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2016 (5) TMI 107 - ITAT PUNE

2016 (5) TMI 107 - ITAT PUNE - TMI - Set off of brought forward business loss and unabsorbed depreciation before allowing deduction under Section 10A - Held that:- Deduction u/s.10A of the Act is to be allowed against the eligible profits and in case there are certain left over profits for the year under appeal the same are to be adjusted against the brought forward losses and unabsorbed depreciation as claimed by the assessee in the return of income. We accordingly set aside the order of the CI .....

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e case of Patni Telecom Pvt. Ltd. (2008 (1) TMI 452 - ITAT HYDERABAD-A ) we are of the considered opinion that the lease line charges should not be reduced from the export turnover of the assessee while computing the deduction u/s.10A of the Act.

Exclusion of leased line charges from the export turnover and the total turnover both for computing the deduction u/s.10A - Held that:- CIT(A) following the decision of the Hon’ble Bombay High Court in the case of CIT Vs. Gemplus Jewellery I .....

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sal of provisions made for employees stock option plan while computing book profit under section 115JB disallowed - Held that:- We find merit in the submission of the Ld. Counsel for the assessee that whether the same has been added under clause (f) or as per clause (c) to Explanation 1 of section 115JB, there will be no difference and the result would have been same had the assessee added the ESOP provision under clause (c) instead of clause (f). Since an amount of ₹ 7,67,47,000/- has alr .....

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f the assessee has increased its book profit under any other clause of the proviso the assess is not entitled for the reduction. Since the assessee has admittedly increased its book profit in A.Y. 2007-08 as per the submission before CIT(A), which has already been recorded by the CIT(A)and the same has not been proved to be false or untrue, therefore, we are of the considered opinion that the assessee is entitled to reduce an amount of ₹ 5,95,14,054/- on account of withdrawal from the prov .....

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e said to be an unascertained liability. Further, he has also analysed various clauses of the lease agreement according to which the terms of lease is for initial period of 3 years which can be renewed for a further period of two terms of three years each. There is also provision for increase in the monthly rent by 15% of the last paid rent at the end of each 3 year period. Thus, the assessee in fact signed the lease agreement for 9 years with provision for escalation of rent at the end of every .....

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A, AM : ITA No.902/PN/2012 filed by the assessee and ITA No.978/PN/2012 filed by the Revenue are cross appeals and are directed against order dated 17-11-2011 of the CIT(A)-I, Pune relating to Assessment Year 2007-08. ITA No.796/PN/2013 filed by the assessee and ITA No.776/PN/2013 filed by the Revenue are cross appeals and are directed against the order dated 11-01-2013 of the CIT(A)-I, Pune relating to Assessment Year 2008-09. ITA Nos. 17 and 18/PN/2014 filed by the assessee are directed agains .....

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w in holding that deduction under section 10A of the Act is allowable after set off of brought forward business loss and unabsorbed depreciation. 3. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted from the statement of computation of income and audit report in Form 56G that the assessee has claimed exemption u/s.10A of the Act at ₹ 113,32,52,316/- after computing the same as net profit. He noted that the assessee has also carried forwarded una .....

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n is allowed from the profits and gains derived by the undertaking from export of articles or computer software. As per the provisions of section 29 of the Act, the income under the head profits and gains from business and profession is required to be computed after giving effect to the provisions of section 30 to 43D of the Act. Thus, a plain reading of the section suggests that deduction has to be computed on the basis of profits and gains derived from the export activities r.w. provisions of .....

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the computation mechanism provided for arriving at the deduction also considers the entire profits of the year (without set off of losses) generated out of the exports made during the year. The assessee further submitted that the form of return of income prescribed by the tax authorities also requires the assessee to compute the income before set off of losses. It was accordingly argued that losses and unabsorbed depreciation of ₹ 143,335,955/- brought forward by the assessee company from .....

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s as per business and profession. The AO further held that for computing the total income, the effect to provisions of section 72 has to be given and what remains finally is the total income of eligible business which will be allowed as exemption u/s.10A of the Act. Therefore, the contention of the assessee that the losses deserves to be carried forward is misplaced. Relying on the decision of Hon ble Karnataka High Court in the case of Himatasingika Seide Ltd. reported in 286 ITR 255 and the de .....

