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2015 (7) TMI 1319 - AT - Income TaxDeduction u/s 10A - compensation received by the assessee on account of termination of contract - whether it would be part of profit of the business for the purpose of computing deduction u/s 10A ? - HELD THAT:- In the case in hand, the assessee is 100% export oriented unit (EOU) and particularly, the export of software. The contract in question was for supply/export of software and on cancellation of that contract for supply of software, the assessee received the compensation which is nothing but income derived from the said undertaking from the main business activity of the supply/export of software. Therefore following the decision of the Delhi Bench in the case Sony India Pvt. [2008 (9) TMI 420 - ITAT DELHI-H] , we are of the view that the amount received by the assessee as compensation on account of cancellation of the contract in relation to export of software would constitute as its business income and will be part of profits of business of the undertaking and, therefore, eligible for deduction u/s 10A. Exclusion of the expenses both from export turnover as well as from the total turnover for the purpose of computing deduction u/s 10A. - This issue of exclusion of the expenses incurred in foreign exchange from the export turnover as well as from the total turnover is settled by the judgment of Hon’ble Jurisdictional High Court in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein held that here should be uniformity in the ingredients of both the numerator and the denominator of the formula, Section 10-A is a beneficial section. Setting off of brought forward losses - HELD THAT:- The issue on the setting off of brought forward losses after allowing the deduction u/s 10A is now covered by the judgment of Hon’ble Jurisdictional High Court in the case of CIT(A) Vs. Yokogowa [2011 (8) TMI 845 - KARNATAKA HIGH COURT] wherein Hon’ble High Court has held that the deduction u/s 10A is allowable on the relevant years profits of the eligible unit without brought forward losses and unabsorbed depreciation being set off. Re-imbursement of travelling expenses to be included in the profit of the business while computing deduction u/s 10A of the Act. - AR has pointed that this issue has not been adjudicated by the CIT(A) - HELD THAT:- . Since this issue has not been adjudicated by the CIT(A), therefore, we remit this issue to the record of the CIT(A) for adjudication of the same on merit after giving an opportunity of being heard to the assessee. Disallowance of deduction u/s 10A in respect of deemed export on account of sale to another STP unit - HELD THAT:- As far as the allowability of deduction u/s 10A in respect of the sale to another STP unit in convertible foreign exchange, this issue is now covered by the above decision of Hon’ble jurisdictional High Court. However, this issue has not been examined by the CIT(A), therefore, only for the limited purpose of giving a finding that the sale in question is to the another STP unit, the issue is remitted to the record of the AO for verification and then allowing the claim of the assessee if sale in question is to the another STP unit.
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