2011 (8) TMI 1182 - AT - Income Tax

Summary

Issues involved: Cross appeals for assessment years 2006-07 regarding deduction u/s 10B of the IT Act, exclusion of certain amounts from export turnover, and treatment of consultancy charges and expenses.

Assessment Year 2006-07:
The assessee, a private limited company engaged in software development and export, filed its return declaring a total income of &8377; 59,90,038 and claimed deduction u/s 10B of the IT Act. The AO observed various receipts related to consultancy services and expenses, reducing the export turnover accordingly. The CIT(A) confirmed some additions but deleted the addition of export sale proceeds received after six months. The Tribunal directed the AO to verify the nature of consultancy services and exclude certain expenses from export turnover.

Consultancy Charges and Expenses:
The AO reduced the export turnover by amounts received for consultancy services and certain expenses. The CIT(A) confirmed some additions, but deleted the addition of export sale proceeds received after six months. The Tribunal directed the AO to verify if consultancy services were for independent purposes and exclude certain expenses from export turnover.

Internet Charges and Expenses:
The Tribunal directed the AO to verify if internet charges and expenses were attributable to delivering software outside India and exclude them from export turnover accordingly. Any excluded amount from export turnover should also be reduced from total turnover for computing deduction u/s 10B.

Traveling Expenses and Foreign Currency Expenditure:
The Tribunal found that the assessee did not provide details for traveling expenses and foreign currency expenditure, directing their exclusion from export and total turnover.

Judicial Precedents:
The revenue's appeal was dismissed as the CIT(A)'s order was in line with judicial precedents regarding the treatment of remittances under FEMA regulations for deduction u/s 10B of the IT Act.

In conclusion, the Tribunal partly allowed the assessee's appeal and dismissed the revenue's appeal, maintaining the CIT(A)'s order based on judicial precedents.