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TMI Blog2014 (7) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... to be deducted from the Export turnover for computing deduction u/s 10A of the Act, is being assailed. 3. The Ld CIT(A), while deciding the issue in the manner cited in paragraph 2, did not adjudicate the alternative contention urged the assessee by considering the same as infructuous. The alternative contention urged by the assessee was that the insurance and telecommunication expenses, if held to be deductible from Export turnover, should also be deducted from the total turnover for computing deduction u/s 10A of the Act. 4. The assessee has filed appeal in respect of the following issues:- (a) Disallowance of Rs. 3,93,572/- made by invoking sec. 14A of the Act while computing income under normal provisions of the Act. (b) Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the assessee contended before AO that they are not required to be deducted from "Export turnover". However, the AO did not accept the said submissions and accordingly computed the deduction u/s 10A of the Act by deducting the amount of communication charges and insurance expenses referred above from the Export turnover. However while doing so, the assessing officer did not deduct the above said amount from "Total turnover". 6. The AO noticed that the assessee has earned dividend of Rs. 15,07,890/- and claimed the same as exempt u/s 10(34) of the Act. The assessee submitted before AO that it has used only its surplus funds in making investments and also it did not incur any expense in earning the dividend income. The AO, however, did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expenses, if held to be deductible from Export turnover, should also be deducted from the total turnover for computing deduction u/s 10A of the Act. As stated earlier, the ld CIT(A) did not adjudicate the alternative contention by holding the same as infructuous. 8. With regard to the disallowance made u/s 14A of the Act, the ld CIT(A) noticed that there was movement in investment portfolios, which consisted of mutual fund units, i.e., from the opening balance of Rs. 5.94 crores, the investment amount has moved up to Rs. 9.80 crores at the year end. The Ld CIT(A) also noticed that the assessee has also sold some units during the year. The Ld CIT(A) held that the activities of selling, purchasing or not selling the existing investments re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery of articles or things or computer software outside India. We notice that the identical issue came to be considered by the co-ordinate bench of Tribunal in the assessee's own case in ITA No.4932/M/2010; ITA 6003/M/2010 and ITA 6194/M/2011 relating to AY 2005-06, 2006-07 and 2007-08. 12. In the above said years, the co-ordinate bench of Tribunal has taken the view that the telecommunication and insurance expenses, if incurred in local currency in India, is not required to be deducted from the Export Turnover. However on a careful perusal of the definition of the term "Export turnover", we notice that the restrictions that the expenditure should be incurred in foreign currency would apply only to "foreign technical services" provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, if any of the portion of those expenses is considered as attributable to the delivery of articles or things or computer software outside India, then that portion is required to be deducted from Export turnover. 14. In the cross objection, the assessee is contending that if any deduction made from Export turnover, then the deduction of corresponding amount should be made from the Total turnover also while computing the deduction u/s 10A of the Act. The contention of the assessee is that the reduction should be made both from the Export turnover and from Total turnover. We notice that the contention of the assessee gets support from the following decisions:- (a) ITO Vs. Saksoft Ltd (313 ITR 353)(SB-Chennai) (b) IBS software servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be made. We also heard Ld D.R on this issue, who supported the order of Ld CIT(A). On a perusal of the orders passed by the tax authorities, we notice that the quantum investments made by the assessee has gone up at the end of the year, which we have already noticed. Further, the Ld CIT(A) has noticed that the assessee has liquidated part of investments also during the instant year. Hence, we notice that the assessee has carried out activities in relation to the investments. At this point, it is pertinent to note the decision rendered by Hon'ble Delhi High Court in the case of Maxopp Investment Ltd Vs. CIT (347 ITR 272), wherein the Hon'ble Delhi High Court has expressed the view that the assessing officer has to first reject the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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