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ent of ₹ 3,73,02,71,812 for software development services from the AEs and has incurred interest expenditure of ₹ 1,14,19,869 on ECB loans. Both these international transactions were declared to be at ALP under the CUP method and the same were also accepted to be correct by the Jt.CIT(TP)-I, Pune. However, the Assessing Officer noted that the appellant has claimed deduction u/s 10A of the I.T. Act at ₹ 1,13,32,52,316. for which auditors' report in Form No. 56G has been file .....

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he Assessing Officer was of the opinion that deduction u/s 10A is to be allowed from the total income which can only be determined after taking into account the provisions contained u/s 28 to 44D, which includes sec. 32(2) and also after giving effect to the provisions contained u/s 72. The Assessing Officer was not convinced from the arguments made by the appellant that the deduction has to be Computed on the basis of profit and gains derived from the eligible business without setting off any c .....

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held that the interest income of ₹ 3,31,827 included in the profit of eligible business is required to be taken off for computing the deductions. In other words, the Assessing Officer computed the profit from the eligible business available for computation of deduction u/s 10A at ₹ 98,99,16,361. After considering the exclusion of receipts relating to leased line charges for software development services from the ambit of export turnover, the Assessing Officer computed the deduction u .....

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ifferent judgments to claim that the deduction computed by it u/s 10A is correct and is required to be accepted. From the perusal of the arguments made by the appellant it could be seen that the appellant has tried to argue that the term 'total income' appearing in sec. 10A(1) cannot be given the meaning as is available in sec. 2(45) of the I.T. Act. Instead it has been claimed that a contextual meaning is required to be given. Furthermore, it has been stated that sec. 10A(4) also suppor .....

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of unabsorbed loss and depreciation cannot be made before computing the deduction. The appellant has also tried to refer to Form No. 56F which is required to be filed by the CA for the above deduction. The appellant has tried to distinguish the cases relied upon by the Assessing Officer by saying that the aforesaid judgment of Hon'ble Karnataka High Court relied upon by the Assessing Officer is relating to the old law, applicable before AY. 2001-02 and has also been held obliquely to be not .....

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g Officer and the appellant including the judgments from which strengths have been drawn. Section 10A, under which the appellant has made the claim for deduction is included in Chapter III of the I.T. Act. This Chapter deals with "incomes which do not form part of the total income". Section 10A has been amended w.e.f. 1.4.2001 by Finance Act, 2000. Before its amendment, income earned by industrial undertakings eligible u/s 10A was not to be included in the total income of the assessee. .....

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e I.T. Act. The claim of the appellant in this respect is farfetched. Similarly, the Assessing Officer has very correctly stated that the deduction is to be computed out of the income of the eligible business which can only be computed after applying sec. 28 to 44D including sec. 32(2). It is important in this respect to point out that before effect to section 32(2) is given effect to section 72(2) has to be given. The appellant also claims the same. Hence both the unabsorbed depreciation and lo .....

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ts of this case and most of them are distinguishable on facts and law. It is not difficult to note that the Authorised Representative has tried to draw strengths from provisions, judgments and forms and not from the section 10A or 28 to 44D etc. It is a trite law that such indirect support can only be drawn when the provisions cannot be given effect properly. A provision cannot be interpreted differently because it does not give higher deduction being sought to be claimed. In fact on careful con .....

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ance with law as are discernible from the provisions directly applicable, Ground No.1 is treated as dismissed. 8. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 9. The Ld. Counsel for the assessee at the outset referring to the decision of the Pune Bench of the Tribunal in the case of M/s. Vishay Components Pvt. Ltd. Vs. Addl.CIT and vice versa vide ITA No.551/PN/2014 and ITA No.736/PN/2014 order dated 08-08-2015 for A.Y. 2005-06 submitted that the Tribunal has held .....

