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2014 (9) TMI 1028 - ITAT BANGALOREDeduction under section 10B - Held that:- No doubt, the AO has curtailed the claim of deduction under section 10B substantially vis-ŕ-vis the claim of the assessee. However, set off of depreciation has been done after computing the total income and not vice versa. It is also not clear from where the figure of ₹ 2,29,70,688/- has been taken by the AO, since set off done by the assessee was ₹ 1,85,17,875/-. We are therefore, of the opinion, that the issue requires a fresh look by the AO, in the case of CIT Vs Yokogawa [2011 (8) TMI 845 - Karnataka High Court ] and CIT Vs Tata Elxsi Ltd.,(2011 (8) TMI 782 - KARNATAKA HIGH COURT ). Order of the lower authorities on this issue is set aside and remitted back to the AO for consideration afresh, in accordance with law. Eligibility for claim of deduction under section 10B - Held that:- There was amendment to the definition of “export turnover” with effect from 01-04-2002, we are unable to find any, that has a bearing on the issue before us. Second proviso to section 10B(1) as it earlier stood was no doubt omitted by Finance Act, 2001, with effect from 01-04-2002. But the earlier proviso was only for fixing a limit of 25% on domestic sales, for computing profits and gains derived from exports. Here on the other hand, claim of the assessee is not on domestic sale, but on export sales of goods purchased as such by it. Sections 10A(i) and 10B(i) are no different, since these are similarly worded. Learned CIT(A) in our opinion, fell in error in not following the decision of Co-ordinate Bench. Assessee had already preferred a claim before AO for deduction under section 10B, though only on manufactured goods. The claim made on trading goods exported was also under same section. It cannot be considered as a claim of different genie. It is also a fact that the AO never had an opportunity to verify this claim. In all fairness we are of the opinion that the claim can be looked afresh by the AO. We therefore, set aside the order of learned CIT(A) on this issue and remit it to the AO for consideration afresh in accordance with law. Expenditure on freight and insurance was excluded from export turnover - Held that:- Definition of ‘export turnover’ in explanation(iii) to 10B(2) specifically require exclusion of freight, telecommunication and insurance attributable to delivery of things outside India. Assessee has no case that such expenses were not attributable to its export sales. Hence exclusion of such expenses from export turnover cannot be faulted. However, its claim that such amounts should be also be excluded from total turnover, while working out eligible deduction under section 10B is on strong wicket, in view of decision of Hon’ble jurisdictional High Court in the case of CIT Vs Tata Elxsi Ltd.[2011 (8) TMI 782 - KARNATAKA HIGH COURT ]. We therefore, direct the AO to exclude the items excluded from export turnover also from total turnover, while working out the deduction under section 10B.
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