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2015 (8) TMI 1500 - AT - Income TaxEligible deduction u/s.10B - whether expenditure incurred in foreign exchange towards telecommunication expenditure and travel expenditure deducted from export turnover should also be deducted from total turnover for arriving at the eligible deduction ? - HELD THAT:- Issue is squarely covered by the decision of the Tribunal in the assessee’s own case [2011 (10) TMI 619 - ITAT CHENNAI] and case of ITO Vs. Sak soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] wherein it was held that such expenditure ought to be excluded both from export turnover as well as from the total turnover. Also see M/S. ALLSEC TECHNOLOGIES LTD. [2015 (9) TMI 219 - ITAT CHENNAI]. Loss on account of conversion of the amount outstanding in EEFC account in foreign currency to Indian currency - CIT held that the loss from EEFC account should be set off against the other business income or any other income of the assessee - HELD THAT:- No infirmity in the order of the Ld. CIT (A). Any loss incurred by the assessee has to be allowed to be set off against the same business income or against the other business income or any other income as per the provisions of the Act - Tribunal on the earlier occasion in the assessee’s own case has only decided the issue of granting deduction U/s.10B of the Act with respect to the gain derived from EEFC account which does not have direct nexus with the profits earned out of export by holding that such gains should be excluded for the purpose of deduction U/s.10B. This is only for the limited purpose of granting deduction U/s.10B - as per the provisions of the Act, any gain or loss incurred by the 10-B unit of the assessee, though not eligible for deduction while computing the income of the assessee, such gains or losses have to be considered in accordance with the normal provisions of the Act. Direction of AO to re-compute the deduction U/s.10B of the Act for the earlier years - CIT (A) directing the AO to re-compute the profit of the business eligible for deduction U/s.10B for the earlier years by not increasing the profit due to disallowance U/s.40(a)(ia) - HELD THAT:- AO for the earlier years have incorrectly granted deduction U/s.10B of the Act i.e., even for the increase in profits due to disallowance U/s.40(a)(ia) - While granting deduction U/s.10B of the Act, the disallowance made U/s.40(a)(ia) cannot be taken into consideration for the purpose of granting the benefit of deduction because Section-10B is a provision with fiction and Section.40(a)(ia) is also a provision with fiction and a provision with fiction cannot be super imposed on another provision with fiction - CIT (A) has rightly directed the Ld. Assessing Officer to re-compute the deduction U/s.10B of the Act for the earlier years, however, subject to the period of limitation provided under the Act. Invoking the provisions of Section-14A - AO observed in his order that the management recharge expenses and software expenses were also expenses related to earning of exempt income U/s.10B of the Act and therefore, cannot be allowed against the taxable income in view of the provisions of section 14A - CIT (A) directed AO to re-compute the income of the assessee for the earlier assessment years 2002-03 to 2005-06 - HELD THAT:- As assessee contented that CIT (A) had exceeded his jurisdiction by directing AO to re-comptue the deduction U/s.10B for the earlier assessment years other than the year under appeal, since we have already held in the earlier grounds that the Ld. CIT (A) has powers under the provisions of the Act to direct the Ld. Assessing Officer to modify the assessment of the earlier years based on the findings in the subsequent assessment year under appeal before the Ld. CIT (A), this ground is also accordingly disposed off.
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