TMI Blog2014 (1) TMI 1588X X X X Extracts X X X X X X X X Extracts X X X X ..... reon; it exports software from its Software Technology Park (STP Units). Apart from that, it has domestic sales of software developed in non-STP Units as well. In respect of claim of deduction under Section 10A of the Income Tax Act, 1961 (hereinafter called as the 'Act'), to the tune of Rs.1,32,18,47,053/- the Assessing Officer pointed out that out of the total turnover of Rs.205,14,65,831/-, a sum of Rs.70,10,93,076/- had been brought into India upto 31.03.2002 by way of foreign exchange and the balance of Rs.135,03,72,755/- was yet to be received within the time frame given under Sub Section [(7A)] of Section 10A of the Act. The assessee claimed net loss of Rs.66,59,04,421/- on the domestic and other exports which did not fall for consideration under Section 10A of the Act. The assessee stated that the company had applied for permission before Reserve Bank of India(RBI) for extension of time under Reserve Bank of India guidelines as per the requirements of the statutory provision upto 31.03.2002 and that the assessee had to collect and remit the said sum on or before the extended time. The Assessing Officer pointed out that adjustment made in the profit and loss account included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the resolution passed by the shareholders of the assessee company at the Annual General Body Meeting held on 20th August 2003, for reduction of the Securities Premium Account of the Company and pointed out that the High Court passed the order approving the resolution of the General Body Meeting. Thus, going by the resolution, the Income Tax Appellate Tribunal held that the liability not having crystallized during the year under consideration, the claim for deduction on 'unrealized sales' did not arise. Aggrieved by this, the present Tax Case (Appeal) has been filed by the assessee. 6. Learned counsel appearing for the assessee/appellant herein made her submissions that the computation done by the Assessing Officer as regards the formula in not excluding the sum of Rs.135,03,72,755/- from the turnover of Rs.205,14,65,831/- was bad in law. According to the counsel, what is excluded from the export turnover as by way of unrealized amount must also be considered for exclusion in the total turnover, thus, numerator and the denominator must be from the same amount. She contended that being a deduction provision concerning STP units, there must be a liberal interpretation, otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the resolution dated 20th August 2003. The assessment under consideration was made on 31.03.2004 and the grounds of appeal was filed on 31.05.2005, taking advantage of the order passed by this Court in Company jurisdiction. Thus, strictly speaking, the claim of business loss not being the subject matter before the Assessing Officer, the same was raised as an additional ground only before the Commissioner of Income Tax (Appeals). The assessee never questioned that Sub Section 4 of Section 10A of the Act applied to the case i.e., excluding unrealized sale proceeds in the export turnover, but included in the total turnover for the purpose of working out the exemption available under Section 10A of the Act. In the circumstances, it is not now open to the assessee to question the formula adopted over the said claim of the assessee on business loss, which was not the subject matter before the Assessing Officer. The claim made was based on resolution and had no relevance to the assessment under consideration. Thus, the claim made based on the High Court order in company jurisdiction was rightly rejected by the Income Tax Appellate Tribunal holding that the claim was not having any rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encouraged by accepting the plea of the assessee, which will go against the very root of Sub Section 4 of Section 10 of the Act and the very scheme of the provision. In the circumstances, neither the business loss nor the contention seeking parity between the export turnover and the total turnover for the purpose of granting deduction under Section 10A of the Act could be sustainable. 9. Replying to the submissions of learned Standing counsel appearing for the Revenue, learned counsel appearing for the assessee submitted that admittedly the assessee has not claimed bad debt but only as business loss that too before the Commissioner of Income Tax (Appeals). In the circumstances, once again, reiterating the order passed by this Court in Company jurisdiction in Company Petition No.358/2003 and Company Application No.1856/2003, she submitted that when the details had already been given as regards the loss suffered as by way of unrealized sales during the year 2000-01 and 2001-02, the assessee's case has to be accepted. 10. Heard Dr.Anita Sumanth, learned counsel appearing for the assessee and Mr.N.V.Balaji, learned Standing Counsel appearing for the Revenue and perused the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,234/- was worked out as exemption under Section 10A of the Act and held that the balance amount would be liable to tax under the regular provisions. 14. At the time the assessee went on appeal against the order of assessment, the assessee raised additional grounds as regards the unremitted sale proceeds including "unrealized sales" written back pursuant to the order of this Court in Company jurisdiction and hence, pleaded that the credit for such write back be granted as "unrealized sales" by way of deduction from its taxable income; learned counsel appearing for the assessee submitted that the amount mentioned as "unrealized sales" would include unremitted sale also. Although we sought for the details on this, we do not have any details produced on these unrealized sales. 15. In any event, going by the resolution made for adjusting the amount from out of the Companies Security Premium amount as on 31.03.2004 and what had been made in the Company Application (order dated 28.06.2004) the same could have no relevance at all as far as the present assessment year is concerned, since, as on that date i.e., on the date of assessment order passed, there was no such claim that the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration, we do not find any merit in the claim of the assessee to accept the same as business loss for the year under consideration. The Circular relied on reported in 245 ITR 21 - CBDT CIRCULAR, CIRCULAR NO.794 DATED 9TH AUGUST 2000 does not advance the case of the assessee. 20. As rightly pointed out by learned Standing counsel appearing for the Revenue, when the so called loss has not crystallized as a business loss during the year under consideration, merely on the score of the amount not having been realized, one cannot allow the loss as business loss. The assessee's contention before the Assessing Officer was that in respect of the said amount, they sought permission from Reserve Bank of India for extension of time for remitting the said amount. In the face of the facts pleaded, the Assessing Officer rejected the same stating that the assessee's case could not be accepted for the grant of relief. Accordingly, the Tax Case (Appeal) stands dismissed. The order of the Income Tax Appellate Tribunal is confirmed. 21. Tax Case (Appeal).No.1196 of 2008 for the assessment year 2002-03 is no different and the question of law raised herein being one and the same as on 2001-02, f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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