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A.Y. 2007-08. Therefore, the issue has been decided in favour of the assessee by the Coordinate Bench of the Tribunal in various decisions. He accordingly submitted that the grounds raised by the assessee should be allowed. 10. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 11. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also con .....

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be computed in the hands of the assessee before adjusting brought forward unabsorbed business loss/depreciation. We find following the above decision the Tribunal in the case of Precision Camshafts Ltd. (Supra) has held that deduction u/s.10B of the Act would be allowed to the assessee before allowing the adjustment on account brought forward business loss and depreciation. The deduction u/s.10B of the Act is to be against the eligible profits and in case there are any left over profits, then t .....

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rought forward losses / unabsorbed depreciation, arose before Pune Bench of Tribunal in M/s. Vishay Components India Pvt. Ltd. Vs. Addl.CIT & Anr. (supra). The Tribunal after considering the facts of the case, which are identical to the facts before us, observed as under:- 27. We have heard the rival contentions and perused the record. The issue arising vide ground of appeal No.3 is in relation to the computation of deduction under section 10B of the Act after the amendment to section w.e.f. .....

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ciation are to be adjusted from the gross total income before allowing the deduction under section 10B of the Act or the said losses or the deduction under section 10B of the Act is to be allowed in the hands of the assessee without considering the brought forward unabsorbed losses / depreciation, which can be set off against the other income of assessee. Both the authorities below had denied the claim to the assessee, in view of the ratio laid down by the Hon ble Supreme Court in Himasingka Sei .....

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lier years. The issue is settled by the Hon ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom), wherein it was held as under:- The deduction under s. 10A, has to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of s.72 which deals with the carry forward and set off of business losses. A distinction has been made by the Legislature while incorporating the provisions o .....

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lescope the provisions of Chapter VI-A in the content of the deduction which is allowable under s.10A, which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. Thus ITAT was correct in holding that the brought forward unabsorbed depreciation and losses of the unit the Income which is not eligible for deduction under s.10A of the Act cannot be set off against the current profit of the eligible .....

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aid proposition in various cases. 29. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the ratio laid down by the Hon ble Supreme Court in Synco Industries Ltd. Vs. AO, (2008) 299 ITR 444 (SC), wherein the issue was whether while computing the quantum of deduction under section 80I(6) of the Act, the Assessing Officer has to treat the profits derived from an industrial undertaking as only source of income in order to arrive at deduction under Chapter .....

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the facts of the present case. The issue in the present appeal is squarely covered by the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (supra), wherein deduction under section 10A of the Act was to be computed in the hands of assessee and the same was whether the brought forward losses had to be adjusted before computing deduction under section 10A of the Act. It may be pointed out that the provisions of section 10A and 10B of the Act are at .....

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considering the ratio laid down by the Tribunal in M/s. Vishay Components India Pvt. Ltd. Vs. Addl.CIT & Anr. (supra), observed as under:- 17. The Tribunal relying on the ratio laid down by the Hon ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (2012) 348 ITR 72 (Bom) and other decisions of the Hon ble Bombay High Court, held that the deduction under section 10B of the Act was to be computed before adjusting brought forward unabsorbed losses / depreciation. The fac .....

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ny leftover profits, then the same are to be adjusted against brought forward unabsorbed depreciation / loss as claimed by the assessee in its return of income. Accordingly, we direct the Assessing Officer to re-compute the deduction under section 10B of the Act in the hands of the assessee. The additional ground of appeal Nos.1 and 2 raised by the assessee are thus, allowed. 7. The issue arising before us is in relation to the computation of deduction under section 10A of the Act, which admitte .....

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as been dismissed by the Hon ble Supreme Court. Before the Hon ble Karnataka High Court, the years involved were assessment years 1988-89 to 1990-91 i.e. the year, where the benefit under section 10B of the Act was exempt. The Tribunal while deciding the issue in M/s. Vishay Components India Pvt. Ltd., Vs. Addl.CIT (supra) had taken note of the decision of the Hon ble Supreme Court and the Hon ble Karnataka High Court in Himatsingka Seida Ltd. (supra) in para 27 of the order and thereafter, appl .....

