rs.104,82,56,327/- in the statement of total income. The assessee had also claimed depreciation as per IT Act for STP Division at Rs.45,58,41,382/-. However, there is no details about depreciation as per Companies Act for non-STPI Units. The AO has not allowed depreciation on additions to fixed assets amounting to Rs.84,78,14,130/-, because, the assessee could not furnish necessary invoices for additions to fixed assets. The Ld.CIT(A) has directed the AO to verify the depreciation claim as per IT Rules and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly agreed that the issue is covered in favour of the assessee by the decision of the ITAT Chennai Benches, in the assessee s own case. 9.2 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The ITAT Chennai Benches, in the assessee s own case for the AY 2002-03 in ITA No.1540/Mds/2006, had considered an identical issue and after considering relevant facts held that IPRs are intangible assets entitled for depreciation u/s.32(1)(ii) of the Act. Therefore, considering the facts and circumstances of the case and also by following the decision of the ITAT in the assessee s own case for the earlier assessment years, we are of the considered view that there is no error in the reasons given by the Ld.CIT(A) to delete the additions made towards depreciation on IPRs and thus, we are inclined to uphold the findings of the Ld.CIT(A) and reject the ground taken by the Revenue. 10. The next issue that came up for our consideration from Ground Nos.4 to 4.2 of the Revenue s appeal is giving relief u/s.10A of the Act, amounting to Rs.7,45,30,071/-. The assessee has claimed deduction u/s.10A of the Act, for profits d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0A of the IT Act. The Form 56F issued by the CA itself had inherent mistake where he had wrongly calculated the ETO as well as TTO and reported incorrect deduction of section 10A. 2.3 The assessing officer had recomputed the deduction /exemption of the undertaking in the original assessment order dated 31/3/2004 by restricting the deduction of l0A of the IT Act on account of the factual issues discussed above. In the assessment order apart from restricting the export turnover reported in form 56F the assessing officer had also allocated the expenditure between STP and non STP division as the company booked substantial profit in STP business and huge loss in non STP business that was taxable. 2.4 As per the original order dated 31-3-2004, the AO quantified Rs.94,31,37,372 as profit of the undertaking as against Rs.132,18,47,053 by allocating the expenditures proportionately. In the next paragraph, he had considered only Rs.70,10,93,076 as Export turnover (ETO) that was brought in as convertible foreign exchange into country as per section 10A(3) of the IT Act. As per the original assessment order the deduction of 10A allowed by the AO was Rs.30,86,49,234/- only. 2.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, on the other hand, submitted that there is no dispute with regard to profit computed by the Ld.CIT(A). However, as regards export turnover and total turnover, the Ld.CIT(A) has excluded unrealized sale proceeds from total turnover in light of the decision of the Hon ble Kerala High Court in the case of Abad Fisheries (supra). Therefore, there is no error in the computation of deduction u/s.10A of the Act, by the Ld.CIT(A) and thus, no interference is called for from the Tribunal. 10.3 We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. There is no dispute with regard to the computation of profit eligible for deduction u/s.10A of the Act, which was computed at Rs.19,22,24,915/-. The only dispute is with regard to computation of total turnover by excluding unrealized sale proceeds of Rs.24,32,35,200/-. The Revenue has agitated the issue in light of decision of the ITAT Chennai Benches and also the decision of the Hon ble High Court of Madras and contended that the Hon ble jurisdictional High Court has settled the issue and held that the assessee is not entitled for exclusion of unrealized sale proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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