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2016 (1) TMI 1019 - AT - Income TaxEntitlement to claim deduction u/s. 10A on the amount of foreign currency expenditure - Held that:- In the present case from the work flow of the activities provided by the assessee which has been reproduced in para 7 above, it is evident that the assessee is not providing any end product such as computer software or design to its parent company in Germany. The assessee is providing technical services to its holding company. In so far as the findings of Commissioner of Income Tax (Appeals) on this aspect of the issue is concerned we are in agreement with him. Whether the technical services provided by the assessee are outside India or from India? - Held that:- The assessee has its situs and work platform in India. Thus, in our considered opinion the assessee is providing technical services to its parent company from India. As far as first two components of the expenses i.e. IT expenses and technical consultancy services, are concerned undoubtedly they are the part of the expenditure required for the technical services performed by the assessee to its AE. These expenses as per the contentions of the assessee are mainly with respect to setting up of workstations i.e. Desktops/Laptops, Wide Area Network, leased line for data transfer between KSB AG and the assessee, printers, internet etc. Applications such as Unigraphics, Autocad, SAP, Ms-office, various other softwares, etc. Payment for technical consultancy services include, technical consultancy fees, off-shore salary paid by KSB AG to its technical representative deputed with the assessee, etc. As far as the third element i.e. reimbursement is concerned they relate to expenses incurred by holding company on behalf of the employees of the assessee when they visited Germany for training. These expenses include mainly rent, accommodation, conveyance, training etc. Therefore, these reimbursements do not form part of the expenditure eligible for deduction u/s. 10A. In the definition of the term “export turnover” it has been specifically stated that expenses incurred in foreign exchange in providing technical services outside India. Thus, the scope of the exclusion from the word “export turnover” cannot be enlarged by excluding the expenses incurred in foreign exchange in providing the technical services from India. Exclusion of foreign currency expenditure from “export turnover” as well as “total turnover” while computing deduction u/s. 10A confirmed
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