TMI Blog2012 (11) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred in foreign currency from the export turnover for the purpose of computing relief allowable under sec.10A of the I.T. Act. 3. At the time of hearing, the Counsel for the Assessee submits that this issue has been decided in assessee s own case in its favour for the Asst. Year 2003-04 by this Tribunal in ITA No.731/Mds/2007 dated 15.2.2008 which was followed by the Commissioner of Income Tax (Appeals) in deciding the appeals for the Asst. Years 2004-05 2005-06. The Departmental Representative relied on the grounds of appeal. 4. We have heard both the parties and perused the material on record. We find that this Tribunal in assessee s own case reported in 119 TTJ 18 decided the issue in favour of the assessee in para Nos.10 to 14. We also find that recently this issue has been considered by this Tribunal in assessee s own case in ITA No. 1169/Mds/2007 for the Asst. Year 2003-2004 dated 03.10.2012 by the co-ordinate Bench of this Tribunal wherein the Revenue s grounds were rejected on similar issue. This Tribunal, while dismissing the Revenue s appeal held as under :- 2. The first ground raised by the Revenue is that the Commissioner of Income-tax(Appeals) has er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same are to be excluded from export turnover. The Commissioner of Income Tax (Appeals), in his order held as under :- The next common ground of appeal for both the assessment years is regarding exclusion of 50% of telecommunication charges for both the assessment years from the figure of export turnover. The learned assessing officer in his order of the AY 2004 05 has held that 50% of the telecommunication charges of ₹ 6,78,750/ are attributable to the delivery of computer software outside India. Similar conclusion was made in the order passed for the AY 2005 06 of ₹ 14,89,526/-. Accordingly, telecommunication charges to the extent of 50% were reduced from the export turnover. I have considered the submissions and the arguments relating to the impugned issue. The definition of 'export turnover' in section 10A mandates the exclusion of, inter alia, the 'telecommunication charges' attributable to the delivery of computer software outside India. The language employed in the said definition is 'attributable' and not the expression 'derived'. It is a settled legal principle that the expression 'derived' is more rigorous than th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reported in 119 TTJ 18 and in ITA No.1169/Mds/2007 dated 03.10.2012 (copies placed on record). The Departmental Representative submits that the Commissioner of Income Tax (Appeals) in fact followed the order of this Tribunal in the assessee s own case in holding that deduction under sec.10A should be allowed before setting off of carry forward loss. 9. We have gone through the orders of the Co-ordinate Bench and find that this Tribunal held that deduction under sec.10A of the Act should be allowed before set off of carry forward loss. The Co-ordinate Bench recently in ITA No.1169/Mds/2007 dated 03.10.2012 held as under :- 5. The second ground raised by the Revenue is that the Commissioner of Income-tax(Appeals) has erred in directing the Assessing Officer to re-compute business profits after setting off brought forward losses and depreciation and allow deduction under sec.10A. 6. In the very same order cited above, the co-ordinate Bench of the Tribunal has allowed the deduction to the assessee under sec.10A without setting off of the brought forward losses and the issue was decided in favour of the assessee. The above order of the co-ordinate Bench is in conformity to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lOA cannot become the guiding principle for the purpose of computing book profits under section 115JB. The book profits are computed in accordance with the provisions of section 115JB. The Supreme Court in the case of Apollo Tyres vs CIT 255 ITR 273 has held that the assessing officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to section 115J. The reduction of actual amount of deduction under section lOA is not provided in any of the clauses of explanationtosectionl15JB. On the contrary the relevant adjustments are as follows: Explanation - For the purposes of this section, book profit means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2) as increased by (f) the amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 10A or section 10B or section 11 or section 12 apply. If any amount referred to in clauses (a) to (g) is debited to the profit and loss account and as reduced by The amount of income to whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Therefore, he directed the Assessing Officer to correctly compute the book profits by adjusting the income and expenditure as per book of accounts of the assessee relating to income exempt under sec.10A of the Act. 13. On going through the order of Commissioner of Income Tax (Appeals) we see that there is no infirmity in his order in directing the Assessing Officer to compute the book profits by adjusting the income and expenditure as per books of accounts of the assessee relating to income exempt under sec.10A for the purpose of allowing book profits under sec.115JB of the Act. The grounds raised by the Revenue are dismissed on this issue. 14. The Department has also taken one more ground for the Asst. Year 2005-06 contending that the Commissioner of Income Tax (Appeals) erred in holding that Miscellaneous income comprising of recovery of bad debts and the reversal of provision for consultancy charges are to be regarded as profits of the business of undertaking and eligible for deduction under sec.10A of the I.T. Act. 15. The facts of this issue are that the assessee claimed deduction under sec.10A of the Act on an amount of ₹ 19,378/- and ₹ 7,91,636/- t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the undertaking and would be eligible for deduction under sec.10A of the Act. Therefore, we find no infirmity in the order of the Commissioner of Income Tax (Appeals) on this issue. Accordingly, we uphold his order and reject the grounds taken by the Department on this issue. 18. In the Cross Objections filed by the assessee for both the Asst. Years under consideration, the assessee is agitated against the decision of the Commissioner of Income Tax (Appeals) in holding that only 50% of the of the telecommunication charges are to be excluded from Export Turnover for the purpose of computing deduction under sec.10A of the Act. 19. The Counsel for the Assessee relying on the decision of Hyderabad Bench of the Tribunal in the case of Patni Telecom P. Ltd. v. ITO (308 ITR (AT) 414) argued that no part of telecommunication charges are to be excluded for the purpose of allowing relief under sec.10A of the Act. In the alternative he submits that the telecommunication charges are also to be excluded from the total turnover in view of Special Bench decision of this Tribunal in the case of ITO v. Sak Soft Ltd. [313 ITR (AT) 535]. The Departmental Representative relied on grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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