TMI Blog2014 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... which does not have an element of turnover cannot find a place either in the export turnover or the total turnover - Reimbursement of expenses has to be excluded from both export turnover and total turnover - Decided against Revenue. - ITA No. 2575/Del/2012 - - - Dated:- 20-6-2014 - Shri S. V. Mehrotra And Shri C. M. Garg,JJ. For the Appellant : Shri Ramesh Chander CIT (DR) For the Respondent : Shri Salil Kapoor Adv. ORDER Per S. V. Mehrotra, A. M. This appeal, by the department, is directed against the order dated 1-3- 2012 passed by the ld. CIT(A), Faridabad in appeal no. 159/GGN/2010-11 relating to A.Y. 2007-08. 2. The assessee company in the relevant assessment year was engaged in the business of render ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and accepted by the Ld. CIT(A). 2. On the facts and circumstances of the case, Ld. CIT(A) has erred on facts and in law in directing the assessing officer to exclude from the total turnover the expenses of Rs. 38,08,386/- being expenses incurred in foreign currency on communication charges and expenses of Rs. 3,36,56,472/- towards providing infrastructure services to its subsidiary, for the purpose of computing deduction under section 10A of the Act. 3. On the facts and circumstances of the case, Ld. CIT(A) has erred on facts and in law in directing the assessing officer to allow deduction of Rs. 61,41,401/- u/s 10A of the Act, thus allowing excess deduction to the assessee without considering the excludible expenses while compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided by Sunlife Ireland co compensate pre- when the assessee had not commenced rendering of services. operative expenses ii) No actual services were rendered during the relevant period. iii) Subsidy was provided in anticipation of the services to be rendered by the assessee. iv) The payment received cannot be termed as revenue of the assessee as no service has been provided with regard to this payment received. v) As the corporate subsidy in not an account of actual rendering of services in the nature of software exports, the amount of Rs. 6,83,53,049/- cannot be held to be profit and gains derived from the business of software exports. vi) The receipt of Rs. 6,83,53,049/- is, therefore, not eligible for deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales ledger, total receipts of Rs. 11,36,55,767/- included the amount of Rs. 6,83,53,049/- as corporate subsidy and, therefore, assessing officer was not justified in again including the same as the same resulted into double taxation. He, accordingly, directed for deletion of Rs. 6,83,53,049/-. 4.3. As regards the exclusion of expenditure of Rs. 87,67,111/- being lease line charges from the export turnover for the purpose of allowing deduction u/s 10A of the Act, ld. CIT(A) in principle agreed that in view of Explanation 2 to clause (4) of sec. 10A, freight, telecommunication charges or insurance attributable to the delivery of articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software outside India or expenses, if any, incurred in foreign exchange in providing technical services outside India are to be excluded, both from export turnover and total turnover, for purposes of computation of deduction u/s 10B(4). 4.8. Ld. CIT(A) accordingly held that the expenditure of Rs. 38,08,386/- incurred in foreign currency on lease line charges reduced from the export turnover is also required to be reduced from the total turnover in the case of assessee. 4.9. Accordingly, ld. CIT(A) observed as under: In the present case, the profits of Rs.61,41,401/- has been claimed for deduction u/s 10A of the Act. Considering the fact that the amount of Rs.33,656,472/- has been held to be not derived from the actual conduct of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various decisions, relied upon by ld. CIT(A) and is no more res integra. 7. We have considered rival submissions and perused the record of the case. As far as ground no. 1 is concerned, the revenue s contention is that when ld. CIT(A) had agreed that payments to the tune of Rs. 3,36,56,472/- were received by the assessee company in terms of clause (3) of agreement and the aforesaid amount had nothing to do with either rendering of services or export of services of the software and the assessing officer was justified under the provisions of law to treat the amount to the extent of Rs. 3,36,56,472/- as not forming part of export turnover, then the said amount should have appeared in balance-sheet and not in P L a/c. The contention is that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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