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2012 (12) TMI 683 - AT - Income TaxComputation of eligible income u/s 10A – Whether interest income on FD is eligible for deduction u/s 10A - interest income derived on account of temporary parking of business funds – Held that:- Following the decision in case of assessee’s own case for earlier assessment year Semantic Space Technologies Ltd.,(2012 (11) TMI 536 - ITAT HYDERABAD) held that the income by way of interest on fixed deposits is not eligible for special deduction u/s 10A. In favour of revenue Deduction u/s 10A - Whether export by HO to branch office is eligible for deduction u/s 10A – Held that:- Following the decision in case of assessee’s own case for earlier assessment year Semantic Space Technologies Ltd.,(2012 (11) TMI 536 - ITAT HYDERABAD) that the transfers between the HO and the Branch Office and vice versa with the approval of the STPI clubbed with satisfaction of other conditions like realization of proceeds in foreign exchange, constitutes exports for the purpose of the deduction under S.10A of the Act. Thus, without going into the other arguments raised by the learned counsel for the assessee, we find that the assessee must be given relief on this issue. In favour of assessee Disallowance u/s 40(a)(ia) - Whether remittance by HO on account of sub-contracted to its branch office abroad subject to TDS - Assessee had paid to its US Branch on account of work sub-contracted to them - AO was of the opinion that the said sub contract payments attracted TDS u/s 194C/section 195, as the US branch is a non-resident – Held that:- The status of the branch office of the assessee abroad is not ‘non-resident’. Therefore, the provisions of Sec 195 are inapplicable. Following the decision in case of assessee’s own case for earlier assessment year Semantic Space Technologies Ltd.,(2012 (11) TMI 536 - ITAT HYDERABAD) issue decides in favour of assessee TDS u/s 194C on leased line charges paid to BSNL - Disallowance u/s 40(a)(ia) – Held that:- Following the decision in case of USHODAYA ENTERPRISES PVT LTD (2012 (7) TMI 120 - ITAT HYDERABAD) held that payment made are akin to telephone lines and hence the provisions of section 194J is not attracted since BSNL is only providing the line and not any professional or technical services to the assessee. In favour of assessee Disallowance on non-deduction of TDS u/s 195 – Payment to Non-resident for due diligence services in USA – Assessee argued that expenditure provision was reversed and the expenditure never really incurred, the disallowance if upheld in the current year, a similar amount reversed in the next year, is liable to be deleted from the computation of total income - Held that:- As the payment having been made to a foreign entity was liable for disallowance if tax was deducted is not made. Therefore view taken by the CIT(A) is justified. In favour of revenue Computation of eligible income u/s 10A – Whether credit balance written back and notice period salary are part of eligible income u/s 10A – Held that:- Following the decision in case of assessee’s own case for earlier assessment year Semantic Space Technologies Ltd.,(2012 (11) TMI 536 - ITAT HYDERABAD) as the amount represents recovery of the business expenses earlier incurred by the assessee, therefore the income arising on account of such recovery also represents the business income of the assessee. In favour of assessee Deduction u/s 10A – Whether disallowed amount are eligible for calculation of deduction u/s 10A – Held that:- As the issue is squarely covered by the decision of the Tribunal in assessee’s own case Semantic Space Technologies Ltd.,(2012 (11) TMI 536 - ITAT HYDERABAD) for AY 2006-07 in favour of the assessee.
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