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2015 (9) TMI 219 - AT - Income TaxEligibility for exemption U/s.10A - brought forward losses and unabsorbed depreciation of earlier years whether cannot be set-off against profit and gains of the undertaking while computing the eligible exemption U/s.10A? - Held that:- Since the Ld. CIT (A) has held that unabsorbed losses and depreciation of the earlier years cannot be set off against the profits from the eligible unit for computing the eligible deduction U/s. 10A of the Act following the decision of the Tribunal in the case Scientific Atlanta India Technology Pvt Ltd. Vs. ACIT [2010 (2) TMI 658 - ITAT, CHENNAI] we do not have any hesitation to confirm the order of the Ld. CIT (A) on this issue. - Decided in favour of the assessee. Expenditure incurred in foreign exchange towards telecommunication charges deducted from export turnover should also be deducted from total turnover for arriving at the eligible deduction U/s.10A - Held that:- Explanation 2(iv) to Section 10A of the Act stipulates that “export turnover” does not include freight, telecommunication charges or insurance attributable to the delivery of articles or things or computer software outside India or expenses if any, incurred in foreign exchange in providing the technical services outside India. The arithmetic consequential implication of such exclusion of the above stated expenditures from “export turnover” would be, to iron out the element of those expenditures, while computing the eligible deduction U/s. 10A of the Act. In the given case before us, the relevant expenditure that has to be excluded from the “export turnover” is “telecommunication charges”. Thus on giving effect to Explanation 2(iv) to Section 10A of the Act, the “telecommunication charges” should be excluded not only from “export turnover”, but it has also to be reduced from the “debit” side of “profit and loss account”. Moreover, once the “telecommunication charge” is reduced from the “export turnover”, it will stand reduced to that extend in “total turnover” because “export turnover” is a part and parcel of “total turnover” while drawing the “profit and loss account”. Further, needless to mention that “total turnover” is a “credit” side item in the “profit and loss account”. Thus, the overall effect in the “profit and loss account” would be that, the “profit” will remain the same, since “telecommunication charge” is excluded from both “debit” side and “credit” side of the “profit and loss account”, however the “export turnover” and the “total turnover” will stand reduced to the extent of “telecommunication charges” so excluded.- Decided in favour of the assessee.
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