TMI Blog2012 (12) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... they have to be treated as exports for the purpose of deduction under section 10A – in favour of assessee. - I.T.A. No. 806/Mds/2012 & C.O.No. 92/Mds/2012 - - - Dated:- 20-7-2012 - Shri N.S. Saini Shri Challa Nagendra Prasad, JJ. Revenue by : Shri Vikramaditya, JCIT, Sr. DR Assessee by : Shri S.R. Chandrasekaran, C.A. ORDER PER Challa Nagendra Prasad, Judicial Member This is an appeal filed by the Revenue and Cross Objection by the assessee against the order of the Commissioner of Income Tax (Appeals) III, Chennai dated 04.01.2012 in ITA No. 382/08-09/A.III for the assessment year 2006-07. Shri Vikramaditya, JCIT Sr. DR represented on behalf of the Revenue and Shri S.R. Chandrasekaran, C.A. represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of income from engineering and design charges as part of export turnover, the Commissioner of Income Tax (Appeals) held that income received from engineering and design charges are eligible for inclusion under export turnover for the purpose of deduction under section 10A in view of the CBDT Notification No. 890(E) dated 26.09.2000. Against his order of the Commissioner of Income Tax (Appeals), the Revenue is in appeal before us. 5. The counsel for the Revenue supported the order of the Assessing Officer in excluding the exchange fluctuation and income from engineering and designs charges from export turnover for the purpose of computation of deduction under section 10A of the Act. 6. The counsel for the assessee, with regard to fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the foreign exchange gain reported for the year is an integral part of the export proceeds earned by the company and arises only due to exports. It was argued that this cannot be separated from the export proceeds and this certainly is not other income as contended by the A.O. It was submitted that the foreign exchange fluctuation gain has resulted in the appellant s case only on account of remittance of export proceeds by the debtor and not otherwise. Reliance was placed on the decision of Hon'ble ITAT Bangalore in the case of Sanyo ISI Technology India Pvt. Ltd v. DCIT, CIT v. Pentasoft Technologies Ltd [2010-TIOL- 525-HC-MAD-ITJ, Renaissance Jewellery P. Ltd v. ITO, 289 ITR (AT) 65 and Sujata Grover [74 TTJ 347 (Del)]. Reliance was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time, the company debits the account of the foreign buyer with equal amount. At the end of the year, if the sale proceeds are not received by the assessee company, the foreign buyer is shown as 'sundry debtor'. If the proceeds are not received in the same financial year and received after one or two years, the fluctuation arising at that time will have any relevance to the turnover reported for the previous year in which the sale took place or not is the puzzle of this issue. In the opinion of the Assessing Officer, the assessee loses its rights over the sold items on the very despatch of the same and as per Accounting Standard prescribed by the ICAI, foreign currency transactions are to be recorded at the date of the transactions applying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Solutions India Pvt. Ltd and M/s Convansys (India) Pvt. Ltd have not been accepted by the Department. But in any case, this decision has got a binding effect being a decision of the Co-ordinate Bench and therefore, this issue stands covered in favour of the assessee. The following decisions also support our contention apart from the decision of Cognizant Technology Solutions (supra): (i) Pentasoft Techonologies Ltd. (ii) M/s Mysodet (P) Ltd (Civil Appeal No. 5475 of 2008) S.C. 15. Therefore, in the given facts and circumstances of the case, we cannot interfere in the finding of the Id. CIT(A). We are bound by the above decisions, therefore, we cannot allow this ground in favour of the Revenue. This issue is decided in favour of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts or services and are to be treated as software and export of such software has to be treated as export. The Commissioner of Income Tax (Appeals) referring to the said notification and the decision of the Bangalore Bench of ITAT in the case of Wipro Ltd. vs. DCIT [96 TTJ 211] directed the Assessing Officer to include the income from engineering design and drawings as part of the export turnover for the purpose of deduction under section 10A, which in our view is in accordance with the notification issued by the CBDT. Therefore, we uphold the order of the Commissioner of Income Tax (Appeals) on this issue also. The grounds raised by the Revenue are dismissed. 11. Since we have dismissed the above appeal of the Revenue and decided issues ..... X X X X Extracts X X X X X X X X Extracts X X X X
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