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2011 (1) TMI 915 - AT - Income TaxDisallowance u/s 40(a)(i) - Royalty or fees for technical services - TDS u/s 195 - The payments made to service providers such as AT&T or MCI Telecommunications are for the use of bandwidth provided for downlinking signals in the United States - A.O., while completing the assessment as in the last year, held that the assessee company has got the benefit of technical consultation and it was concluded by the AO that the payment falls within the ambit of section 195 of the IT Act - Since the amounts for subscription to foreign entities mentioned above are not chargeable to tax in India, the assessee is not liable for tax deduction at source - Decided in favour of the assessee Provision for warranty for post sales customer support - held that:- the estimation is implicit in the concept of provision and if the estimation is on reliable basis, it is to be accepted. In the case of Rotork Controls India (P) Ltd. v. CIT (2009 -TMI - 33420 - SUPREME COURT OF INDIA), it was held by the Hon’ble Supreme Court that provision for warranty at the rate of 2% of turnover based on past experience was found to be acceptable. Deduction u/s 10A - Reduction of telecommunication charges from the total turnover while calculating deduction u/s 10A of the Act. - held that:- decided in favor of assessee. Deduction u/s 80HHE - The assessee, while claiming deduction u/s 80HHE, considered the ‘total turnover’ of only those units, which were eligible for deduction u/s 80HHE. The A.O. completed the assessment and adopted the entire turnover as per the P&L account in allowing deduction u/s 80HHE. - Decided in favor of assessee.
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