2010 (1) TMI 1102 - AT - Income Tax

Summary

Issues involved:
1. Whether communications charges can be reduced from Export Turnover and total turnover u/s 10A of the Income Tax Act.
2. Whether disallowances u/s 40(a)(ia), Section 36, 40A, and 40(a)(ia) are eligible for deduction u/s 10A of the Income Tax Act.

Issue 1: Communications charges reduction from turnover
The appeal by the Revenue challenged the CIT(A)'s decision to reduce communications charges from Export Turnover and total turnover, contending that there is no provision for such reduction under Section 10A of the Income Tax Act. The Tribunal referred to a previous case, ITO Vs. SAK Soft Ltd., where it was established that expenses like freight, telecommunication charges, or insurance related to delivery outside India should be excluded from export turnover and total turnover. The Tribunal upheld the CIT(A)'s order based on this precedent, dismissing the Revenue's ground.

Issue 2: Disallowances eligibility for deduction u/s 10A
The second ground in the Revenue's appeal questioned the CIT(A)'s decision regarding the eligibility of disallowances u/s 40(a)(ia), Section 36, 40A, and 40(a)(ia) for deduction u/s 10A of the Income Tax Act. The Tribunal cited a previous case, DCIT, Hyderabad Vs. Plant Online (P) Ltd., where it was ruled that disallowances under specific sections of the Income Tax Act must be considered for computing deduction u/s 10A. The Tribunal found no fault in the CIT(A)'s order, affirming that the disallowances should be taken into account for the purpose of computing deduction u/s 10A. Consequently, the appeal of the Revenue was dismissed.

In conclusion, the Appellate Tribunal ITAT Hyderabad, in the case dated 8.1.2010, upheld the CIT(A)'s decision regarding the reduction of communications charges from turnover and the eligibility of disallowances for deduction u/s 10A of the Income Tax Act, based on relevant legal precedents and interpretations.