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), we hold that the assessee is entitled to the claim of deduction under section 10A of the Act before setting up of brought forward losses and unabsorbed depreciation. The deduction under section 10A of the Act is first allowed against the eligible profits and in case there are certain left over profits for the year under appeal, then the same are to be adjusted against the brought forward losses and unabsorbed depreciation / loss as claimed by the assessee in return of income. Accordingly, we .....

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in case there are certain left over profits for the year under appeal the same are to be adjusted against the brought forward losses and unabsorbed depreciation as claimed by the assessee in the return of income. We accordingly set aside the order of the CIT(A) and direct the AO to recompute the deduction u/s.10A of the Act against the eligible profits before adjustment of brought forward losses/depreciation. Grounds of appeal No.1 and 1.1 by the assessee are accordingly allowed. 13. Since the .....

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tion u/s.10A of the Act. 15. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the asessee company has incurred expenditure of ₹ 53,79,131/- as lease line charges for export of the software outside India. He, therefore, asked the assessee to explain as to why this expenditure should not be excluded from the export turnover for computing the deduction u/s.10A of the Act. It was submitted that the expenditure incurred by the assessee company .....

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ne charges) are embedded or factored in the bills raised against the services provided to the customers. There is no need to charge these expenses separately as it is clear that these expenses are included in the export turnover. The assessee also took an alternate claim without prejudice that if the above mentioned expenses are excluded from the export turnover the same needs to be excluded from the total turnover as well. Various decisions were also brought to the notice of the AO. However, th .....

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n interpretation to the statutory provisions where such interpretations are not warranted in view of the provisions being unambiguous. Rejecting the various explanations given by the assessee and distinguishing the various decisions, the AO held that the expenses incurred for telecommunication charges of ₹ 53,79,131/- attributable to the delivery of the computer software outside India is not to be included in the export turnover eligible for computation of exemption u/s.10A of the Act. 17. .....

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e software and therefore, it should be treated as part of the export turnover. Alternatively, the appellant has claimed that if such receipts are excluded from export turnover, then it should also be excluded from the total turnover for computing the deduction u/s 10A(4). In other words, the leased line charges were argued to be excluded from the numerator and the de-numerator both. On careful consideration of the law, I am in agreement with the finding of the Assessing Officer that the receipt .....

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the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India. However, the alternate claim of the appellant that the items which are excluded from the export turnover should also be excluded from the total turnover has been upheld by many Courts including the jurisdictional High Court in Gemplus Jewellery (I) Ltd. dated 23.6.2010 (Bombay He). The Hon'ble High Court has upheld the .....

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Parliament for the purpose of section 10A. However the expression 'export turnover' has been defined. The definition of export turnover excludes freight and insurance. Since export turnover has been defined by the Parliament and there is a specific exclusion of freight and insurance, the expression 'export turnover' cannot have a different meaning when it forms a constituent part of the total turnover for the purpose of the application of the formula. Undoubtedly, it was open to .....

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eight and insurance, though it has been specifically excluded from export turnover for the purpose of the numerator would be brought in as part of the export turnover when it forms an element of the total turnover as a denominator in the formula. A construction of a statutory provision which would lead to an absurdity must be avoided. " Therefore, it can be seen that the courts have given the interpretation that the items required to be specifically excluded from the definition of export tu .....

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ng the deduction u/s 10A. Ground No. 2 therefore, is partly allowed. 18. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 19. The Ld. Counsel for the assessee referring to the provisions of section 10A drew the attention of the Bench to Explanation 2(iv) where the export turnover has been defined as under : export turnover means the consideration in respect of export [by the undertaking] of articles or things or computer software received in, or brought into, India by .....

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our of the assessee. 20. The Ld. Counsel for the assessee referring to the decision of the Hyderabad Bench of the Tribunal in the case of Patni Telecom Pvt. Ltd. Vs. ITO reported in 120 ITD 105 submitted that the Tribunal in the said decision has held that internet service provider charges incurred by the assessee on development of software, i.e. goods, not being attributable to delivery of software to the client do not come within the scope of telecommunication charges as provided under clause .....

