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2021 (9) TMI 350 - AT - Income TaxDeduction claimed u/s 10A - exclude expenditure incurred in foreign currency from export turnover while computing deduction u/s 10A - HELD THAT:- As relying on own case [2021 (6) TMI 987 - ITAT BANGALORE] we restore this issue to the file of Ld CIT(A) for examining it afresh. Reduce expenses incurred towards telecom charges and expenditure incurred in foreign currency from both export turnover and total turnover while computing deduction u/s 10A - It is now settled that the amount reduced from the export turnover has to be reduced from the total turnover also as held in the case of HCL Technologies Ltd [2018 (5) TMI 357 - SUPREME COURT] Accordingly, the decision rendered by Ld CIT(A) on this issue does not require interference TP adjustment in respect of Software development services (IT services) - Comparable selection - HELD THAT:- Exclusion of companies functionally different from that of assessee - companies with RPT in excess of 15% of operating revenues need to be rejected. Rejection of deduction u/s 10A in respect of sale proceeds which have not been realised within a period of six months - HELD THAT:- We notice that the circular issued by RBI allowed a period of 12 months for realisation of export proceeds. Accordingly, we direct the AO to recompute the deduction u/s 10A of the Act by considering the permitted period of realisation of export proceeds as 12 months. Disallowance u/s 14A - AO noticed that the assessee has earned exempt dividend income from mutual funds - AO computed disallowance under Rule 8D(2)(iii) @ 0.50% of average value of investments - HELD THAT:- The assessee has made fresh investments in six schemes of mutual funds during this year, out of which three schemes fall under Growth/reinvestment schemes. Considering the less number of schemes, in our view, it may not be proper to apply Rule 8D mechanically. Accordingly, we are of the view that the disallowance may be estimated to meet the requirements of sec.14A of the Act. Accordingly, we estimate the disallowance u/s 14A at ₹ 2.00 lakhs and in our view, the same would meet the requirements of the provisions of sec.14A of the Act. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s 14A to ₹ 2.00 lakhs. Disallowance of expenses on foreign language training of spouses of employees - AO disallowed the above said claim holding that the expenses incurred on spouses of employees for imparting training in foreign language is not for the purposes of business - CIT(A) also confirmed the same - HELD THAT:- CIT(A) has held that the payment for language skill enhancement of spouses of employees has got no link with the business of the assessee. In our view, the Ld CIT(A) was justified in holding so, since we also do not find any connection between the expenditure and the business of the assessee. Accordingly, we confirm the disallowance made by the AO. Short credit of TDS amount - HELD THAT:- Since this issue requires verification of factual aspects, we restore this issue to the file of the AO.
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