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TMI Blog2018 (5) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal: "The CIT(A) erred in holding that Commissioner of Income Tax - 2 (CIT) has decided the ground relating to proportionate unbilled revenue and sub-contractg charges vis-à- vis exemption under section 10A against the appellant. The CIT set aside the assessment order on the above issue to be decided after undertaking appropriate inquires. 2. The CIT(A) confirming the action of AO in excluding the proportionate unbilled revenue of Rs. 4,55,86,705 from the export turnover, while computing deduction under section 10A. 3. The CIT(A) erred in confirming the action of the AO in excluding proportionate revenue of Rs. 11,45,75,769 earned from onsite work subcontracted to its Associated Enterprise (AE) while computing deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by excluding from the export turnover and the same was excluded from the export turnover and deduction u/s 10A was reduced proportionately. 6. In the appellate proceedings, the Ld. CIT(A) affirmed the order of AO by not giving any detailed finding. 7. The Ld. A.R. vehemently submitted before us that the Ld. CIT(A) has erred in law and on facts in upholding the order of AO by ignoring the fact that unbilled revenue represented the work done by the assessee which could not be billed till the year end pending completion of certain milestones and thus the unbilled revenue is billed in the subsequent year as per the contract conditions. The Ld. A.R. submitted that the assessee has correctly accounted for the amount of unbilled revenue as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the rival submissions and perused the relevant material on record as placed before us. The assessee is engaged in the business of softwares development in Bangalore and export thereof and thus is eligible under section 10A of the Act qua those profits as are attributable to the export turnover. During the year, there is no dispute as to the development of softwares and export thereof. The dispute is as regards the work done but not billed which included by the assessee to the extent of Rs. 4,55,86,705/- in the export turnover and the profit was claimed as exempt u/s 10A of of the Act. According to the AO, the said unbilled revenue should be excluded from the export turnover for the purpose of computing the deduction under section 10A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude this unbilled amount, both in total turnover as well as in export turnover. The assessee has specifically submitted that unbilled turnover was subsequently billed and substantial amount has been realised in the immediately subsequent year, within the statutory period permitted for claim of exemption under section 10A of the Act. All the details were filed both before the Assessing Officer and the Ld. CIT(A). Both these authorities ignored these submissions. Assessing Officer as well as the CIT(A) should have considered these details and granted relief on the amount of foreign exchange realised by the assessee within the stipulated period as per law. Any how, we do not direct the Assessing Officer to do so in view of our finding in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of arriving at the deduction under section 10A of the Act. 11. The issue raised in ground No.3 is against the confirmation of the action of AO in excluding the proportionate revenue of Rs. 11,45,75,769/- earned from onsite work subcontracted to its associated enterprise while computing under section 10A of the Act. 12. The brief facts are that the Pr. CIT in the order passed under section 263 of the Act directed to AO to frame the assessment denovo on the issue of sub contracting activities as he found that the assessee is entitled to deduction u/s 10A in respect of profit from manufacture or production of article or thing or computer software and export of the same and not in respect of sub-contracting manufacturing activities. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT vs. M/s. Mphasis Software and Service India Pvt. Ltd in Income Tax Appeals No. 263-264/2014 dated 29.07.2015 in which it has been held that income earned by the assessee through onsite work subcontracted through AEs on behalf of the assessee would be eligible for deduction under section 10A of the Act. The Ld. A.R. submitted that in view of the ratio laid down by the Hon'ble Karnataka High Court, the issue was decided in favour of the assessee. 15. Per contra, the Ld. D.R. relied on the order of the authorities below. 16. We have heard the rival submissions and perused the material on record. We find that in this case the dispute is regarding the profit which was earned by the assessee on subcontracting operation to its AEs onsite f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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