TMI Blog2018 (3) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... ectfully following the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 we uphold the finding of the learned CIT (Appeals) that lease line charges paid for bandwidth are not liable for TDS under the provisions of Sec.194C / 194J of the Act and therefore no disallowance under Section 40(a)(ia) of the Act was called for. Deduction u/s.10A - reduction of expenditure incurred in foreign currency towards telecom charges as are attributable to the delivery of software outside India - Held that:- The jurisdictional High Court of Karnataka in the case of Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT ) has held that when certain expenses are excluded from the export turnover for the purposes of claiming deduction admissible under the Act, like under Section 10A of the Act, such expenses are also to be excluded from total turnover, as export turnover forms part of total turnover. - ITA Nos. 827 & 1082/Bang/2016 - - - Dated:- 31-1-2018 - Before Shri Jason P Boaz, Accountant Member And Shri Lalit Kumar, Judicial Member For the Assessee : Shri R. Srinivasan, C A For the Revenue : Smt. Padma Meenakshi, JCIT (D.R) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of computation of deduction under Section 10A of the Act on the ground that the above items of income are not connected with the export business of the assessee and in this regard placing reliance on the decision of the Hon'ble Apex Court in the case of CIT Vs. Ravindranath which was rendered in the context of Explanation (baa) to Sec. 80HHC of the Act. It is submitted that the assessee is engaged in the business of development and export of computer software and is a 100% EOU; having no other business. It is contended that when admittedly the aforesaid were claimed by assessee and allowed by the Department in the earlier years as part of the assessee's export business, it was now not open to Revenue, when it is written back, to exclude the same from the assessee's business income for the purpose of computing deduction under Section 10A of the Act on the ground that it has no nexus with the assessee's business income. 4.3 Per contra, the learned Departmental Representative for Revenue relied on the orders of the authorities below on this issue. 4.4.1 We have heard the rival contentions, perused and carefully considered the material on record. Admittedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee 100% EOU business. We hold and direct accordingly. Consequently the grounds raised by the assessee on this issue are allowed. 5. In the result, the assessee's appaeal for A.Y. 2010-11 is allowed. Revenue s Appeal in ITA No.1082/Bang/2016 6. In Revenue s appeal, the grounds raised are as under : 1. The order of the learned CIT(A) is opposed to law and facts of the case. 2. The CIT(Appeals) erred in ignoring the fact that the TDS provisions u/s 194C / 194J are applicable on the payments made towards lease line charges and therefore the provisions of sections 40(a)(ia) are applicable. 3. The CIT(Appeals) erred in not considering that the assessee ought to have deducted TDS on the payments made. 4. The CIT(Appeals) ought to have considered that that the expenditure incurred in foreign currency, towards telecom charges and rendering technical services outside India, to be excluded only from export turnover and not from total turnover for the purpose Of computation Of deduction u/s IOA Of the Act, since such exclusion is permitted to arrive at the export turnover only as per the definitions given in Sec. IOA and total turnover has not been def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that assessee was not bound to deduct tax at source under Section 194J of the Act on the payments effected to the service providers. Vis- -vis application of Sec. 194C, the Assessing Officer was not able to show that the service provided were based on any specific contract entered by the assessee with the service providers. We are therefore, of the opinion that disallowance under Section 40(ia) of the Act was not warranted. Such a disallowance stands deleted. Ground No.13 of the assessee is allowed. 8.3.2 Respectfully following the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2009-10 (supra), we uphold the finding of the learned CIT (Appeals) that lease line charges paid for bandwidth are not liable for TDS under the provisions of Sec.194C / 194J of the Act and therefore no disallowance under Section 40(a)(ia) of the Act was called for. In that view of the matter, the grounds raised by revenue at S.Nos.2 3 are dismissed. 9. Ground No.4 Deduction u/s.10A of the Act . 9.1 In the grounds of appeal raised (supra), Revenue contends that the learned CIT (Appeals) has erred in directing the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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