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2011 (12) TMI 377 - ITAT, BANGALOREReopening - Deduction u/s 10A - The assessee was engaged in development of software and also offers consultancy, data hosting and other related activities - AO noticed that there was a mistake apparent on the record in allowing the carry forward of loss and that from 1.4.2001 onwards deduction u/s. 10A should have been allowed only on the total income of the assessee and not in the individual STPI - ld. counsel for the assessee submitted that section 10A of the Act is a complete code in itself and therefore deduction under this section is allowable on the profits for the year arising to the undertaking before setting off of the loss from other units or brought forward lossess of the earlier years - High Court in the case of CIT v. Yokogawa India Ltd. and Ors. (2011 -TMI - 211353 - Karnataka High Court) wherein it was held that: the income of the unit eligible for deduction u/s. 10A of the Act is to be excluded at source itself before arriving at the gross total income, therefore the loss of non-10A unit cannot be set off against the income of section 10A unit for carry forward of loss u/s. 72. Regarding disallowance of additional liability arising due to exchange fluctuation - ld. counsel for the assessee submitted that during the year under consideration the assessee claimed only the expenses related to foreign exchange variation and the actual expenses were allowed in the earlier year - In the present case, one of the contentions of the ld. counsel for the assessee was that the expenditure incurred for restrictive covenant in the preceding year has been allowed and it was only the exchange fluctuation variation which was claimed as revenue expenditure in the year under consideration - Held that: this fact is not verifiable as to whether the expenditure incurred in the earlier year was considered as revenue expenditure by the department and the claim of the assessee was allowed and this year only the exchange fluctuation variation was claimed - Decided in favor of the assessee by way of remand to AO. Reduction of telecommunication expenses from export turnover. - held that:- for the purpose of computation of deduction u/s. 10A of the Act, if any expenditure is excluded from the export turnover, the same has to be excluded from the total turnover also.
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