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2009 (7) TMI 915 - AT - Income TaxRevision u/s 263 - as per CIT Assessee claimed excess deduction u/s 10A on software units - Whether Order of the AO was prejudicial to the interest of revenue? - whether AO had allowed an excess deduction under section 10A without appreciating the fact that the appellant had two software undertakings and the figures considered by the ld. CIT were in respect of only one undertaking? - CIT u/s 263 has taken the total turnover of only one unit into consideration and has ignored the turnover of the second unit and cumulative deduction of both the units - HELD THAT:- We find that the CIT has revised the assessment order u/s143(3) by issuing show-cause notice only with regard to not reducing the expenditure incurred in the foreign currency from the total export turnover while computing the deduction u/s 10A. But in the revision order, the assessment was set aside also on the other ground that some of the sale proceeds was yet to be received by the assessee. The revision u/s 263 is not like the reopening of the assessment where once the assessment is reopened, entire assessment is open before the AO to be reconsidered in accordance with law. In the revision proceedings, the CIT cannot travel beyond the reasons given by him for revision in the show-cause notice. Therefore, we hold that the revision on the ground that part of the sale proceeds is yet to be received by the assessee is not tenable. We find that section 10A is a special provision relating to newly established undertaking in trading zones and the clause (iv) of Explanation (2) of section 10A defines the export turnover, according to which, it is the consideration in respect of the export by the undertaking articles or things or computer software received in or brought into India by the assessee in convertible foreign exchange in accordance with sub-section (3), i.e., within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf and it does not include freight, telecommunication charges or insurance charges attributable to the delivery of articles or things or computer software outside India. The other expenditure which can be reduced is the expenditure incurred in foreign exchange in providing the technical services outside India. The nature of the expenditure incurred by the assessee is not in the nature of technical expenditure for providing the technical services outside India. Therefore, the assessee has correctly not reduced the same from the export turnover while computing the deduction u/s 10A. This view is also fortified by the decision of the ITAT, Bangalore in the case of Infosys Technologies (P.) Ltd.[2006 (4) TMI 447 - ITAT BANGALORE] and also ITAT, Hyderabad in the case of Patni Telecom (P.) Ltd.[2008 (1) TMI 452 - ITAT HYDERABAD-A]. Further these decisions also were already delivered when the assessment order was passed on 20-3-2006 and the view adopted by the AO is in consonance with the said decision as held by the Hon’ble Supreme Court in the case of Max India Ltd.[2007 (11) TMI 12 - SUPREME COURT] and Malabar Industrial Co. Ltd.[2000 (2) TMI 10 - SUPREME COURT]. When two different views existed when the Commissioner was passing the order, it had to be taken into account and the Commissioner has no jurisdictional power to revise u/s 263. In the result, the assessee’s appeal is allowed and the order of the AO u/s 143(3) is restored.
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