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of computing deduction u/s.10A. 21. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). Referring to the bills raised by Amdocs he submitted that the telecommunication charges are embedded in it, therefore, in view of the definition of export turnover as per clause (iv) of Explanation 2 to section 10A telecommunication charges should be excluded from the export turnover. He accordingly submitted that the CIT(A) is justified. 22. As regards the conten .....

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at pages 51 to 57 of the paper book. Referring to the reply of the assessee he submitted that it was categorically stated before the AO that only if the sale consideration includes said telecommunication charges, i.e. if the charges are recovered from the purchaser, they have to be excluded from the export turnover but where the sale consideration is a single consolidated amount it should not be split into individual components and to exclude some of them for the purpose of section 10A of the A .....

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ave considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute to be decided in the impugned ground is regarding the exclusion of ₹ 53,79,131/- towards lease line charges from the export turnover for computing deduction u/s.10A of the Act. It was the submission of the assessee before the AO that the expenditure incurred by t .....

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aised against the services provided to the customer. The AO accordingly excluded the telecommunication charges from the export turnover which has been upheld by the CIT(A). 25. We find the assessee during the course of assessment proceedings before the AO vide letter dated 31-08-2010 at Para 4.1.5 and 4.1.6 has stated as under : 4.1.5 In the process of computation of export turnover, the starting point to be considered is sale consideration received. Only if the sale consideration includes telec .....

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the decision of the Honourable Hyderabad Tribunal in the case of Patni Telecom (P) Limited Vs. ITO (22 SOT 26) (Hyd), wherein it has been held that telecommunication charges cannot be reduced from the export turnover if export turnover does not specifically include recovery on account of telecommunication expenses. Relevant extract from the para 7.2 of the said decision is reproduced below : If such expenses are not included in the consideration received in convertible foreign exchange, deductio .....

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xcluded from the export turnover. The relevant observation of the Tribunal at Para 7.4 of the order read as under : 7.4 Now, we examine the facts of the case in the light of the above discussion. The AO noticed that the expenses attributable to the delivery of the software were ₹ 40,93,493 booked under ISP, since the assessee got leased line exclusively. The AO deducted this amount from consideration treating as communication charges. We find that the said expenditure on Internet Service P .....

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s presumed that the expenditure incurred is attributable to delivery of goods outside India even then same is not to be excluded. The words 'received' and 'but not include' used in cl. (iv) of Expln. 2 to s. 10A of IT Act are significant. What is to be excluded is out of what is received. In the case under consideration the assessee received consideration against software i.e. goods. For this purpose, the assessee has demonstrated by referring invoices (pp. 4.1 to 4.4) and agreem .....

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on is that such expenditure is also included in consolidated consideration which is forming part of "total turnover". In order to make the formula for the purpose of 'export turnover' in s. 10A workable one has to give a schematic interpretation to the formula. Elimination should be from both the denominator and the numerator. We therefore find that the AO was not correct in excluding ₹ 40,93,493 from consideration received in convertible foreign exchange while calculatin .....

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on u/s.10A of the Act. We therefore set aside the order of the CIT(A) and the ground raised by the assessee is allowed. ITA No.978/PN/2012 (By Revenue) (A.Y. 2007-08) : 28. The only effective ground raised by the Revenue reads as under: 1. On the facts and circumstances of the case, the Ld.CIT(A) erred in directing the AO to exclude leased line charges from the export turnover and the total turnover both for computing the deduction u/s.10A of the Income Tax Act, 1961. 29. After hearing both the .....

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the CIT(A) who has followed the decision of the Hon ble Bombay High Court while directing the AO to exclude the lease line charges from the export turnover and the total turnover for computing deduction u/s.10A of the Act. In absence of any contrary material brought to our notice by the Ld. Departmental Representative against the decision of Hon ble Bombay High Court cited (supra) which was relied on by the CIT(A), the ground raised by the revenue is dismissed. ITA No.796/PN/2013 (By Assessee) .....

