2013 (6) TMI 908 - AT - Income Tax

Summary

Issues involved:
The judgment involves the exclusion of certain expenses from export turnover for computing deduction u/s 10A of the Act and the exclusion of statutory disallowances from the income derived for the purpose of computation of deduction u/s 10A of the Act.

Exclusion of Certain Expenses from Export Turnover:
The Assessing Officer excluded communication charges, insurance, and professional charges from export turnover for computing deduction u/s 10A of the Act. The assessee contended that these expenses should be reduced from both export turnover and total turnover. The Tribunal agreed with the assessee, citing precedents from the Hon'ble Bombay High Court, Karnataka High Court, and Income-tax Appellate Tribunal. It directed the Assessing Officer to re-compute the deduction u/s 10A after reducing the mentioned expenses from both turnovers.

Exclusion of Statutory Disallowances from Income:
The Assessing Officer excluded statutory disallowances like delay in remittance of employees' PF contribution, provision for leave encashment, and gratuity from the income derived for computing deduction u/s 10A of the Act. The assessee argued that these disallowances should be considered as part of profit for the deduction. The Tribunal, following the decision of the Hon'ble Bombay High Court and other Tribunal benches, held that statutory disallowances cannot be excluded from the income for computing deduction u/s 10A. It directed the Assessing Officer to re-compute the deduction without excluding the disallowances, thereby allowing the grounds raised by the assessee on this issue.

In conclusion, the appeal filed by the assessee was allowed by the Tribunal, and the re-computation of the deduction u/s 10A of the Act was directed based on the considerations outlined in the judgment.