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2019 (7) TMI 865 - AT - Income TaxDeduction u/s 10A on delayed realization of Export proceeds - whether the assessee can be allowed deduction u/s 10A in respect of such export sales, the proceeds of which have not been remitted in foreign exchange, which have not been received within the period stipulated in the Act? - HELD THAT:- The facts of the case on hand are also similar to the aforesaid case of Wipro Ltd. [2015 (10) TMI 826 - KARNATAKA HIGH COURT] the assessee has made exports and certain foreign remittances on export sales have not been received within the specified time limit of six (6) months and application for extension of time for receiving such foreign remittances have been filed with the authorized bankers and the applications have not been rejected. However, the foreign exchange remittances have been received and credited to the assessee’s account. Respectfully following the aforesaid decision of the Hon’ble Karnataka High Court in the case of Wipro Ltd., (supra), we also hold that notwithstanding the fact that there is no express order granting approval by the authorized bankers extending the time limit of six months for receipt of foreign remittances on account of export sales, the assessee is entitled to the benefit of deduction u/s 10A - ground No.3.1 of the assessee’s appeal is allowed. Excluding export sales from export turnover, even though the proceeds of these export sales were realized within the time limit specified u/s 10A(3) - HELD THAT:- As we have already held that those export sale proceeds that were realized within the time limit and those export sales proceeds for which extension of time limit was applied for by the assessee to the authorized bankers are eligible for deduction u/s 10A, this ground is also covered by the aforesaid decision in the case of Wipro Ltd. [2015 (10) TMI 826 - KARNATAKA HIGH . Consequently, ground No.3.2 raised by the assessee in this appeal is allowed. Exclusion of Expenditure incurred in foreign currency from Export Turnover - HELD THAT:- While the assessee has given some break-up of details of expenses incurred in foreign currency, the details do not establish that all of these expenses were not incurred for rendering technical services outside India; as claimed by the assessee. In the absence of details, the issue is only academic. Further, we do not consider it necessary to adjudicate on issue which is academic in nature, as the CIT(A) has addressed the assessee’s grievance and allowed the alternate claim of the assessee on this issue. Consequently, ground No.4 raised by the assessee is dismissed as academic. Deduction u/s 10A to be on assessed income - HELD THAT:- The disallowance of expenses has been made under section 40(1)(i) towards non-deduction of tax at source and such disallowance automatically enhances the taxable income of the assessee and consequently the assessee is entitled for deduction u/s 10A on such enhanced income. Therefore, respectfully following the decision of CIT Vs. M. Pact Technology Services Pvt. Ltd [2018 (8) TMI 202 - KARNATAKA HIGH COURT] we hold that the deduction under section 10A of the Act shall be allowed on the assessed income. The AO is accordingly directed. Consequently, ground No.5 of the assessee’s appeal is allowed. TDS u/s 195 - disallowance of commission paid to foreign parties u/s 40(a)(i) - HELD THAT:- Services are provided outside India, the commission payments made to non-residents cannot be treated as income deemed to accrue or arise in India and therefore the provisions of Section 195 have no application and are not attracted in the case on hand. In order to invoke the provisions of Section 195, the income in question should be exigible to tax in India. In the case on hand, the commission payments to non-residents are not chargeable to tax in India and therefore the provisions of Section 195 are not applicable / attracted. - Decided in favour of assessee Charging of interest u/s 234B - HELD THAT:- The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon’ble Apex Court in the case of Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B Disallowance of employees’ contribution to Provident Fund (PF) - HELD THAT:- Employer shall get deduction for payment of employees’ contributions to PF provided they are deposited before the due date for filing the return of income under section 139(1) of the Act. It has further held that Parliament has not made any distinction between employees’ contribution and employer’s contribution to PF and that the above conditions / time specified for payment thereof apply to both these contributions to PF. Respectfully following the aforesaid judgments in the case of Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT] and Spectrum Consultants India Pvt. Ltd. [2014 (2) TMI 127 - KARNATAKA HIGH COURT] we uphold the decision of the CIT(A) and dismiss ground Nos.2 and 3 of Revenue’s appeal. Deduction u/s 10A – Export turnover / total turnover computation - HELD THAT:- High Court of Karnataka in the case of CIT v Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that when certain expenses are excluded from the export turnover for the purposes of computing deduction admissible under the Act; like u/s. 10A , such expenses are also to be excluded from total turnover, as export turnover is a part of total turnover. This issue is no longer res integra, and has been decided in favour of the assessee and against revenue by the decision of the Hon'ble Apex Court in the case of CIT V. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] - we direct the AO to allow assessee's claim for deduction u/s 10A. Consequently, the grounds raised by Revenue are dismissed.
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