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ts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has reduced an amount of ₹ 5,95,15,054/- on account of withdrawal from the provisions of ESOP form the taxable book profit in the working of MAT. On being asked the AO it was explained as under : Employees Stock Option Costs (ESOP Cost) : The company has entered into an "Equity Award Reimbursement Agreement" (Reimbursement Agreement) with its parent company i.e. Amdocs Li .....

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cs Limited in terms of the Reimbursement Agreement, computed with reference to the Fair Market Value ('FMV') of the shares of Amdocs Limited as on 31 March 2007. The Provision had been suo motto offered for taxation under the normal provisions of the Act as well as in the computation of books profits of the Company for the purposes of section 115JB of the Act. However, as on 31 March 2008, there was a significant reduction in the FMV of the shares as compared to the FMV as on 31 March 20 .....

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er MAT provisions this item was not added back by the assessee. The only adjustment made in the computation of income u/s.115JB for A.Y. 2007-08 is for provision of income tax of ₹ 1,12,790/-. Since the provision for ESOP was not added back while computing book profit u/s.115JB of the Act for A.Y. 2007-08 the AO held that no deduction can be allowed from the book profit u/s.115JB of the Act for the current year. Accordingly, the claim of the assessee for reduction of this amount of ₹ .....

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ble and the provision thereof {clause (a)} and amount or amounts set aside to provisions made for meeting liabilities other than ascertained liabilities {clause (c)}. The assessee has added back provision for income tax, which the Assessing Officer has duly noted in the assessment order, but since provision for ESOP is not ascertained liability, it should also have been added back to MAT profits for F.Y. 2006-07, i.e., A.Y. 2007-08. It is an undisputed fact that ESOP provision is in the nature o .....

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ot added back the ESOP provision in terms of clause (c) of Explanation 2 to section 115JB. 34. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 35. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). He submitted that as per ESOP norms the employees have a right to subscribe to the shares at a certain price. The parent company recovers the difference from the Indian company which is the difference between the market price and the option price .....

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loss account. He submitted that assessee fulfils these conditions. He submitted that upto A.Y. 2007-08 there was specific exemption u/s.10A companies as per clause (f) of Explanation (1) to section 115JB(2). 36. Referring to the letter dated 21-11-2011 addressed to the AO he drew the attention of the Bench to para 5 of the submission which reads as under : Treatment of provision for Employee Stock Compensation cost while computing MAT for the A.Y. 2007-08. While computing the income under the se .....

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income deductible under the section 10A of the Act in accordance with the provisions explanation 1(f) and 1(ii) to the section 115JB of the Act. All the expenses that have been added back to the income under section 115JB includes provision made towards Employee Stock Compensation Cost. Accordingly provision for Employee Stock Compensation Cost has been added back while computing MAT for the A.Y. 2007-08. Computation of the MAT of the A.Y.2007-08 along with relevant extract has been enclosed as .....

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n in terms of clause (c) of Explanation to section 115JB the amount of reversal cannot be reduced from the book profit. He submitted that proviso nowhere says that you should have added under a particular clause. If the assessee has increased its book profit under any other clause of the proviso the assessee is entitled to reduce the same from the book profits. Admittedly the assessee has increased the book profit in the preceding year. He accordingly submitted that the ground raised by the asse .....

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n of the Bench to the computation of income u/s.115JB of the Act which results into loss, therefore, whole exercise shows a negative income for which the purpose of the scheme is defeated. He accordingly submitted that the CIT(A) was fully justified in rejecting the claim of the assessee. 39. The Ld. Counsel for the assessee in his rejoinder submitted that the quarrel between the assessee and the department is under which clause the amount has to be added. According to the assessee it is as per .....

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AO in the instant case made addition of ₹ 5,95,15,054/- to the taxable book profit on the ground that the assessee has wrongly reduced the amount of ₹ 5,95,15,054/- on account of withdrawal from the provision of ESOP from the taxable book profits in the working of MAT. According to the AO since the assessee in its computation of income for A.Y. 2007-08 under MAT provisions had not added back the provision for ESOP, therefore, the assessee is not entitled to any deduction from the bo .....

