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The Deputy Commissioner of Income Tax, Circle-7 (1) (1) , Bangalore Versus M/s. Timken India Manufacturing Pvt. Ltd.

2015 (10) TMI 1592 - ITAT BANGALORE

Entitlement for deduction under section 10AA - whether CIT(A) has erred in directing the AO to reduce the expenditure incurred in foreign currency, both from the export turnover as well as total turnover for the purpose of computation of deduction u/s. 10AA and allowed deduction of ₹ 36,065,831/- as claimed by the assessee? - Held that:- We are of the view that the arguments advanced by the ld. DR are contrary to the facts as recorded by the CIT(Appeals), about which there is no dispute. T .....

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P Dhivahar, Jt. CIT(DR) For the Respondent : Shri Bharath Agarwal, CA ORDER Per N V Vasudevan: This appeal by the revenue is against the order dated 3.9.2014 of the CIT(Appeals)-III, Bengaluru relating to assessment year 2009-10. 2. The assessee is engaged in the business of manufacture and sale of tapered roller bearings and its components from a unit registered under the Special Economic Zones Act at Mahindra World City - Special Economic Zone at Kanchipuram District and entitled for deductio .....

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A of the Act by reducing travel expenses incurred in foreign currency amounting to ₹ 90,044,900 from the export turnover on the ground that the Company is engaged in the business of rendering technical services outside India/delivery of software services outside India without considering the fact the Assessee was engaged in the business of manufacture and export of tapered roller bearings and its components. 4. According to the assessee, it was engaged in the manufacture and export of tape .....

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y. The AO has reduced the said amounts in computing the export turnover of the assessee by holding that the same is attributable to the delivery of software outside India, and consequently reduced the amount of deduction claimed under section 10AA of the Act. According to the assessee, the telecommunication, freight and insurance expenses were not incurred for the purpose of delivery of the articles or things outside India. Therefore, there should be no requirement to reduce such expenses from t .....

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ominator, i.e., Export Turnover and Total Turnover, in the formula prescribed under section 10AA of the Act. The assessee placed reliance on the recent decisions of the of the Hon'ble High Court of Karnataka in the case of CIT Vs. Tata Elxsi (17 taxmann.com 100) (Kar.) wherein it was held that expenses should be reduced from the Total Turnover if the same is reduced from Export Turnover, while computing deduction under section 10A of the Act. 7. The CIT(Appeals) agreed with the submissions o .....

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efore not clear as to what was the factual basis for the AO's observation that the assessee is engaged in the business of export of software. Appellant has also stated that the value of goods exported is the FOB value and therefore it cannot be said that the telecommunication freight and insurance expenses have been incurred for the purpose of export of articles outside India. The appellant's contentions are borne out from the documentary evidence of the statements of accounts. In my vie .....

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pellant is supported by the decision of the jurisdictional High Court in Tata Elxsi reported in 349 ITR 98, which has held as follows: "In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the denom .....

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