9911796707
TMI Blog2010 (8) TMI 750X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to recomputed the exemption under section 10A, without appreciating the facts of the case. 2.On the facts and in the circumstances of the case and in law, the CIT (A) erred in holding that the income of Rs. 21,76,680 arising out of training activity is eligible for exemption under section 10A and it has to be taken as part of the total turnover while computing extra profits without appreciating the fact of the case. 3.On the facts and in the circumstances of the case and in law, the CIT (A) erred in deleting the addition made in terms of subsection 92CA(4) of the Income-tax Act, 1961, without appreciating the facts of the case." 2. The assessee has taken following grounds in the CO.: "1.The Commissioner of Income-tax (Appeals)-VIII, Mumbai [CIT(A)] erred in holding that exchange gain on travel recovery of Rs. 20,75,709 is not eligible for deduction under section 10A. 2.The CIT(A) erred in holding that the income from training of Rs. 21,76,680 should be excluded from the export turnover for the purpose of computing the deduction under section 1OA of the Act." 3. The Cross Objection filed by the assessee is time barred by 20 days. 3.1 We have heard the Learned Counsel as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10A of the Act? 8. The revenue as well as assessee have taken the grounds on this issue. The facts pertaining to the issue are as under. 9. The assessee-company is engaged in providing software solutions to banks and financial institutions. The assessee had claimed deduction/exemption under section 10A of the Act. The assessee has included Rs. 21,76,680 in it's income for the purpose of section 10A of the Act, which was an income generated from training activity relating to the software product of the assessee-company. The Assessing Officer was of the view that the income generated from the training activity cannot be considered for the computation of deduction/exemption under section 10A and it is not on account of any development of software, but, training is given after software is delivered to the customer. Assessing Officer, therefore, reduced Rs. 21,76,680 from the eligible profit to compute the deduction under section 10A. In consequence, the claim of the assessee under section 10A was reduced. The assessee carried the issue before the Learned CIT (A). The Learned CIT (A) was of the opinion that the training activity is incidental to the sale made by the assessee-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 10A. 11. Now, we consider the grievance of the assessee that it should form the part of the export turnover. The Learned CIT (A) directed the Assessing Officer to include the receipts of the training into the 'total turnover' but exclude the same from the 'export turnover'. We do not understand the logic behind the directions of the Learned CIT (A). It is a basic principle that the numerator and denominator of the formula are to be same, and adjustment should be made both to denominator and numerator. Once it is held that it is intricately related with the export of the software then it has to be included into the export turnover also as admittedly same is brought in to India in convertible foreign exchange. We, therefore, direct the Assessing Officer to include said amount of training receipt into export turnover and also to the total turnover and thereafter work out allowable deduction/exemption under section 10A of the Act. In the result, ground No. 2 in the revenue's appeal is dismissed and ground No. 2 in the CO. is allowed. 12. The next issue arises from the CO. is in respect of exchange gain on travelling expenses recovery of Rs. 20,75,709. 13. We have heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidiaries directly with the end-customers and assessee offers negotiated a margin of 10 per cent. In addition to the subsidiaries, there are local independent distribution agents to whom the commission is paid @ 20 per cent to 30 per cent. Whereas, external agents are given commission @ 15 to 20 per cent. It was also explained that the ultimate margin given by the assessee to its subsidiaries is only 10 per cent. The Assessee also contended that for the customisation work subsidiaries are paid more. Assessee also contended that customisation work is not done by the distributors but same is entrusted to the subsidiaries. Though the Assessing Officer has not made any comment on the reasons given by the assessee justifying payment of more commission but made the addition to the income, which is based on the order passed by the TPO under section 92CA(3) of the Act and that resulted into an addition of Rs. 53,50,379. The assessee challenged the addition before the Learned CIT (A) who deleted the same. Now, the revenue is in appeal before us. 17. We have heard the rival submissions of the parties. The Learned D.R. vehemently argued that there is no reason to pay the additional commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