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. 2007-08 had added ESOP amounting to ₹ 7,67,47,000 under clause (f) to Explanation 1 of section 115JB. The submission of the assessee showing the working of book profit has been given at page 7 of the order of the CIT(A) which is as under : For ease of understanding, we provide below a working of the book profits as per section 115JB of the Act (depicting separately the expenditure added back to book profits and incomes reduced from the book profits) of A.Y. 2007-08. 1 Profit after tax as .....

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vident from the working above, the provision in respect of options granted/allotted to employees under ESOP Scheme had been added back to the book profits for A.Y. 2007-08 under Explanation 1. 40.2 In view of the above clarification/submission by the assessee before the Ld. CIT(A) which is not controverted by the revenue, we find merit in the submission of the Ld. Counsel for the assessee that whether the same has been added under clause (f) or as per clause (c) to Explanation 1 of section 115JB .....

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e working of MAT. We further find merit in the submission of the Ld. Counsel for the assessee that the proviso nowhere says that you should have added the provision under a particular clause and if the assessee has increased its book profit under any other clause of the proviso the assess is not entitled for the reduction. Since the assessee has admittedly increased its book profit in A.Y. 2007-08 as per the submission before CIT(A), which has already been recorded by the CIT(A) in the body of t .....

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e allowing deduct ion under Section 10A 2.1 The Hon ble CIT(A) has erred in facts and law in holding that deduction under section 10A of the Act is allowable after set off of brought forward business loss and unabsorbed depreciation. 2.2 The Hon ble CIT(A) erred in facts and law in not allowing set off of brought forward loss from profits / gains from business for the year amounting to ₹ 11,08,219/-. 2.3 The Hon ble CIT(A) erred in facts and law in not allowing carry forward of business lo .....

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lease line charges from export turnover The Hon ble CIT(A) erred in facts and law by upholding the order of Addl. CIT for reducing the expenses of ₹ 71,32,538/- on lease lined charges from export turnover of the appellant while computing deduction u/s.10A of the Act. 44. After hearing both the sides, we find the above ground is identical to ground of appeal No. 2 in ITA No.902/PN/2012 for A.Y. 2007-08. We have already decided the issue and the grounds raised by the assessee have been allo .....

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ovision made of for future liabilities which cannot be said ascertained liabilities and which is not pertains to the year under consideration. 4. The Ld.CIT(A) grossly erred in deciding the issue in favour of the assessee on the additional evidences i.e. rental agreement signed by the assessee in respect of lease premises at Cyber City, which was not produced before the Assessing Officer and also without giving the Assessing Officer any opportunity for rebuttal which is violation of Rule 46A of .....

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loss account of the company is prepared in accordance with the Accounting Standards specified by ICAI and further notified by the Ministry of Corporate Affairs. However, the AO was not satisfied with the explanation given by the assessee. He concluded that since provisions, which are in the nature of unascertained liabilities, have to be added back to compute book profit u/s.115JB. The provisions for lease rent equalization being in nature of unascertained liabilities was required to be added ba .....

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s of agreement. Relying on various decisions it was submitted that lease rent equalization provision is not a provision for unascertained liability. 49. Based on the arguments advanced by the assessee the Ld.CIT(A) held that the provision for lease rent equalization may not be included for computing book profit u/s.115JB of the I.T. Act. The relevant observation of the CIT at para 4.2 of the order reads as under : 4.2. I have examined the submissions made as per above and find that the rental ag .....

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lant have argued that the appellant has effectively signed rent agreement for 9 years since substantial investments in the lease premises have been incurred by the appellant. The provision made on account of lease is made by apportioning the lease payments due over a period of 9 years (i.e. the lease term) on a straight line basis and taking into account the escalation clause provided in the lease agreement. No doubt creation of the liability provision for lease equalization cannot be said to be .....

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o s. 115JA of the Act. On this aspect, we find that the Tribunal in the case of MGF India Ltd., IT Appeal No 1143/ Delhi/02 while considering a similar claim in the context of s. 115 JA has held that such an adjustment cannot be made. The Tribunal had referred to the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (2002) 174 CTR (SC) 521 :;(2002) 255 ITR 273 (SC) and has held that such adjustments cannot 'be made while determining income under s. 115 J of the A .....

