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2013 (9) TMI 296 - ITAT CHENNAIDeduction u/s 10A - Reduction of expenditure incurred in foreign currency from export turnover - DPO & Assessing Officer reduced the expenditure incurred in foreign currency from export turnover while computing the deduction under section 10A - Held that:- The Assessing Officer has given a finding that the assessee has incurred these expenses in the process of exports of software. This expenditure incurred was in providing technical services outside India. Therefore, this expenditure was excluded from the export turnover by the Assessing Officer which was affirmed by the DRP. The assessee could not able to substantiate its claim that such expenditure was not incurred in rendering any technical services. In the circumstances, the contention of the assessee that this expenditure should not be excluded from the export turnover is rejected. However, we agree with the assessee that this expenditure having excluded from the export turnover, it should also be excluded from the total turnover, in view of the decision of the Special Bench Tribunal in the case of Sak Soft Ltd. (supra). Therefore, we direct the Assessing Officer to exclude the expenditure incurred in foreign currency which was excluded from export turnover from the total turnover for the purpose of computing relief under section 10A of the Act - Decided in favour of assessee. Disallowance u/s 14A - Whether DRP and the Assessing Officer ought to have granted deduction under section 10A on the enhanced income on account of the aforesaid disallowance - Held that:- Though the counsel for the assessee submits that during this year there were no borrowings and all the investments were made out of own funds, therefore, the provisions of section 14A cannot be invoked as it becomes academic, in view of the alternative ground of the assessee that deduction under section 10A has to be granted on the enhanced income on account of disallowance made under section 14A. As we incline to accept the alternative ground of appeal that the deduction under section 10A has to be granted on enhanced income on account of disallowance under section 14A - Disallowance shall go to enhance the profit eligible for deduction under section 10A. Accordingly, we direct the Assessing Officer to enhance the disallowance made under section 14A as part of the eligible profit for the purpose of section 10A - Following decision of Godrej & Boyce Manufacturing Co. Ltd., Vs. DCIT. [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Decided in favour of assessee.
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