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g financial statement of NBFCs. It is applicable while preparing financial statements under the Companies Act, 1956. The sum in question does not fall within any of the other cls. (a) to (/) of Explanation to s. 115 JA. In view of the above, the claim maid by the assessee for the asst. yr. 1998-99 is allowed. In the result, IT Appeal No. 2977/Del/02 and IT Appeal No. 2912/Del/02 are dismissed while IT Appeal No. 1712/Delhi/02 is allowed. 4.3 On account of the judicial precedent available on this .....

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the CIT(A) submitted that the AO had not asked any specific evidence during the course of assessment proceedings on this issue. Furnishing of the rent agreement during the course of appeal proceedings cannot be termed as additional evidence because submissions were made during the course of hearing and the AO has never asked for the rent agreements. Referring to the decision of the Delhi Bench of the Tribunal in the case of U.P. Ceramics and Potteries Ltd. Vs. DCIT reported in 52 ITD 334 he drew .....

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the Assessing Officer thinks otherwise, nothing prevents him in informing the assessee about the inadequacy of the evidence. An Assessing Officer exercising quasi-judicial authority is not supposed to take advantage of ignorance of the assessees. The job of the Assessing Officer is to make a fair and reasonable assessment and not to fight a ping pong battle of write with the assessees. A fair and reasonable assessment is possible only by giving a fair and reasonable opportunity to the assessee a .....

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respective dealers, the primary onus that vested with them stood discharged. By giving a satisfactory explanation and the evidence referred to above, the onus had shifted to the revenue and the latter having failed to make enquiries from the concerned dealers whose turnover had been included by the assessee in the turnover of other dealers for the purposes of computation of incentive bonus as also having failed to collect any material against the assessee disproving their claim, the addition ma .....

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e by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Ld.CIT(A) while holding that the lease rent equalization provision should not be included for computing book profit u/s.115JB of the Act has followed the decision of the Delhi Bench of the Tribunal in the case of Goodwill India Ltd. (Supra) and has held that lease rent equalization charge cannot be said to be a .....

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Ld. Departmental Representative neither could point out any infirmity in the order of the CIT(A) appeal nor could controvert the factual findings given by the CIT(A). Accordingly, we do not find any infirmity in the order of the CIT(A) on this issue. Grounds raised by the revenue are accordingly dismissed. 53. As regards the grievance of the revenue that CIT(A) has violated provisions of section 46A by deciding the issue on the basis of additional evidence, i.e. rent agreement, we do not find an .....

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proper adjudication of the matter, therefore, we do not find any merit in the grounds raised by the revenue on this issue. Accordingly, the grievance of the revenue regarding violation of Rule 46A under the facts and circumstances of the case is not sustainable. Grounds of appeal No.2, 3 and 4 by the revenue are accordingly dismissed. 54. Grounds of appeal No.5 by the Revenue reads as under : 5. The Ld.CIT(A) grossly erred in directing the Assessing Officer to exclude leased line charges from th .....

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Grounds raised by the assessee in ITA No.17/PN/2014 are as under : Aggrieved by the order passed by the Hon'ble Commissioner of Income-tax (Appeals) - I, Pune hereinafter referred to as 'the Honble CIT(A)'], under section 250 of the Income-tax Act, 1961 ('Act') and based on the facts and circumstances of the case, Amdocs Development Centre India Private Limited [hereinafter referred to as 'Appellant"] respectfully submits that the Honble CIT(A) erred in disposing of .....

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ard loss from profits / gains from business for the year amounting to ₹ 2,96,64,834. 1.3 The Honble CIT(A) erred in facts and law in not allowing carry forward of business loss and unabsorbed depreciation amounting to Rs I 1,18,09,218. 58. Grounds raised by the assessee in ITA No.18/PN/2014 are as under : Aggrieved by the order passed by the Hon'ble Commissioner of Income-tax (Appeals) - I, Pune hereinafter referred to as 'the Honble CIT(A)'], under section 250 of the Income-ta .....

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